5 Ways for E-Commerce Teams to Improve Marketing Efficiency

James Hsu

October 25, 2022October 26, 2022

Insights

A return to post-pandemic normalcy and the looming threat of recession have been challenging for some e-commerce teams in 2022.

Yet, history shows us how the best businesses can thrive when the circumstances are seemingly against them.

For example, during the pandemic, restaurant chains that embraced digital ordering and added new capabilities like curbside pickup or contactless delivery mitigated the worst of it and sometimes even thrived. Many that didn’t embrace mobile ordering at all have since been shuttered.

It can be easy for marketers to stop advocating for new strategies when the cards are seemingly stacked against them. However, staying agile and making the right investments can help e-commerce marketers thrive against the odds.

5 ways for e-commerce teams to improve marketing efficiency

1. Focus on customer loyalty and improving CLV

On average, repeat customers spend 67% more in the third year of their relationship with a company than they do at prior stages. Small increases in customer retention can lead to large increases in profit.

Given that it’s harder than ever to acquire new customers, fostering the health of your existing customer relationships can be far more productive than throwing ad dollars at people who have never tried your product. Improving customer loyalty in this way can drive meaningful improvements in your CAC:LTV ratio, ROAS, or whichever metrics you use to understand marketing efficiency.

But how do you increase customer loyalty?

Traditional loyalty programs that incentivize increased engagement and more frequent purchasing (e.g. points programs) and membership perks are an obvious starting point, but there are many other ways to drive customer loyalty, too. Let’s go over some of them.

2. Offer “fast and free” same-day delivery

Research from Ohi (based on actual anonymized client data) shows a substantial boost to repeat purchase rates and customer lifetime value (CLV) for customers who chose instant delivery with Ohi versus those whose orders were fulfilled with standard shipping.

What’s more, merchants can leverage instant delivery as a selling tool, boosting website conversion rates.

Together, these effects work in tandem to help marketers drive improved return on ad spend (ROAS) by delivering more bang for the buck.

Read more about how “fast and free” shipping has an outsized effect on shopper behavior.

3. Reduce CAC by weeding out low-performing ads/programs and focusing on best-performing audience segments

When times are good, marketers tend to cast a wider net. More programs, more campaigns, more ads. When conversion rates go down, it’s important for marketers to reprioritize efficiency.

Go through your programs, campaigns, and ad sets to determine which are actually bringing in new customers and which are wasting valuable dollars and ad impressions. Trim everything that isn’t working, or pivot into more relevant messaging.

Use split testing to boost performance further, even for ads that are already performing reasonably well. See what reduces CAC for your ads by experimenting with creative, copy, CTAs, and audience targeting. Once you’ve made some optimizations and have enough performance data to review, rinse, and repeat.

Targeting: As the times change, so too can your ideal customer profile (ICP). Continually update your understanding of who (demographics, interests, etc.) is best suited for your products, and ensure your advertising campaigns are optimized to target your ICP segments, specifically.

4. Recoup lost sales with remarketing strategies

Did you know that the average documented cart abandonment rate is 69.99%? That’s right — seven out of 10 shoppers that add something to their shopping cart don’t go on to complete their order.

Cart abandonment can be extremely damaging to your company’s bottom line and marketing success, causing both acquisition and retention costs to skyrocket.

Shoppers who have recently left the site without completing their purchase can be retargeted using techniques such as these:

Send personalized abandonment email campaigns with enticing offers such as free same-day shipping or a discount to get them to complete the purchase. “Your cart with (Product Name) is still waiting for you.”

Similarly, you can run customized display ads to re-engage cart abandoners by letting them know they still have items in their baskets and teasing that they’ll have a special offer upon their return.

A remarketing email from Tipsy Elves highlighting a first-time discount.

5. Offer an excellent post-purchase experience

Increasing revenue while lowering costs is near the top of every company’s priorities. But in order to accomplish that, your customer experience must be on point.

While e-commerce teams and marketers understand the importance of the customer experience, they often over-prioritize everything leading up to the purchase decision.

After all, getting a new customer to order one time means a lifetime of blissful re-ordering, right?

Not quite. The key to boosting your revenue over the long term is heavily dependent on the post-purchase side of the customer experience.

What is a customer’s actual experience with your product, how quickly did it arrive, and how have they successfully incorporated it into their lives?

Here are a few ways to enable an amazing post-purchase experience:

After a purchase is made, point customers to a “thank you” page that goes beyond the “order confirmation” function. Take the opportunity to thoughtfully address how this is more than a transaction for your team – how every order contributes to something bigger and more meaningful, e.g. societal impact, a movement to do X, Y, and Z.

