Mar 11, 2021 | newsroom
“Aaron Rubin has been fending off venture capital for his company, ShipHero, since 2015. ShipHero is an e-commerce software provider and runs nine warehouses so shippers can outsource order packing and shipping. In 2015, the company was only making a software-as-a-service play when competitor Stitch Labs raised a $15 million Series B round and the VCs came knocking.”
Oct 13, 2020 | Blog
What is Revenue per Visit?
And, how our best warehouse management software can help you fulfill all those new orders.
The trinity to e-commerce digital marketing excellence lies in three metrics: Average Order Value (AOV), Conversion Rate (CR), and Revenue per Visit (RPV). In this series, we will introduce how these metrics are gathered, how they impact your business, and how to improve each.
In this first part, we will discuss Revenue per Visit.
Revenue per Visit (RPV) is calculated as Total Revenue ($) divided by the Number of Visitors (#)
RPV is also calculated as Average Order Value ($) multiplied by Conversion Rate (%)
Revenue per Visitor and Your Business
Revenue per Visitor basically translates to: how much money does my business make for every person that visits my website.
RPV also allows you to gauge your new visitor acquisition efforts: are you attracting the right kind of visitor?
Notice it says visitor, not visit. The RPV metric does not use the total number of visits to your site in its calculations; rather, it counts only unique visitors, with each individual person counting as one visitor.
Revenue per Visitor (RPV) as a metric carries an important distinction from Average Order Value (AOV) and Conversion Rate (CR) — discussed in our AOV and CR blogs. WIth AOV and CR metrics, you are able to set targets, a desired number or percentage to achieve. For RPV, the importance lies in how the metric is trending, whether upwards or downwards.
- Positively-trending RPV — an upwards trend for RPV means that your website is attracting a larger amount of high-quality or qualified customers i.e., customers that are likely to convert upon visiting your site.
- Negatively-trending RPV — a downwards trend for RPV means that your website may be attracting more visitors, but these visitors are unqualified or less likely to convert.
RPV allows you to measure and determine your budget for spending on user acquisition, such as your advertising budget.
- Positively-trending RPV signals that your user acquisition strategy is working and the dollars you spend are paying off.
- Negatively-trending RPV signals a disproportionate growth of unqualified customers to your site, or possibly it can indicate a problem in your sales funnel, such as too many form-fields or possibly performance issues on your website landing page.
Calculating RPV
Let’s look at how to calculate RPV, and show the implications it can make for your business. Consider the following scenario:
Example 1
- Company A’s website has a total monthly revenue of $20,000 and 10,000 visitors; RPV = $2 per visitor
- Company B’s website has a total monthly revenue of $20,000 and 5,000 visitors; RPV = $4 per visitor
Example 2
- Company A’s website sells couches, so they have an AOV of $2,000 and a conversion rate of 1%; RPV = $2 per visitor
- Company B’s website sells clothing, so they have an AOV of $50 and a conversion rate of 8%; RPV = $4 per visitor
In both examples, it is apparent that Company B is attracting higher-quality and more qualified customers than Company A. Company B is also spending half of what Company A does in customer acquisition.
So, improving RPV could be the competitive advantage you need to succeed. Ready to start climbing?
Top 3 Proven Ways to Increase RPV
If you want to start on the path towards positively increasing your PRV, you need to start attracting the right customers to your site and providing them with the best experience. Here are the Top 3 Proven ways to do just that:
1. Attract the Right Customers
Attracting the right customer to your website is the best way to improve your RPV. Now, who are the right customers?
The right customers are those specific website visitors that are more likely to convert and hopefully contribute towards a higher Average Order Value (AOV). Oftentimes these are referred to as ‘qualified’ customers. These customers also have growth potential for their lifetime value — calculating Customer Lifetime Value is a great way to understand who the right customers are.
In analyzing your customer base of those that successfully converted, what common factors did they share if any? Any demographic or location similarities? Did they look at the same products? Did they check your ‘About Us’ page or Company Mission statement before converting?
