Shipping Subscriptions: The rise of delivery as-a-service

Shipping subscriptions

From video streaming and gaming to flowers and apparel, the average household in the UK now spends more than £50 a month on subscription services. And, with marketplaces starting to offer same- or next-day delivery as-a-service, it’s highly likely this could top £100 in the near future.

The rise of marketplaces such as Amazon and Zalando has completely changed our perception of online shopping. We want the largest product range, the best service, the most competitive prices and the fastest delivery – all within just a few clicks. 

While regular online stores try to capture customers with a unique brand experience or a niche product range, convenience is the magic word for marketplaces. Consumers can choose from countless products, additional services and, if desired, have their order on their doorstep in just a few hours. 

Not surprisingly, recent research shows that 91% of UK consumers shop through marketplaces, as they find them the most convenient and easiest way to shop. You don’t have to be a genius to explain this massive popularity: marketplaces are simply extremely good at fulfilling consumers’ expectations. ‘You ask, we serve’ seems to be the motto, and there is one thing in particular marketplaces seem to master extremely well: delivery.

Shipping subscriptions as a Unique Selling Point 

While consumers are increasingly willing to pay less and less for delivery, at the same time they are becoming more demanding than ever. Consumers want to decide for themselves where, when and how an order is delivered. 

Almost three quarters (71%) of consumers say flexibility in delivery is key for them). Consumers are ruthless, and will ditch their digital shopping cart  if online stores fail in meeting this requirement.  

Our research backs this up, with 68% of consumers claiming they abandon a shopping cart when shipping costs are too high. Another 44% do so when the delivery time is too long. 

To win over the hearts and minds of customers, online businesses need to offer both flexible and affordable delivery. Online marketplaces such as Asos and Next have understood this, and may well have found a solution in the form of shipping subscription services. However, as Asos recently found out, consumers are even starting to get annoyed at minimum spend requirements.

In exchange for a fixed annual fee, consumers get a year of free delivery as well as premium shipping options such as same-day delivery and access to special discounts. In this way, marketplaces respond to the demand for flexible and affordable delivery, and at the same time manage to retain customers in the long-term. 

In 2005, Amazon was the first marketplace to offer a shipping subscription with Amazon Prime. Offering customers unlimited free express delivery, on top of access to a streaming service and gaming plan all for less than ten pounds a month has become one of the e-commerce giant’s most popular services. 

But Amazon is not the only one doing this any more, and more and more large marketplaces are starting to provide their own delivery plans. A smart move, since shipping subscriptions are not only a good way to meet the high delivery demands of consumers, but are also a clever strategy to engage consumers in the long run.

After all, once you have a shipping subscription, it pays to order as much as possible from the marketplace in question – ultimately, you want to get the most out of your subscription. 

Raising the shipping bar: marketplaces vs. online retailers 

While marketplaces have taken the delivery experience for consumers to the next level, it hasn’t all been sunshine and roses. 

Although very successful in their own right, the services provided by the likes of Amazon, Walmart and other online marketplaces have seen consumer delivery expectations skyrocket. Many consumers wish, or even expect, that their order will arrive within 24 hours, if not the same day. 

These shipping subscriptions have also raised the bar for retailers and third-party sellers. In order to win over consumers, they too will have to live up to the superior delivery experience that marketplaces now offer, including flexible, faster, and cheaper delivery options as well as a multiple choice of carriers.

And that’s no easy task. Whereas the Amazons of this world have enormous warehouses, even bigger budgets and established relationships with parcel delivery companies, the average third-party seller has to work with a lot less. 

Consumers don’t care what happens behind the scenes.  All they want is the best delivery experience, no matter how big or small the online store is. 

Delivering consumer expectations using a multi-carrier strategy 

For this reason, an excellent delivery rating is key to ranking higher up on marketplaces. 

A whopping 43% of consumers identify delivery as the main reason for shopping at marketplaces, which is why marketplaces are doing everything in their power to keep this reputation. Therefore, they often set high requirements for the delivery service of third-party sellers. Sellers who do not meet these requirements get a lower delivery score and will therefore never achieve the coveted top position on a product page. 

The exact shipping requirements vary from one marketplace to the next. Zalando works with DHL and DPD, while Asos prefers shipping with Evri and Royal Mail. But it goes further than just offering the desired delivery service. 

Amazon, for example, bases the delivery score of sellers on three elements: the valid tracking rate, on-time delivery score and seller initiated cancellation score. Or, in simple terms: Amazon monitors the extent to which sellers share the right tracking info, deliver on time and whether orders are correctly processed. 

All in all, shipping via marketplaces can quickly become very tricky. While third-party sellers might look into various fulfilment options, a multi-carrier strategy is probably the only way to live up to the technical requirements and satisfy customers at the same time. By combining multiple carriers, sellers are able to offer a mix of shipping options and save costs at the same time – a win-win scenario. 

What this means is that selling on marketplaces actually starts at the end of the customer journey. If your shipping strategy is not in order, it’s unlikely you will ever appear at the top of a product page, meaning you can forget about sales flying through the virtual door.

Rob van den Heuvel, CEO at Sendcloud