Send out follow-up emails with product care tips, how-to guides, or interesting use cases to help customers incorporate your product into their lives successfully.

Encourage customers to join and interact with your community of happy customers.

Reminding customers to restock (e.g.: 50 days into a two-month supply) is another excellent way to provide value, stay in touch, and increase CLV.

As discussed earlier, ensure a fast and reliable delivery experience. Ohi’s research shows that providing same-day delivery results in a significant boost to CLV and repeat purchase rates, suggesting the importance of last-mile delivery within the overall post-purchase experience.

Give customers the option to schedule and reschedule deliveries (e.g.: Ohi allows customers to schedule the delivery in a four-hour window, up to seven days out), especially for subscription orders. Delivery scheduling allows customers to enjoy e-commerce on their terms while reducing the risk of package theft and removing much of the friction that receiving a package can present.

While the post-purchase experience is not traditionally a focus for marketing teams, advocating cross-functionally for some of these best practices can dramatically improve overall marketing efficiency, and that’s reason enough to have the conversation.

About Ohi

At Ohi, we’ve flipped the script for e-commerce fulfillment, transforming it from what is traditionally seen as a cost center into a growth engine. Brands join the Ohi platform to deliver powerfully fast, brand-focused, and memorable post-purchase experiences that enable them to grow. Want to learn more about how Ohi enables instant commerce? Get in touch today.

Fast & Free: How to Price (or “Unprice”) E-Commerce Shipping to Perfection

James Hsu

August 30, 2022September 30, 2022

Insights

According to the zero price effect, traditional cost-benefit models cannot account for the psychological effect of getting something for free. “Free goods have extra pulling power.” (source)

A store could be offering a free ice cream cone or even a free sticker worth less than a penny. Regardless, there we are waiting patiently, grinning ear-to-ear for the opportunity to get something for nothing.

There’s no better example in e-commerce than “free shipping.”

Let’s discuss the arguments for and against providing free shipping from an e-commerce merchant’s perspective.

Shoppers hate add-on fees, and speed matters

According to recent research by The Baymard Institute and shared by Shopify, the #1 reason why shoppers abandon checkout is because “extra costs [like shipping and taxes] were too high,” accounting for 55% of total cart abandonment.

A 2021 global consumer insights survey conducted by PWC showed “fast/reliable delivery” as consumers’ #1 overall consideration when shopping online (ranked top three by 41% of respondents), beating out eleven others, including “in-stock availability of items I want (35%),” “ability to quickly and conveniently navigate the website to find products I’m interested in (30%),” “availability of online customer reviews (26%),” and “a good return policy (31%).”

Want to reduce cart abandonment (and increase conversions) for your online shop? The research is clear: offer your customers fast order fulfillment, and don’t charge them for it.

Despite the body of evidence, many e-tailers remain skeptical about the merits of offering “fast and free” delivery, with “erosion to profit margins” being among the most common reasons given.

There’s a cost to “free” shipping

While free shipping is a proven way to get customers to buy from you, providing it isn’t exactly “free” for retailers.

E-commerce shipping can sometimes be a very significant expense for retailers, particularly when it comes to expedited deliveries (learn how Ohi keeps fulfillment costs low for sub 2-hour, same-day, and next-day delivery) or heavier/bulkier goods.

But what if you can generate ROI from offering “fast and free” delivery? Might there be a scenario where you’d want to eat free shipping costs in order to reduce cart abandonment (or increase conversions) and even increase customer satisfaction (i.e. through a better and faster delivery experience), leading to improved customer lifetime value?

To understand that scenario better, we need to first establish the ROI of fast shipping (or what Ohi calls “instant delivery”).

The ROI of instant delivery

Previous research from Ohi (based on actual anonymized client data) demonstrated a substantial boost to repeat purchase rates and customer lifetime value (CLV) for customers whose orders were delivered in less than two hours (via Ohi 2-hour instant delivery) versus those whose orders were fulfilled with standard UPS/FedEx 3-5 day ground.

Because immediacy and convenience are so valuable, instant delivery helps merchants grow in a major way.

BUT (and this is a big “BUT”) – it can only do that if customers select instant delivery at checkout. And therein lies the rub.

Brands that charge for instant delivery consequently have fewer customers choose instant delivery at checkout—thereby forgoing the retention/growth boosts they would have otherwise enjoyed.

Does it make sense to charge for instant delivery?

New research from Ohi shows that Ohi-enabled merchants that price instant delivery either (1) free, (2) free above an order amount threshold, or (3) in line with their standard shipping, have instant delivery picked five times more often than when instant delivery is priced higher than standard shipping (e.g. 3-5 day ground).