Questions like these are what Data Analytics departments strive to answer, and it is the basis for your ecommerce business to take a data-driven and targeted approach towards marketing your business and finding the high-value customers or customers with a potentially large lifetime value. You should focus on retaining valuable customers, and getting rid of the rest.
After you identify and attract the right customers to your website, what’s next?
2. Sell, Sell, Sell
As discussed in our past blog about AOV, providing product recommendations, and upselling or cross-selling complementary products along the customer journey is an effective method to increase AOV.
To recap, the strategies to increase AOV are:
Product recommendations
Set order minimums
Increase prices
Upselling
Cross-selling
Urgency and Scarcity
Reward Programs
3. Offer the Best Experience
As discussed in our blog about Conversion Rates (CR), you must think about your customer journey from landing page to purchase confirmation. Each step in this process needs to be streamlined to reduce friction and increase your conversion rates.
To recap, the strategies to increase CR are:
Adding pop-ups
Simplify the first step
Chat boxes
Reduce form fields
Eliminate noise and distractions
Retargeting and remarketing
Conclusion
The above three methods are the top three proven ways to increase your company’s RPV.
Identify and market to your high-value customers
Sell more product per transaction and Improve the average order value (AOV)
Optimize the customer experience and improve conversion rate (CR)
This is the first part of our 3-part blog series covering essential e-commerce metrics: RPV, AOV, and CR. We hope you have a better grasp of how to measure the success of your e-commerce business. We’ll cover AOV and CR in future posts.
The beauty of your ecommerce company is that it can be easily measured and optimized; all you have to know is what to look for and how to turn the dials. Check back here to learn more about other metrics and tools of the trade.
And, if your warehouse is getting a surge of volume, we can help. We believe we have the best warehouse management software on the market. It will make your warehouse run like a finely-tuned Swiss watch, with great efficiency and minimal mistakes.
Oct 8, 2020 | Blog
You are an eco-conscious consumer. Maybe you turn off and unplug your lights, or you try to reduce water consumption. You may buy second-hand products, or perhaps you are well-studied on the long, long list of rules for recycling.
Maybe you carpool or ride a bike, or you have a garden and shop for organic produce. You do all the eco-friendly things that would make Al Gore blush; but now consider this inconvenient truth: each and every time a package arrives on your doorstep within 48 hours of ordering, also known as same-day delivery or two-day delivery, the environmental costs of such an expedient service are wasting all of your carbon-diminishing habits.
“The time in transit has a direct relationship to the environmental impact. I don’t think the average consumer understands the environmental impact of having something tomorrow vs. two days from now. The more time you give me, the more efficient I can be.” That is a quote from Patrick Browne, director of global sustainability at UPS.
The advent and booming popularity of same-day and two-day delivery have forced delivery and fulfillment companies to take more inefficient and carbon-intensive routes, passing both the financial and environmental costs on to the consumers. Yes, the shipping may appear to be ‘free’, but that is because notable e-commerce giants are fronting the logistics costs for competitive reasons while doing all they can to disguise the true costs, the harm to our environment. Cue Captain Planet.
Let’s delve into the environmental impacts of the services provided by these e-commerce giants, and then examine carbon-friendly solutions with promises of the exact same delivery times.
The Cost of Consumer Expectations
You wake up in a cold sweat. It is your dear mother’s birthday tomorrow, and you have nothing, nada, zip, zilch, diddly-squat… just like last year. You’re out of excuses, and more importantly, out of time. What is a desperate son or daughter to do? Well have no fear; up in the sky, look! It’s a bird, it’s a plane, no! It’s a delivery drone coming to your rescue. Ah, the future.
