Shipwire's Director of Engineering shares thoughts on teamwork
March 2, 2011
Today's e-commerce sales have driven merchants to ship orders the same day. Shipwire is one of the few order fulfillment companies that has a Shipping Time Guarantee that includes same day shipping with money back guarantees.
But is it possible that orders can be shipped too quickly? In this blog post we'll discuss the impact of buyer errors on your business and explore this question.
Don't worry, we're not going to eliminate our same day shipping guarantee. Nor are we going to argue that the world needs to slow down. Rather, we hope this inspires you to look at your business and run some numbers for whether you might be increasing your returns and customer support costs because of the speed at which you ship.
I asked our twitter friends "What is the impact of same day shipping to returns?". Here were some of the thoughts.
@billda (ecommerce merchant and developer behind FoxyWire): "very few – probably 1% edits at most. Bigger problem is people ordering twice by mistake and trying to catch it b4 sending em 2."
@colderICE (John is just the man! But also an expert in ecommerce education, an old school eBay PowerSeller). "I am sure the rate of cancellations alone will be hit. We get people all the time wanting to cancel an order they placed that day".
@pamelahazelton (a top Ecommerce consultant)"I haven't seen much change in returns. Small percentage needing to return as result of same day cancel post shipping."
9% of orders get changed
In a quick Shipwire study of a few hundred merchants over the past 2 years, we found that 3.5% of orders are edited after being processed by the shopping cart. An additional 5.7% of orders are canceled after they were submitted but before the orders shipped. Remember, we are only looking at orders that have been cleared by the shopping cart (passed all payment and fraud checks). When you run your analysis you should look at how many orders get canceled before you send them to Shipwire.
So, approximately 9% of consumers who purchase online in our study want to modify their orders after they have paid and the shopping cart has confirmed the order is ready for shipping.
For every 100 people who buy something online, 9 of them need to inform you of a change on their order. In some cases, it may be buyer's remorse after an impulse buy. In other cases, they may be trying to proactively get in front of a payment issue. Most commonly in our survey, they are trying to change the shipping address.
That seems to be a bit higher than what our twitter friends are reporting, but please also realize that the question asked was slightly different. I would also expect Shipwire to have more edits and pre-shipping cancels because we have made it very easy to empower merchants and customers to control this aspect of their shipping.
Ship Now Vs. Give it a day?
There is obviously a trade-off to same-day order processing. Get that product out the door now. Or give time for that small percent of people who want to edit their order.
Once the order leaves the warehouse it becomes more expensive and increasingly difficult to redirect the shipment. With many shipping methods, it is impossible.
While Shipwire offers same day shipping, we have specifically built in functionality to allow you to delay the processing of your orders if your business needs it. Our API preferences or Same Day Shipping allow merchants to control how long orders can be held. We recommend that you give buyers clear guidelines on how long they have to edit (or change) orders. Set up your Shipwire account to match this policy. This can save a lot of time on returns, cancels and costs for carrier redirects. Each edit or cancel you can catch, before it gets to the shipping truck, the better your bottom line.
The argument for processing orders as fast as possible is that you can tell the buyer "It already shipped." While this sounds great in theory, it breaks down with most buyers who will want you to have the carrier redirect it or will be initiating expensive returns processing.
What do I need to know as an Online Retailer?
As an E-tailer starting out, if you tend to have a lot of customers who cancel or edit their orders, as you scale, these numbers will likely scale respectively.
If you manage your own warehouse, you know the hassles of finding the order and editing the shipping label. That assumes that the order change didn't result in a new shipping price. Even a simple change like changing an apartment number can turn into a 30 minute hunt for the order to scratch on a new address. If you are a small volume shipper, you will likely have less hassles with this, but you still need to make sure you get all your systems in line with the new address.
If you are a bigger company or using a 3rd Party Logistics (3PL) distribution center, there is a bit more complexity because another party is added to the mix. If you are use to shipping on your own and planning on using an outsourced fulfillment company, it helps to set expectations and create some time buffers to help you catch and manage order cancels and edits in a timely manner.