What’s more, merchants that (1), priced instant delivery this way (i.e. free, free above a threshold, or in line with standard shipping), and (2), had been optimized* on the Ohi platform, saw on average a 26% increase to repeat purchase rate (when orders shipped via Ohi 2-hour/same-day/next-day instant delivery vs. standard delivery), while those that priced instant delivery higher than standard shipping saw no improvement in repeat purchase rate.

When you consider how cost-effective instant delivery can be for many brands (e.g. learn how Greater Than saves 20% with instant delivery versus standard ground shipping), it’s not hard to see that charging more for instant delivery is counterproductive to increasing profits.

If this loss in potential ROI from not getting selected in checkout and the cart abandonment mentioned earlier aren’t enough to dissuade you from marking up e-commerce delivery, consider this piece of research: when retailers charge a high shipping fee relative to product price, shoppers believed retailers did so to earn additional profit (rather than simply to pass shipping costs on to the customer). It’s not a great look for any brand that aspires to be customer-first.

The overall implication here is that brands should strongly consider offering “fast and free” e-commerce delivery, allowing more customers to enjoy the best customer experience and setting the stage for increased retention and business growth.

How to offer free shipping

Now that we’ve established that “fast and free” shipping is great for conversions, amazing for customer retention, and can more than pay for itself, here are some pointers on how to make free shipping work for your brand.

Streamline the number of shipping options you offer in checkout to prevent choice paralysis and to ensure your customers easily find the option that’s best for them

OLIPOP has seen a 150% increase to CLV through “fast and free” Ohi instant delivery. This simple and clean shipping screen is optimal.

Too many choices can lead to abandonment, and the lack of an Ohi instant delivery option here results in cost-prohibitive expedited shipping costs.

If margin is a concern, consider including your average shipping cost as part of the product price, especially if you primarily sell DTC or if you are selling hard-to-find or highly unique products. This allows you to benefit from the “zero price effect” with free shipping and avoid preventable cart abandonment. Plus, your customers may not “feel” the additional dollars as much when they’re baked into the product pricing.
Free shipping with order minimums: If you’re concerned about losing money by giving away free shipping for low-value orders, you can simply set an order minimum for free shipping. Free shipping above a basket threshold can serve as a powerful incentive for customers to buy more from you, while protecting your bottom line.
Promote free shipping. (“If a tree falls in the forest…”, etc.) If the goal is to maximize sales, you need to be committed to letting shoppers know you offer free/”fast and free” delivery. A few common places to highlight this: website ticker (a horizontal announcement bar at the top or bottom of the screen), homepage leaderboard or box banner, product page (near add-to-cart button), in checkout, marketing emails/SMS, on social posts, and in paid advertisements.

At Ohi, we’ve flipped the script for e-commerce fulfillment, transforming it from what is traditionally seen as a cost center into a growth engine. Brands join the Ohi platform to deliver powerfully fast, brand-focused, and memorable post-purchase experiences that enable them to grow. Want to learn more about how Ohi enables instant commerce? Get in touch today.

_{*Merchants “optimized on the Ohi platform” are those with at least 200 orders shipped via Ohi instant delivery in the last 30 days and an efficiency rate greater than 30%. Efficiency rate is the percentage of Ohi clients’ orders within Ohi’s serviceable zips that Ohi does fulfill.}

From Fast to Instant Delivery: Why Same-day Delivery is no Longer Good Enough in E-commerce Fulfillment

James Hsu

November 19, 2021June 21, 2022

Insights

With the global pandemic as a backdrop in 2020, same-day delivery became a major differentiator for e-commerce brands and has remained a priority through 2021.

But with many more marketplaces now offering same-day and some expanding 2-hour delivery coverage, will same-day delivery continue to be a differentiator?

New ROI data from Ohi shows a clear advantage for brands that offer sub 2-hour delivery, or “instant delivery.” Read on to understand how an ongoing fulfillment arms race has led us to this modern reality.

The pandemic has accelerated the shift to e-commerce by 5 years (US Retail Index, IBM)

Worldwide lockdowns (in 2020, primarily), slowing economic activity, and changing customer behavior have done a number on traditional retail.

As a result, department store sales in 2020 declined by 25% in Q1 and a nearly implausible 75% in Q2. According to IBM’s retail index, more people began shopping online and with more frequency in 2020, accelerating the ongoing shift to e-commerce by more than five years.

The expansion of e-commerce is here to stay, and things are only going to get more competitive.

