Research finds inflation could cost U.S. consumers $219B, highlights tactics for merchants to grow despite economic challenges
ShipStation, the world’s leading cloud-based ecommerce shipping solution, released Protect Your Growth Strategy: the 2023 Consumer and Merchant Benchmark Report. The report contains findings from a global consumer and merchant study conducted by Auctane, which operates the ShipStation brand among others, and Retail Economics, an independent economics research consultancy.*
“This year, consumers have become more price conscious, and therefore selective with their shopping decisions,” said Sudha Chandrasekharan, Senior Vice President and Global General Manager of ShipStation. “The report highlights an urgent need for merchants to provide a phenomenal buying experience, from start to finish, to stand out to the modern consumer.”
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In the report, ShipStation encourages merchants to optimize the pre and post-purchase experience to continue growing amid unstable market conditions. Key findings include:
Cost drives decision making in 2023:
Both merchants and consumers continue to feel financially uncertain this year. The research found that inflation could account for $219B in increased sales this year as a result of rising prices, rather than increased sales volume. 64% of surveyed U.S. consumers rank inflation as their biggest financial concern this year, and 66% plan to change their buying behaviors in 2023, likely as a result of economic uncertainty. 23% of consumers say they expect to shop online more than they currently do to save and compare costs across multiple brands. Meanwhile, 72% of surveyed U.S. merchants are looking to cut shipping costs in order to grow this year.
Free over fast deliveries:
Consumers are now willing to swap faster deliveries for cost savings. 41% of surveyed consumers say cost of delivery is the most important factor when buying online, up from 33% in 2022. A whopping 61% of consumers say that they’re less likely to shop with a brand if shipping costs are high. On average, 34% of U.S. consumers expect packages to arrive in 3-4 days. Only 6% expect overnight delivery as the standard.
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Customer experience doesn’t stop at checkout:
Consumers had strong opinions about what they want out of their online shopping experiences and how merchants can deliver. Returns and merchant communications topped consumers’ priority lists. 44% of surveyed consumers say they’re less likely to shop with a brand if the returns process is difficult, and 81% believe returns should be free. Gen-Z is the most likely to be open to paying for returns. Meanwhile, 66% of surveyed merchants do not currently offer free returns. In 2022, ShipStation found that 18% of merchants planned to restrict return policies or eliminate free returns in order to cut costs amid economic headwinds. When it comes to communications, ShipStation found that 42% of consumers want tracking updates daily, whether or not the status of the order has changed.
Optimize operations:
ShipStation’s research reviews merchants’ operating strategies and recommends new areas of focus to promote business growth. When it comes to geographical reach, 65% of surveyed merchants did not expand internationally last year, nor do they have plans to expand this year. 57% of merchants report that they only operate out of a single warehouse, and 30% of merchants plan to introduce warehouse automation this year.