A Look Inside a Warehouse
In a big warehouse there are thousands of shipments coming in and going out. It is a constant "buzzz" of activity that might remind you of a beehive. Like a beehive, there is incredible order and lots of small little processes that add up the overall success of the individual order shipments.
And then there is Joe Exception. Who is Joe Exception? Joe Exception is your buyer who insists on canceling his order far after your cut-off dates. We all know Joe Exception. He didn't check his order properly and perhaps ordered product 1 when he meant to order product 2. He wants you to just change the product you package or issue an immediate refund even though he placed the order yesterday and you have already processed his credit card and told the warehouse to ship product 1. Joe is "adamant" that you immediately fix this problem.
You inform Joe, "I'll ship you a new order for Product 2 (order 2) and try to cancel order 1, but it has already been processed and the warehouse has likely shipped it already." Joe doesn't want two orders on his credit card. He wants you to change the product in his original order. You help Joe understand it's better for everybody to just cancel the order and start over, but you need to try to catch the order before it ships. You are now going above and beyond because you love your customers.
You notify the warehouse of Joe Exception and tell the warehouse to "cancel that order". With same day shipping, this this is past the stage where you could log-in and cancel it and you know this is probably already on the shipping truck. If we haven't shipped it yet, we'll immediately cancel it and tell you to resubmit a new order. However, if the order is already being processed on the floor, let's dive into the process of tracking down this order.
With many employees in the warehouse, thousands of packages moving, and all the bees humming around the hive, it's pretty hard to identify one bee and tell them to do something different.
- You call or email because Joe insists on canceling his order and you know the warehouse is already processing this order.
- The customer service representative learns of this issue and escalates it to a warehouse team supervisor. These supervisors handle "out of band" order processes.
- The warehouse team supervisor stops what they are doing, finds the status of the order, and tries to locate this within the warehouse (Keep in mind they may be stepping away from coordinating freight, receiving and shipping those 1000's of backorders you have). With luck, they find the shipment to either cancel it or inform you that it is on the truck already. Depending on when they catch the shipment, they will need to edit the inventory systems to adjust inventory correctly and possibly cancel shipping postage or inform carriers not to make a pickup.
If it's shipped, the supervisor delivers the bad news and probably spent just as much time on the order as if he could have caught it.
As you can tell, there is lots of time involved (in some cases hours) which means there is cost both real and opportunity to deal with Joe's exception.
What is the take away? As the speed of e-commerce speeds up, it helps to communicate to your buyers the last time they can edit/cancel an order. IF your business has a lot of post-transaction edits, you need to set guidelines with your buyers that match your warehouse processes. Shipwire gives you tools to do all this, but it's a helpful thing to review before your big shipping seasons.
Your Edit is Actually a "Cancel"
In our hypothetical above, Joe wants to edit the order because in his mind he is changing one aspect of it – the product. In some cases it may be a simple thing like a color change. In reality, that change actually causes a cascade of changes. The order price could change, the product availability may change, the product location could change, the shipping price may the product inventory levels in the online store and warehouse change.
When dealing with an edit to an order, it is better to think about canceling the order and then rebuilding it correctly from scratch.
The reason is that, canceling an order is something supported by all the upstream and down-stream systems. The warehouse can easily cancel the order. The shopping cart knows how to deal with an order cancel. The payment systems know how to deal with a cancel.
Shipwire, Making All This Easy
Shipwire warehouses are highly automated, processing thousands of orders a day. Shipwire systems are designed for incredible performance, while delivering a cost-effective service. One side effect of this efficiency is that Shipwire must limit the changes that can be applied to an order once it is submitted to a processing warehouse. Prior to warehouse submission, Shipwire allows orders to be fully edited and/or canceled, as needed, directly through your online account. Shipwire also provides rich software controls that allow you to choose the frequency at which orders are submitted to the appropriate processing warehouse.
You can always tell the status of an order and whether it has been submitted to a warehouse in your account. Just look at the order progress indicator.