Customer acquisition costs are at an all-time high. While the reasons for this uptick may be different per product category, there are a few key factors impacting the broader retail industry:
1. Proliferation of channels
2. Regulatory iOS changes and privacy concerns
3. Increased competition
4. Post-pandemic inflation
In a time of rising customer acquisition costs, we’ve seen brands experiment with creative tactics to increase conversions and sales on their Shopify-enabled sites, such as leveraging customer testimonials, implementing virtual shopping experiences, and tapping into psychology tricks.
But even these innovative approaches aren’t enough on their own. Shipping costs and speed are among the five vital components that affect Shopify conversions. In fact, more than 90% of U.S. online consumers now expect free 2- to 3-day shipping.
The secret to offsetting customer acquisition costs and increasing Shopify sales is simple: offer ultra-fast shipping.
What is customer acquisition cost?
Without getting too in the weeds, let’s take a look at a simple formula that may (or may not) be familiar:
Customer Acquisition Cost (CAC) = total marketing costs / total # of new customers acquired
This includes the cost of producing, storing, and shipping items that a customer purchases. Having a positive customer acquisition cost is often viewed as the only way for your business to be successful. Other factors can also have a direct impact on your CAC, including:
• Warehousing
• Fulfillment
• Labor
Why are customer acquisition costs increasing?
Customer acquisition costs are now shockingly 60% higher for B2C brands than they were just six years ago. We can attribute this spike to a few key reasons:
1. Proliferation of channels: Customer preferences have evolved to include video, chat, text, and social, which means your strategies must now implement a strategic omnichannel approach to meet customers at every touchpoint.
2. iOS privacy changes: Digital and social users want more control and transparency over how your brand uses their data across channels.
3. Increased competition: Digitalization has lessened barriers to entry for new brands. What once required large sums of capital investments can be done using existing solutions and software. More brands in the space means more money being spent on trying to win over customers from your competitors.
4. Post-pandemic inflation: With prices skyrocketing across all industries due to inflation, a significant amount of consumers (53% to be exact) are reducing their spend and are more apprehensive about buying outside their means.
Tackle customer acquisition costs head-on with Shopify Fast Tags
Lower your customer acquisition costs and increase Shopify sales with a fast delivery promise. Shopify Fast Tags are fast delivery badges enabled on your Shopify site’s product details pages. Designed to enhance the shopper’s experience and increase sales for your business, these dynamic service level agreements (SLAs) allow your customers the option to receive orders as quickly as 1, 2, or 3 calendar days.
A recent analysis of our merchants reveals that consumers are more likely to place an order from your Shopify site when fast delivery is available. In fact, Deliverr merchants across popular categories see an average sales lift of 34% when Shopify Fast Tags are enabled versus not:
• Home: +66%
• Food: +63%
• Apparel: +44%
• Beauty/ personal care: +40%
• Baby: +23%
What are other benefits of Fast Tags in addition to driving conversions?
Build brand credibility and trust through reliable delivery
When providers fail to meet SLAs for your business, your customers’ delivery expectations are also missed. Shopify Fast Tags allow you to exceed consumers’ expectations with consistent deliveries that arrive by the promised delivery date. When using the 3-day Fast Tag option (in calendar days), we currently promise a 93% on-time delivery rate so you can build credibility and trust with your customers.
Reach more customers with high coverage availability
Consumers expect a fast and easy delivery experience no matter where they live. Shopify Fast Tags offer 1, 2, and 3-day delivery options (in calendar days) to a large majority of the U.S. Reach more customers and secure more sales with high shipping coverage availability:
• 1-day: 22% of U.S. population reached
• 2-day: 56% of U.S. population reached
• 3-day: 82% of U.S. population reached
With Shopify Fast Tags, you can also set an order import delay*. While we usually recommend that you set the delay to zero so Deliverr can import and fulfill orders as soon as possible, there are certain instances where an order delay might be useful (i.e., upsell opportunities and fraud verification).
*It’s important to note that if you plan to show promises on your Shopify page via Fast Tags, the delay will push back the SLA on those badges around cutoff time (2pm Eastern or 11am Pacific). That is, suppose you have customer looking at your page at 10:50am PT and you have an ingestion delay set up for 15 minutes, we will show a 3-Day Delivery badge instead of the 2-Day Delivery to accommodate for the late order receiving. This way, the shopper will have the correct expectation of the order arrival but they will see a slower transit time.
Enjoy flexible options based on your specific business needs
Choose from two different kinds of Fast Tags to enable on your Shopify site:
1. Cart Minimums
Cart Minimum Fast Tags encourage customers to increase their average order value (AOV) by offering free shipping when their cart reaches a certain dollar amount. You can also set a price for customers to pay for fast shipping regardless of their cart size.
See how Ani Energy leveraged Cart Minimum Fast Tags to boost sales by 19%
2. Paid Fast Tags
This feature allows you, the merchant, to pass 100% of the shipping cost to your buyer. This gives them the flexibility to decide if they want to pay for fast shipping or not. This option is typically more feasible for merchants who are looking to save on shipping costs.
PRO TIP: you can turn off Fast Tags at any time for low-value products or unpopular listings.
How do Shopify Fast Tags work?
Shopify Fast Tags are automatically generated on your product listings based on a few key factors:
• Nearest on-hand inventory: if your inventory is located in a fulfillment center located at one of our key origin hubs (Dallas Fort Worth, Atlanta, Newark, Los Angeles, Chicago, or San Francisco).
• Transit time reliability: How well carriers are performing across SLAs. We determine the likelihood of a carrier delivering a package on time from city A to city B within the designated time frame. If the likelihood exceeds 98%, then we entrust that carrier to deliver the order.
• Outbound cost estimate: How much it will cost to fulfill the order.
PRO TIP: Maximize Shopify Fast Tag coverage by ensuring your inventory units are in-stock in all five key areas of the Deliverr fulfillment network (the Midwest, Northeast, Southeast, Texas, and the West Coast) and creating regular forwarding inbounds at our cross docks. Additionally, replenish inventory before it depletes using the ‘popular SKUs to replenish’ feature within the Merchant Dashboard in your Seller Portal account.
Increase your Shopify sales by 34%
The next time you’re struggling to lower your customer acquisition costs, consider enhancing your customer experience with a fast shipping promise via Shopify Fast Tags. Learn more about Shopify Fast Tags, or talk to a Deliverr expert to see how you can start to grow your Shopify sales today.
Check out additional Shopify content including Shopify Markets and tips to stand out from the competition with your listings:
• 11 Shopify Website Themes for Your DTC Brand
• Connect With Customers on a Worldwide Scale With Shopify Markets
• What Your Shopify Store Needs to Compete With Big Marketplaces
