ContentsState of Shipping Report 2023

Intro

03

Key Findings: 5 Tactics to Help Merchants

04

Online Shopping Shows No Signs of Slowing

06

Fulfillment Costs Remain the #1 Key
Concern for Merchants

08

Meeting Consumer Expectations in 2023

11

Conclusion

17

About Shippo

18

INTRO
Since the onset of the Covid-19 pandemic,
drastic change has without a doubt been
the only constant – and in 2023, that continues to be the case.
Today’s e-commerce landscape has notbeen immune, as market concerns haveshifted from supply chain disruptions anddelivery delays to changing consumer
spending habits brought on by last year’s
rising inflation and a looming recession:•

The Consumer Price Index rose 6.5%
year-over-year from December 2021 to
2022.						

•U.S. retail sales fell 1.1% in December
2022 – the biggest month-over-monthdecline in a year.				

•83% of e-commerce businesses arevery concerned about the risk inflation
poses to growth, and 82% say high inflation is forcing them to cut costs.

But it’s not all doom and gloom for
e-commerce merchants this year. Whileconsumers are poised to cut back on
discretionary spending in 2023, they also
promise to remain loyal to the brands thattreat them well. We at Shippo recently
surveyed over 2,000 e-commerce merchants and consumers for our 6th annualState of Shipping Report, and found that
this year – while merchants certainly feelthe crunch to optimize fulfillment costs –there are plenty of opportunities to getcreative with shipping and other strategies to satisfy customers’ evolving expectations without sacrificing their own profit
margin goals.
With this in-depth merchant and consumer survey data, we can foresee thatwhile 2023 might not be another year ofrecord-shattering e-commerce growth,
it will provide merchants the chance tobuild more resilient businesses, find creative ways to acquire more customers,
and turn first-time buyers into lifelong
brand advocates.

3

KEY FINDINGS: 5 TACTICS
TO HELP MERCHANTSDRIVE MORE CONVERSIONS BY PROVIDINGSHIPPING POLICY DETAILS AND FULFILLMENTOPTIONS UPFRONT:
Communicating your shipping and e-commerce return policies
clearly and upfront, and offering a variety of fulfillment options
to suit differing preferences, can gain consumer trust and inspire
more confident purchases.

PROVIDE A SEAMLESS E-COMMERCE
RETURNS EXPERIENCE:
Even if universal free returns aren’t financially feasible,
providing a convenient returns experience can help you
differentiate your business and meet today’s consumer
expectations to keep your customers coming back.

INCENTIVIZE FREE SHIPPING THROUGHMINIMUM SPEND THRESHOLDS OR 		LOYALTY PROGRAMS TO INSPIRE AND
REWARD LOYALTY:
Instead of offering this perk across the board, including
free shipping after a certain spend threshold is met or as aloyalty perk can help you strike the right balance between
meeting high expectations, while also saving more broadly
on shipping costs by rewarding customers who shop andspend regularly.

OFFER PRE- AND POST-PURCHASEPEACE OF MIND WITH ORDER TRACKING
AND INSURANCE:
Help customers feel more confident in their purchases byprotecting e-commerce orders with shipping insurance
and keeping buyers in the loop with tracking updates at
every step of the way, from purchase to delivery.

IMPLEMENT A MULTI-CARRIER STRATEGY AND BETTER TECH 			TO HELP DRIVE DOWN AND OPTIMIZE BUSINESS SPEND:
By comparing more rates across a variety of carriers and service levels, you can ensure you’re choosing themost cost-effective option for every order. If you haven’t already, 2023 is a great time to explore a multi-carrier strategy because of benefits afforded by increased ground competition, competitive pricing, and a varietyof new service levels offered by carriers. A multi-carrier solution such as Shippo can help you identify themost optimized choice when comparing cost, reliability, and service levels. In addition, streamlining labelpurchasing and other fulfillment workflows with better technologies and more automations leads to more
efficient processes, optimizing for further savings.

