The size of a parcel is a vital determiner of how much a merchant would spend on shipping, says The Ecommerce Shipping Benchmarks Report by Shippo.
The report tracked how much ecommerce industries are spending on shipping, whether they ship internationally and information on returns.
Shipping spend – size matters
Sellers in jewellery, electronics and the medical/Rx industries, which typically ship smaller packages, are spending under 10% of the average order value on shipping, whereas retailers in industries with heavier and bulkier goods like books and food/grocery are spending as much as 18%, says The Ecommerce Shipping Benchmarks Report.
Another potential correlation is that the average order value for these industries is often higher, driving shipping cost ratios lower.
Industries with the lowest shipping spend
- Jewellery 8.28%
- Medical and Rx 9.41%
- Electronics 9.61%
Industries with highest shipping spend
- Books 18.76%
- Food and Grocery 18.43%
- Toys 16.47%
International shipping – growing but still rare
Most shippers have a nascent to growing international customer base. Auto, electronics and apparel industries comprise the strongest industries sending their goods cross the border, while health and wellness, medical and Rx as well as food and grocery skew towards domestic US buyers.
Industries with the highest international shipping rate
- Auto 22.6%
- Electronics 18.87%
- Apparel 16.94%
Industries with the lowest international shipping rate
- Food and Grocery 5.03%
- Health and Wellness 8.01%
- Medical and Rx 8.42%
The rate of returns
The report says that the highest rate of returns is in the apparel industry, as it’s common for many customers to purchase items in multiple sizes with a plan to return some or all of them immediately.
Industries with the highest rate of returns
- Apparel 9.09%
- Health and Wellness 7.51%
- Baby 7.43%
h3>Industries with the lowest rate of returns
- Food and Grocery 1.23%
- Arts and Crafts 2.9%
- Books 3.03%
Average order value – A key metric of the seller health
According to Internet Retailer, consumers spent $517.36 billion online with US merchants in 2018. That’s up 15.0% from $449.88 billion spent from the last year.
For online retailers looking to increase their revenue, the average order value is one of the most-watched metrics. The report says that Amazon accounts for 40% of ecommerce spend, but here’s a closer look at where else—and how much—consumers are spending by industry:
Industries with highest AOV
- Beauty and Skincare $354.12
- Health and Wellness $285.76
- Electronics $267.79
Industries with lowest AOV
- Pet Care $83.24
- Books $82.95
- Food and Grocery $78.70
How to turn delivery into an advantage
The report says that boosting the average order value can generate two things. First, encourage customers to buy more items. Second, inspire them to buy items that cost more. However, some sellers are finding that shipping can also play a role in helping to boost business metrics across the board.
An unexpected way bolsters customer loyalty. Consistent and reliable delivery is key to customer retention. As customers, we lead busy lives. When we make the choice to buy something online, we don’t want to think twice about when or how our packages will arrive.
Small businesses can use their size as a strength
Small businesses can turn their size into an advantage because they have a greater ability to understand their customer and product offering more intimately than ecommerce giants. A sharper focus on the customer can enable them to be more agile and offer other incentives that offset the psychic cost of paying for shipping.