Marketplaces and Big Retail leverage same-day shipping as differentiator

The nation’s biggest retailers — Amazon, Walmart and Target, for starters — have seen the shift towards e-commerce coming from a mile away. Consequently, they’ve prioritized faster e-commerce fulfillment to unlevel the playing field.

In Q4 of 2020, for instance, Target increased its same-day e-commerce fulfillment by 273% over the previous quarter.

It’s a sound strategy. Smaller retail companies and D2C brands lack the logistics platform to offer same-day delivery, without the help of an instant commerce provider like Ohi.

And Amazon is no stranger to the strategy of using delivery speed as a competitive advantage.

Having once succeeded in shifting consumer perceptions of Prime “2-day delivery” from a “nice-to-have” to a “must-have,” Amazon is poised to do it again with Prime same-day delivery.

What’s so fun about a game of “catchup”?

With the biggest retail marketplaces squarely behind the proliferation of same-day delivery, the trend has gained momentum industry-wide.

As Amazon, Walmart, Target, and others work to increase their same-day delivery capabilities, the next crop of retailers and D2C brands are working furiously to stay close.

Bed Bath & Beyond and Abercrombie & Fitch both have both added same-day shipping for online orders in many key product categories. Beauty brands Sephora and The Body Shop have similarly debuted same-day delivery as a means of staying competitive with the Amazons of this world.

But, if Amazon and other large retailers are already making same-day delivery pervasive, is offering same-day delivery enough to truly win?

As same-day delivery becomes more commonplace, it’s inevitable that forward-looking retailers and e-commerce-focused brands will be considering the next step up in delivery speed.

A new threshold to reach

“No one needed two-day delivery of anything when Amazon introduced Prime, but as soon as people could get everything delivered within two days, they wanted everything in two days,” said Ben Jones, CEO of Ohi. “It’s the same phenomenon again with sub 2-hour or ‘instant delivery,’ only we’re seeing it play out much faster due to the pandemic and the dramatic shift in consumer preferences it’s brought about.”

Many of the leading marketplace and large retail companies are looking beyond same-day shipping and pushing the envelope once more with sub 2-hour delivery.

Walmart already offers express delivery in two hours or less. Uber Eats, Instacart, and other instant delivery services are moving to provide sub 2-hour delivery in an increasingly diverse number of product categories. Amazon’s Prime Now service was merged into Amazon’s main app earlier in 2021, bringing two-hour delivery to the masses (on that marketplace).

Why Instant Delivery?

As the e-commerce market shifts towards instant commerce, the ROI of instant delivery (sub 2-hour) has become hard to ignore.

Ohi is an instant commerce platform that provides sub 2-hour, same-day, and next-day delivery for D2C-focused brands via its micro-fulfillment network and proprietary smart warehousing and inventory system.

In an analysis of several of its large partner brands that offer both 2-hour delivery and same-day delivery, Ohi found that orders delivered with same-day delivery were associated with up to 30% higher repeat purchase rates than standard UPS/FedEx. But repeat purchase rates associated with Ohi’s 2-hour delivery were even higher: up to 24% higher than same-day delivery and 61% higher than standard UPS/FedEx.

Outcomes were similar for observed customer lifetime value (CLV). Customers who initially ordered with Ohi same-day had 23% higher CLV compared to those whose orders were fulfilled through UPS/FedEx. CLV for 2-hour delivery was up to 16% higher than same-day delivery and 43% higher than standard UPS/FedEx.

Ohi’s initial ROI analysis shows a clear benefit for brands to be ahead of the delivery speed curve, even without taking into account instant delivery’s impact on customer acquisition (i.e. getting new customers to try).

It’s not just about the dollars and cents, though, as attractive as that angle might be to e-commerce teams.

Instant delivery can also become a key part of a brand’s sustainability ethos. When inventory is kept hyperlocal to customers, as it is for Ohi, packaging and last-mile transport can become eco-friendly.

For example, many Ohi brands are now choosing to have their products delivered in custom-branded, eco-friendly/reusable totes, forgoing the cardboard boxes and packing materials needed for longer distance deliveries.

In densely populated urban areas like New York City, Ohi is able to provide instant delivery via e-bikes/bikes, further reducing their clients’ carbon footprint.

“We’re seeing multiple trends converging and creating a strong impetus for brands to adopt instant commerce. As compelling as the ROI already is, we continue to see the gap between instant and traditional e-commerce fulfillment expanding,” said Jones. “At Ohi, we’re positioning our client brands to thrive in a dynamic market.”

Ultimately, a brand’s motivation to enable instant commerce typically boils down to customer satisfaction. When customers can order directly from the brands they love, receive their orders within two hours, and know it’s all happening sustainably, it’s a big win for all parties involved.