4THE STATE OF SHIPPING 2023
KEY FINDINGS45%
OF CONSUMERS

45% of consumers want a retailer
to let them know when an orderis delivered, and 42% said their
willingness to shop with a retailer
again if a package is lost depends
on how the merchant responds toor resolves the issue.

47%
OF CONSUMERS<50%

47% of consumers will spend a minimum amount to get free shipping,creating an opportunity to meet
expectations while increasing AOV(Average Order Value)

OF MERCHANTS

45%

While consumers flagged it as one of the top
two details they want to see on a product orcheckout page, the average shipping time iscommunicated by less than 50% of merchants, presenting a chance to differentiate
your offering and drive more sales.

OF CONSUMERS

While 45% of consumers said free
return shipping is most importantto them when purchasing an item
online, roughly ¼ said it’s the ease ofprocessing a return.

11%

ORDER’S
TOTAL
VALUE

The #1 challenge for e-commerce
merchants is the cost of shipping,and 44% spend over 11% of anorder’s total value on shipping.

About the Surveys
Merchant data is based on survey responses collected through email from 1,191 e-commerce
merchants spanning multiple retail categories, including apparel, food products, jewelry, andelectronics. Consumer data is based on responses from 1,000 US-based e-commerce shoppers
and was gatheredby a third-party survey platform. Both sets of data were collected from 		
November 10-December 14, 2022.

5

DESPITE ECONOMIC UNCERTAINTY,ONLINE SHOPPING SHOWSNO SIGNS OF SLOWING
While inflation woes and fears of a looming
recession may impact its rate of growth,
e-commerce doesn’t appear to be losing
traction in 2023. In fact, 60% of consumers
we surveyed said they do at least half their
shopping online – compared with 41% theprevious year – while 61% prefer to purchaseonline when given the choice.
While there’s no doubt consumer spending
habits are shifting and will likely continue todo so throughout the year, digital experiences are still king when it comes to where andhow today’s consumers shop.

will remain loyal to your brand and help growyour e-commerce business. In an economic
downturn, however, there is an inherent needfor merchants to be more cautious, resourceful, and flexible.
The key to recession-proofing your e-commerce business is to focus on driving operational efficiencies and optimizing costs
wherever possible throughout the fulfillment
journey, from pre- to post-purchase and beyond. At the same time, today’s e-commerce
merchants must take consumer expectations
and needs into account if they want to succeed in a world where belts are tightening.

Even in increasingly difficult times, because
consumers are still doing most of their shopping online, there are still plenty of opportunities to attract and retain customers who6

60% vs 40%
Prefer Buying Online
vs In-store

HOW OFTEN DO YOU SHOPONLINE VS IN-STORE?
28%

31%

22%

19%

I do all or almost all of
my shopping online
I do less than half ofmy shopping online

2021

I do more than half ofmy shopping online2022

I shop online about asoften as in person

25%

35%

24%

16%

I do more than half ofmy shopping online

I do less than half ofmy shopping online

I shop online about asoften as in person

IF GIVEN THE OPTION,
WHAT IS YOUR PREFERREDMETHOD FOR MAKING
PURCHASES?

I do all or almost all of
my shopping online

60%

Buying online

40%

Buying in-store

7

FULFILLMENT COSTS REMAIN
THE #1 KEY CONCERNFOR MERCHANTS
Differing from previous years, however, shifting
consumer behaviors such as decreased discretionary spend are becoming a rising cause forconcern, while the supply chain and carrier delay woes common throughout the past several
years – a result of the Covid-19 pandemic – aretaking more of a backseat.

As in previous years, the cost of shipping
remains the number one challenge for
e-commerce merchants, both looking backat business operations in 2022 and further
ahead into 2023.