The trend of faster delivery times, from click to door, has always been a point of competition amongst e-commerce companies, with a 2019 study conducted by Rakuten Intelligence showing that delivery times have been steadily decreasing the previous two years from 5.2 days to 4.3 days. And today, over 50% of shoppers between 18-35 years old have reported that they expect same-day shipping and will opt for speed of delivery; however, 90% of consumers reported that they would opt for free delivery over speedy delivery.
So, are you willing to trade speed for the eco-friendly, green alternative? If so, you are in the vast minority. A study by Forbes in 2019 showed that 95.6% of consumers were not willing to make the trade-off of speed for package consolidation, and 54% of consumers mention ‘speed of delivery’ as their top delivery consideration when shopping.
Our expectations as consumers are trending towards not only the same day but within 1-3 hours for some products. The promise of e-commerce was economies of scale, allowing companies to synergistically ship orders to your door in a more environmentally-friendly way when compared to each consumer driving to the store in their own cars. These initial environmental benefits are now at risk as shipping gets artificially pushed to be faster and faster.
Environmental Costs of Shipping
You may be thinking, how bad is bad? Well, in the worst-case scenario, a package delivered the same-day could result in carbon emissions up to 35 times more than if the delivery had been done efficiently. These abhorrent emission numbers can stem from carriers relying heavily on air freight, which values speed, instead of the lower carbon option of ground freight.
Transporting 2 tons of freight over 500 miles with a truck creates just 12% of the carbon emissions used to do the same with a plane. That’s right, give a trucker a hug. The air freight option is much more expensive and carbon-intensive than ground freight and is used solely in the case where goods need to be shipped long distances, quickly. This, of course, requires a lot of energy and fossil fuel.
Not only does air freight emit over 8 times the carbon, but the effects of these emissions are also 2 to 3 times more harmful compared to carbon emissions from ground transportation because airplanes release the carbon at high altitudes into the atmosphere, where they contribute much more to the greenhouse effect.
While larger delivery companies are able to combat a portion of these added carbon emissions by purchasing more carbon-neutral vehicles or packaging, the large majority of companies that are struggling to compete, such as meal kit delivery or razor subscription box companies, just cannot afford to be environmentally-friendly, and unfortunately, it will be all of us that will pay the price.
Solutions for Low Carbon Delivery
“But it’s my mom’s birthday tomorrow and I need to get something, like, today!”, you may be saying to yourself. Or, “Shouldn’t that be the company’s job to be environmentally friendly?” Well, absolutely. Here are some ways that companies are meeting consumer expectations for quick service, all while reducing the added carbon footprint.
Implementing Machine Learning
One of the major trends in 2020 for delivery and fulfillment will certainly be the injection of Artificial Intelligence (AI) and Machine Learning into the supply chain. According to McKinsey & Company, businesses can expect to gain between $1.3 trillion to $2 trillion a year in economic value by using AI in their supply chains.
These computing solutions have limitless potential to transform the supply chain and logistics network. The main impact of these solutions can be found in the following areas:
- Predictive demand: tuning Machine Learning models to predict and forecast demand, using order metrics, product data, and real-time KPIs, will allow companies to shorten shipping distances, lower delivery time, and eliminate the need for carbon-intensive air freight in some circumstances.
- Smart Warehouses: Smart warehouses are able to simplify and automate the tedious tasks of picking, packing, and shipping, thereby creating a greener and more cost-efficient system.
- Route Optimization: Route planning using real-time location data allows companies to optimize ground routes with various stops, allowing them to fill ground vehicles more efficiently and aim to reduce fuel consumption.
Delivery and smart fulfillment companies like ShipHero are realizing the potential of Artificial Intelligence and Machine Learning to solve the complex problems presented by logistics and supply chain operations; and when configured correctly, Machine Learning has the ability to help key business leaders get the real-time information they need to make smart decisions.
Considering the present-day state of shipping and delivery during the COVID -19 pandemic, with shipping carriers at capacity and consumer demands at all times high, companies must rise to meet this watershed moment where e-commerce has seen 5 years of growth… in just four months. So being able to combine these new technologies, a wide fulfillment network, and transportation optimization will present a radical new shift for e-commerce logistics.
