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Navigating Rising CAC: Where Shipping Optimization Gives an Edge

E-commerce has become the dominant force in the retail world over the last decade. With the onset of the COVID-19 pandemic, online shopping has surged even more quickly, with customers flocking to e-commerce sites for everything from groceries to luxury items and for online Retailers, driving down customer acquisition costs (CAC). However, in the last year, as more brands move online, the competition for customer attention and sales has become increasingly intense. Struggles include rising digital advertising costs and other factors like the impact of Apple's iOS 14 update on Facebook targeting. These challenges have only been compounded by the hangover effect from the Covid e-commerce sales bump. This has now led to rising customer acquisition costs (CAC), making it increasingly difficult for e-commerce brands to maintain growth while also protecting margins. As a result, brands need to find innovative ways to optimize their marketing investments and reduce customer acquisition costs. In this article, we will discuss strategies that businesses can use to navigate rising CAC and the importance of optimizing shipping processes to give an edge.

Improving Customer Experience

One of the most important things e-commerce businesses can do to reduce CAC is to streamline the customer journey; the path a customer takes from initial awareness of a brand or product to purchase and post-purchase experience. By automating decision-making processes, businesses can make the customer journey more efficient and increase the chances of a sale. For example, chatbots and virtual assistants can help answer customer questions (ie., WISMO ‘where is my order?’) and provide personalized recommendations. Additionally, predictive analytics can be used to personalize product recommendations and promotions, including shipping promotions, to specific customers, making the shopping experience more tailored and increasing the chances of a sale.

Reducing friction in the sales process is another key way to reduce CAC. Friction refers to any obstacles that customers encounter during the purchase process, which can cause them to abandon their cart and seek out a competitor instead. One significant source of friction in the e-commerce experience is shipping costs and delivery times. According to a survey by Statista, 63% of customers have abandoned their cart because the shipping cost was too high. This makes it clear that shipping is a key differentiator for e-commerce brands.

How Fenix Helps

One way that e-commerce brands can reduce friction in the sales process is by providing estimated delivery dates (EDD) early in the customer journey. Customers often abandon their carts because they are unsure of when their order will arrive. By providing EDDs upfront, on Category and Product Detail pages, businesses can remove this uncertainty and increase the likelihood of a sale. FenixCommerce provides real-time shipping information and dynamic EDD, allowing businesses to send automated cart abandonment notifications that include a personalized delivery date for that specific cart. By providing real-time shipping information and predictions, brands can reduce customer uncertainty and reduce abandoned carts. 

FenixCommerce uses machine learning algorithms to predict delivery times accurately, taking into account factors such as pick to pack times, warehouse operations, inventory location, weather, traffic, and carrier capacity. This not only increases customer satisfaction but also reduces shipping cost, by optimizing the use of carriers and reducing the likelihood of expedited or emergency shipping.

Using More Data, More Often

Using data-driven marketing to acquire customers more efficiently is another strategy that businesses can use to reduce CAC. Data-driven marketing involves using customer data to create targeted marketing campaigns that are more likely to resonate with specific segments of customers. By analyzing customer behavior and preferences, businesses can create personalized marketing campaigns that increase the chances of a sale. For example, a customer who has purchased a specific product in the past might be more likely to respond to an email campaign promoting related products or accessories.

Shipping Automation is Key

Shipping optimization is a key part of data-driven marketing, as it allows businesses to use real-time data to make decisions about shipping rates and delivery times. In addition to reducing friction, optimizing shipping processes with FenixCommerce can help businesses stretch their digital advertising dollars even further. By reducing the likelihood of abandoned carts, businesses can increase their conversion rates without having to spend more on advertising. FenixCommerce's machine learning algorithms automate carrier selection decisions that also predict shipping times accurately, taking into account factors such as weather and carrier capacity, reducing the need for expedited or emergency shipping and the associated costs. This type of data-driven optimization can reduce CAC by ensuring that businesses are only spending money on marketing campaigns that are likely to convert into sales.

In conclusion, rising customer acquisition costs are a significant challenge for e-commerce brands. However, by optimizing the customer journey, reducing friction in the sales process, and using data-driven marketing, businesses can reduce their marketing investments and still maintain growth. Shipping optimization, specifically with FenixCommerce's estimated delivery dates and automated cart abandonment notifications, can be a key differentiator for e-commerce brands in today's market. By reducing customer uncertainty and optimizing shipping processes, businesses can increase conversion rates and stretch their digital advertising dollars even further.

Akhilesh Srivastava

Author: Akhilesh Srivastava
Founder and CEO of FenixCommerce

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