In 2022, what has been the biggest
challenge for your business?
•

41% - Cost of shipping•

12% - Supply chain delays•

11% - Decreased consumer spending•

9% - Customer acquisition•

21% of merchants say supply chain disruptions are still regularly impacting shipping
operations vs 38% in 2021•

21% are still experiencing more package
delays vs 53% in 2021

While inventory will likely be easier to secure
this year, we still recommend merchants placeorders for their more popular products aheadof time to ensure there’s minimal risk of runningout, especially in uncertain times. By anticipating low inventory levels, you’ll ensure those
products are always available for the customers
looking to purchase – or re-purchase.

In 2023, what do you anticipate 		
being the biggest challenge for 		
your business?
•

36% - Cost of shipping•

20% - Decreased consumer spending•

13% - Customer acquisition•

8% - Supply chain delays

8Merchant confidence in shipping operations
remained fairly steady year-over-year – and infact fewer merchants said they are not feelingconfident about shipping operations – likely
due to a lessened impact of delivery delays on
the end consumer’s experience as supply chain
disruptions eased in 2022.
•

sell through multiple marketplaces or social andlive-selling channels in addition to an e-commerce platform. You might also consider diversifying or expanding your product offerings aswell as demand ebbs and flows across categories, or differentiating your fulfillment offerings –through a more consumer-friendly returns experience, for instance – to gain a competitive edge
in a tighter market.

46% of merchants are somewhat confident
in their current shipping operations vs 45%
in 2021•9% are not confident or somewhat not confident vs 13% in 2021•

28% are very confident vs 27% in 2021•

17% responded No opinion

Just as consumers look to spend less in 2023,
merchants are also searching for ways to drive
down their own business costs. As mentioned
above, shipping is one area where merchants
have historically faced challenges as they findways to save and optimize costs. In our latest
survey, one-third of merchants said they spend
6-10% of an order’s total value on shipping,while another one-third spend anywhere
between 11-20%.

But while confidence in operations hasremained fairly static, we can see that in 2023,
optimizing for cost savings and improving profit
margins are top of mind for merchants wary ofa possible recession and the resulting decreasein discretionary spend.

On average, 34% of merchants spend
11-20% of an order’s total value on
shipping

What keeps you up at night when it
comes to readying your business for2023?
•

23% - Looming recession•

20% - Consumers cutting out discretionary
spending•

32% spend 6-10%•

21% spend between 1-5%•

13% spend >20%

One place for e-commerce merchants to startsaving on fulfillment costs is by exploring a
multi-carrier strategy, which provides accessto diverse benefits across carriers stemmingfrom increased ground competition, competitive
pricing, and a variety of new service levels. A
multi-carrier strategy can help ensure each labelpurchase is optimized to meet your cost, service
level, and reliability concerns and needs.

With concerns around consumer spend plaguing merchants more in 2023 than the past few
years, it’s important to consider new strategies
that can help you sell more products, for instance implementing a diverse channel mix to

HOW MANY 					SHIPPING CARRIERS 			
DO YOU WORK WITH?
68%

2 to 4 carriers

30%

1 carrier2%

5+ carriers

9Multi-carrier shipping solutions such as
Shippo enable merchants to compare
rates across a vast network of carriers
Today’s e-commerce merchants may
be hindering their ability to optimize
shipping costs by limiting the numberof carriers they have access to at one
time. The best-suited carrier to delivera package can change depending on
several factors including its weight,
size, and the distance it will travel, andeach carrier will offer different service
levels and rates after these factors
are taken into consideration. Becauseof this, the only way to determine themost cost-effective option for any
given e-commerce order is to compare
all available rates across carriers inreal time.
While 68% of e-commerce merchants
are utilizing 2-4 carriers, just shy of onethird are only utilizing a single carrier
for every shipping need, and only 5%
are using five or more. This showcasesa broad opportunity for further savings– by comparing more rates across morecarriers and service levels businesses
can ensure they’re choosing the mostcost-effective option for every order. In
addition, comparing multiple carriers
and service levels allows you to choose
options that provide more optimal timein-transit reliability, which translates toa more delightful delivery experience
for the end customer and more loyalty
down the line.