Reducing Waste
Single-use and disposable materials are terrible for our environment, filling up landfills, waterways, and the bellies of poor turtles. Fulfillment companies like ShipHero are switching to recyclable packaging, thereby eliminating single-use materials, and using sustainably sourced paper and recyclable packaging.
Waste can also be created by overproduction, unnecessary inventory, and unnecessary transportation, all of which can be addressed and reduced through a smart fulfillment platform set with a goal to lower and optimize carbon emissions. So how can companies measure their carbon emissions?
Transparent Reporting and KPIs: A Competitive Advantage
Almost half (46%) of surveyed global consumers said they would be willing to forgo a brand name in order to buy environmentally friendly products. In this information era ripe with cancel culture, brands should be sure to show-not-tell their customers how they are being eco-conscious, lest join the expanding list of canceled brands.
Over 73% of global consumers say they would definitely change habits to reduce environmental impact and over half of shoppers choose brands based on sustainability; so, brands that are notably eco-friendly like Lush Cosmetics, Patagonia, and TOMS make sure to advertise just how eco-friendly they are. In order to meet the expectations for this majority of consumers, companies must be able to demonstrate this competitive advantage through transparent reporting and Key Performance Indicators (KPIs).
When warehousing, distribution, and fulfillment activities are all performed by a singular entity, carbon emissions and footprint are much easier to monitor, optimize, and report. These are brand new reporting capabilities that could not have been made under standard fulfillment methodologies, and now these capabilities can be developed even further. Taking the approach to continually build out more eco-friendly reporting services at a steady pace, ShipHero can make a difference now, all while continuing to evolve them over time; and they even envision a future service where carbon savings are published and available for every shipment with a simple scan of a QR code included on the shipping label. What’s important to note is that ShipHero does all of this while maintaining the exact same delivery times (between 3-5 days) that you and your consumers have come to expect.
Then, these carbon emission optimization metrics are passed onto you, so that you can communicate them to your loyal, eco-aware customer base.
Oct 7, 2020 | Blog, Fulfillment
Ah yes.
The instant dopamine rush of seeing your name on that big, brown package sitting on your doorstep. You pick up the box and scurry inside, grab your trusty pair of scissors, open the box and… it’s not what you ordered. Dang.
ShipHero – We Have a Full Range of Ecommerce Fulfillment Services to Handle Your Returns and Much More
Is there a bigger frustration in the shopping experience than having to return an item? Long lines, obscure policies, unhelpful employees, and where the heck did you put that receipt? And that’s just pre-COVID, back when you could go to the store and meet the perpetrators face-to-face.
And what’s more, in the age of rising e-commerce sales where shopping, browsing and just about everything is done online, approximately 30% of orders are returned, which translates to 3 in every ten packages you can expect to return. This figure rises to a whopping 50% for clothing retail. Not only that, those percentages only account for when the shopper purchases items for themselves, not as a gift. Oh, and speaking of…
Black Friday Cyber Monday shopping is right around the corner, with most shoppers reporting to start shopping in October. 2020’s holiday season will smash ecommerce delivery records and with delivery companies like UPS, USPS and FedEx already strained or at capacity, let’s talk about the returns aftermath.
Online Returns
National Returns Day is January 2nd, so don’t forget to get your mailperson something nice.
In case you weren’t aware, National Returns Day is known as the day in which American shoppers return the highest amount of packages back to retailers. In fact, Reuters stated that “UPS estimated that it processed 1.9 million Christmas returns for U.S. retailers on National Returns Day 2020 (January 2, 2020), equating to a 26% year-over-year increase.”