Comparing carrier rates and service
levels helps e-commerce merchants
determine which options are thebest to meet their and their customer’s
needs at any given time, but you need
the right technology in place to do soin a way that’s both time and cost-effective. Multi-carrier shipping solutions
such as Shippo enable merchants tocompare rates across a vast networkof carriers in real time, and seamlessly
integrate with e-commerce platforms
to sync order data for more efficient
end-to-end fulfillment. Our top-tiersupport team also works with merchants consultatively, helping them
identify the most optimal carrier andservice level to meet their needs whencomparing price, reliability, and timein-transit requirements.
By helping optimize shipping costs
and drive process efficiencies throughout the fulfillment journey, solutions
such as Shippo enable merchants to
refocus more of their business efforts
on newly-looming challenges this year,
such as meeting a more discerning
consumers’expectations in an evolving
economic landscape.

10With worry about decreased consumer spending
growing this year, winning customers over to keepthem coming back is more crucial than ever. The
critical question today’s e-commerce merchantsshould be asking centers around how to implement
delightful and cost-effective fulfillment strategies
that drive loyalty and repeat purchases without
eating away further at profit margins.

2022

Different strokes for different folks:
The importance of delivering choiceat checkout

2021

MEETING CONSUMER EXPECTATIONSIN 2023: FULFILLMENT STRATEGIESTHAT INSPIRE CONVERSIONS & LOYALTY

The amount of consumers who refuse tocompromise on free shipping is up year-overyear, with 62% saying they won’t purchase with aretailer this year if the offering isn’t on the table,
and just 3% saying shipping costs don’t matterat all to them.

35%

3%

Prefer free shipping
but it won’t prevent
them from buying

Don’t care about
shipping costs

52%

Won’t purchase witha retailer without freeshipping

38%

Prefer free shipping
but it won’t prevent
them from buying

10%

Don’t care about
shipping costs

2020

Providing shipping options within your checkout
experience – whether via free or cheaper versus
fast shipping, or even letting a consumer decide
on a specific carrier – can help drive more purchases and inspire ongoing customer loyalty bydelivering great e-commerce experiences thatmeet a variety of consumer preferences.

62%
Won’t purchase witha retailer without freeshipping

40%

Won’t purchase witha retailer without freeshipping

41%

Prefer free shipping
but it won’t prevent
them from buying

19%

Don’t care about
shipping costs11

On the flip side, fewer merchants are offering
universal free shipping this year versus theprevious year when 22% always offered freeshipping and 18% offered free shipping mostof the time, while just 30% occasionally offered
free shipping.

Do you offer free shipping?

In order to get free shipping:•

47% will spend a minimum amount on
the purchase•

42% will join a loyalty or membershipprogram•

30% will wait to purchase the item during
a promotion

When given a choice, do you 		
prefer free or fast shipping?

33%

12%

33%

3%

Occasionally offer
free shipping
Do not offer
free shipping

Offer free shipping
more than half the time
Other

75%

Free shipping

25%

Fast shipping

19%

Always offer
free shipping

Consumers want free shipping, but with shipping costs holding strong as the top challenge
for merchants, few are able to offer it across theboard without taking a huge hit to their profit
margins. However, there is wiggle room for merchants who are willing to approach this consumer expectation creatively.
Merchants who aren’t able to provide free shipping for every order should consider offering it
as a loyalty incentive, as 42% of consumers said
they would join a loyalty or membership program in exchange for the perk. In addition, 47%
said they would spend a minimum amount on
a purchase in order to qualify for free shipping,
opening more opportunities for merchants toboth drive conversions and increase the averageorder value with the offering provided only after
a certain threshold is met.

Do more customers opt for
faster or lower cost/freeshipping options?

85%

Free or lower
cost shipping

15%

Faster shipping12

Today’s merchants have a good understanding of consumer expectations when it comesto fulfillment, as merchants and customers are largely aligned on how shipping speed
factors into an e-commerce buying decision, as well as the importance of striking theright preferential balance between lower cost versus faster shipping. In fact, the needfor speed has dropped from our previous year’s consumer survey, with just 10% desiring
same or next-day delivery in 2022 versus 18% in 2021.

What is your preferred shipping
speed when you buy item(s) online?

What is the most commonlypurchased shipping service level?

2022

2023

52%

I can wait 2-3 days

38%

10%

2021

I can wait 2-3 days

34%

I can wait 4-7 days

24%

27%

5%

We don’t offer options

I can wait 4-7 days

48%

44%

2 to 3-day service

I want same day ornext day delivery

18%

I want same day ornext day delivery

4 to 7-day service
Same or next-day
delivery•

1/3 of consumers have a personal preference for which carrier delivers an order•

74% of merchants don’t offer any carrier
choice at checkout

Beyond shipping costs, having a diverse carrier
mix allows you to provide more delivery options
at checkout. Different customers may have varying preferences on the service levels or carriers
you have to offer. For example, some customers
may want to receive their packages on a Sunday
or want their international packages delivered acertain way. Giving them more of a say in thematter ensures they have a positive post-purchase experience and are more inclined to shopwith you again.

13

Communicating throughout 		the fulfillment journey, from 		
pre to post-purchase
No matter which shipping services you have on
offer, upfront and clear communication throughout your e-commerce fulfillment journey canhelp drive more confident purchases, save timeand money on customer support activities, andinspire more trust in – and loyalty to – your brand.
Before deciding whether to commit to a purchase, consumers are hungry for information
about what they can expect from a retailer’s fulfillment experience.

What information is most importantto see on a retailer’s website?
•#1 Shipping cost•

#2 Avg shipping time•

#3 When the item will ship•

#4 Expected delivery date

When do you want a retailer to communicate with you about your order?
•

68% want a retailer to communicate withthem when a purchase has shipped•

66% want an order purchase confirmation•

59% want to receive shipping updates•

45% want a retailer to communicate withthem upon delivery

These touchpoints offer several more opportunities for merchants to connect with customers
even after the initial purchase, and yet – as ourmerchant survey results show – one oft-missed
opportunity is to provide branded tracking
information for each touchpoint. Only 18% of
survey respondents said their tracking emails
lead customers to a branded page with delivery
updates, while the majority link directly to acarrier’s website.

How do you provide customers
with tracking information?

While just 73% of merchants surveyed areproviding information about the cost of shipping upfront, less than half are letting potential
customers know the average shipping time,
expected delivery date, and item ship date on
their product or checkout pages.

What information is provided on the
product and/or checkout page?
•

73% Shipping cost•

49% Avg shipping time•

33% Expected delivery date•

33% When the item will ship

These discrepancies between what consumers
want and what e-commerce merchants currently provide highlight a key opportunity forbetter alignment. This year, merchants should
work to include expected shipment and delivery
details upfront on product or checkout pages,
inspiring more confidence in purchases thatlead to both more revenue and higher potential
for repeat customers.
Consumers also want to be notified of a package’s journey after they commit to a purchase
all the way through to delivery:

67%

Customers receive an
email with a link to thecarrier’s tracking page18%

Customers receive an
email with a link to abranded tracking page

15%
Other

By providing branded tracking pages, you cantake an additional opportunity to stay top of mind
by extending their brand experience throughout
the entire e-commerce journey instead of directing customers away to a third party.
Because 39% of customers track their online
orders once per day, branded tracking pages
offer an excellent chance to re-engage withcustomers who’ve made a purchase with you.
For instance, enabling branded tracking in
Shippo allows merchants to highlight theirunique brands, recommend specific products,
and promote repeat store visits and purchaseswith every order tracking update.

14

Delivering convenience and peace of mind
inspires loyalty, trust, and confidence
When it comes to packages gone missing, a consumer’s delivery experience – and the way
a merchant responds to mishaps – can make or break the relationship. 19% of consumers
said they would stop shopping with a retailer after experiencing a delivery issue wherea package is lost, while 42% said their willingness to shop with a retailer again in suchcircumstances depends on how the merchant responds to or resolves the issue.