When compared to purchases made in a traditional brick-and-mortar retail location, purchases made online are returned three times more frequently. The major cause of online returns stems from a disconnect between what is advertised online versus what is actually shipped to the consumer, and the main culprit seems to be issues with how the product is portrayed, such as low-quality images or incorrect size and style comparisons for clothing. In fact, discrepancies in sizing with each manufacturer are responsible for more than half of all customers that are returning clothing items due to a wrong size or fit.
Considering that e-commerce sales revenue is growing 15 percent year over year, and the product return rate sits around 30 percent of sales, that leads to about 4 billion additional units that need to be delivered and shipped. Considering the effects of the pandemic, with delivery companies already at capacity and demand only increasing, you would assume that this has an impact on what companies accept for returns. But, you can just return them for free, can’t you?
The Cost of Free Returns
We as consumers have come to expect relatively liberal return policies from our stores. With Amazon Free Returns, Walmart Free Returns, Nordstrom, and L.L. Bean all having notoriously generous return policies, almost 32% of shoppers in the US reported that they would forego an online purchase if there wasn’t an offer of free returns.
The process of preparing returned products to be sold further diminishes profit margins, and the term ‘Free Return’ comes with a lot of hidden costs, either tacked onto the price of goods by way of margins, or fronted by the retailer for competitive reasons.
In order to successfully reduce the adverse effects that returns have on your e-commerce business without taking the margins hit of ‘Free Returns’, you need to know why, when, and how customers return items, especially during these uncertain times. This is where reverse logistics supply chain capabilities are able to help your business maintain inventory, reduce operational costs, and provide your customers with a phenomenal return experience. So, what is reverse logistics?
Reverse Logistics: The Solution to Returns
Reverse logistics supply chain is defined as the operations involved in the moving of product from the end consumer back to the seller or manufacturer for the purpose of satisfying returns, salvaging value, or recycling and disposal.
According to a 2020 report by Tech HQ, “The global reverse logistics market is forecast to hit US$603.90 billion by 2025, and businesses can save millions of dollars if reverse logistics management is implemented and done properly. With the expansion of the e-commerce industry emerging in parallel with the closure of many brick-and-mortar stores, retailers can expect to see a hike in return goods once the reopening of the sector begins.”
While brick-and-mortar retailers have the ability to leverage their COVID-19 solutions of contactless check-out and curbside pick-up and dropoff to handle the onslaught of returns, those without a physical location must handle this through delivery and fulfillment companies.
If you are an online retailer, this should signal to you that solving returns will absolutely be an essential component of your business if you want to properly maintain inventory, retain revenue, avoid exorbitant operating expenses, increase customer loyalty, AND increase your company’s sustainability and eco-friendliness.
The answer seems to boil down to a data-driven approach fueled by big data, and in some cases, blockchain.
Partnering with companies like Happy Returns and Returnly will allow e-commerce businesses to turn logistical challenges into business opportunities, as well as transform return policies and processes into a holistic returns strategy. This translates to understanding all aspects like why, how, and when customers make returns, and using a data-driven approach to optimize the return process.
Smart fulfillment companies like ShipHero leverage their partnerships with companies like Happy Returns as well as their expansive big data collection and analysis capabilities in order to forecast returns and plan accordingly, ensuring that your customers are happy, your margins are intact, and your company is sustainable. Check out ShipHero’s full line of ecommerce fulfillment services that can handle your company’s fulfillment, returns, and much more.
Oct 23, 2019 | Blog, Case Study
We realized there was no way we’d be able to continue filling orders one year down the road at the rate we were growing. We were excited by the growth, but we needed a software solution like ShipHero.
— Jake Rajsky, Vice President, American Tall
Challenges
Scaling fulfillment with rapid business growth
Finding high-quality, well-tailored men’s clothing online can be a tall order—especially for men who are 6’3” or taller. So there was high demand when American Tall, a men’s apparel brand, launched their direct-to-consumer ecommerce site.
At first, the small family business relished picking and packing each order by hand. They even enclosed personalized thank- you cards with each order. But as their business grew, keeping up with order fulfillment became a challenge.
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