If given the option, would you
add shipping insurance to yourpurchase order at checkout?

27%

22%

50%

16%

26%

25%

21%

13%

No

Yes, always

Yes, but only of themerchant covers the costYes, but only for purchases
over certain amountIn-transit damage and lost packages are just partof e-commerce, so adding insurance to orders isa great way for e-commerce merchants to give
their customers that peace of mind, and that
positive resolution should something happen.
•

Do you offer shipping insurance
to customers?

Half of consumers say the merchant should
cover the cost of shipping insurance.

Do not currently offer
shipping insurance andhave no plans to start

Offers shipping insurance for every order

Offers shipping insurance for orders over acertain threshold

Do not currently offer
shipping insurance
but have plans to startin 2023

But there’s a discrepancy here – while 50% ofconsumers say the merchant should cover thecost of shipping insurance, showing the desire
for package protection and the expectationthat the merchant should cover the cost. However, half of the merchants we surveyed do notcurrently offer shipping insurance and have noplans to start. This highlights an opportunity formerchants who want to provide that peace ofmind to their customers to differentiate their offering and stand out from the pack.

15

Which of the following is mostimportant when it comes to returning
an item you bought online?

45%

24%

18%

9%

3%

1%

Free return
shipping

A longer returns
time-frame

The ease ofprocessing a return

I don’t careabout returns

How quickly I
get my refund

I care aboutsomething else

How do you handle return shipping?

51%

29%

5%

3%

The customer
contacts ourteam to request
a return label

We include a returnlabel in every box

Do not offer
e-commerce
returns

The customer must
return the item in-store

12%
Other

According to Shippo’s 2022 E-commerce Returns & Exchanges Report, 84% of consumers
read a return policy before making a purchaseonline, and 91% of consumers say that the overall
ease of their returns experience impacts their
willingness to shop with a retailer again. While
free returns may take the cake for consumers –and many smaller merchants are willing to take on
the burden of paying for e-commerce returns tomaintain positive customer relationships – there’s
no doubt this often comes at a high cost, especially when you consider consumers returned$816 billion worth of merchandise in 2022.
While universal free returns are nice in theory, inpractice – much like with free shipping – it’s hard
for a small e-commerce business to justify eating the cost. The good news is that consumers
are willing to remain loyal to brands that offer amore convenient returns experience as well – it all
depends on how your business crafts your policy
and manages the end-to-end process.
Over half of e-commerce merchants we surveyed
said they require a customer to contact support
in order to initiate a return, and just under onethird don’t accept e-commerce returns at all. Just
5% include a return shipping label in every box,
offering a huge opportunity for merchants to differentiate their returns experience and incentivize
more conversions with a more attractive, consumer-friendly policy.
As with the cost of shipping, merchants will needto get more creative this year with how they anticipate and accept returns to minimize the risk
to their business, whether through the pre-purchase experience (providing more detailed
information on product pages, or creating FAQ
sections to address common complaints, misconceptions, and points of feedback), or the returns experience itself (incentivizing an exchange
in lieu of a return by offering extra credit for later
use in your store, for example).

16

CONCLUSION
This year is poised to challenge retailers of all sizes to revisit theire-commerce business strategies as economic factors shift and		
consumer behaviors change accordingly.
As we move further into 2023, it’s crucial that e-commerce merchants feelequipped to meet today’s consumer expectations, while simultaneously
making business decisions that help them save on fulfillment costs in a morefrugal and competitive environment. Savings strategies that jeopardize thecustomer’s experience can end up costing retailers more in the end, while
those who strike the right balance will come out on top.

17

ABOUT SHIPPO
E-commerce is complex. Shipping doesn’t have to be. Shippo helps you grow yourbusiness by integrating with your workflows, providing experienced support, andconnecting you with easy access to the best rates at the most carriers.

goshippo.com

sales@goshippo.com