How outsourcing your logistics can increase your conversion rate by 24%

The conversion rate in e-commerce is a simple yet powerful metric, representing the percentage of website visitors that convert into actual buyers. 

In our current digital world, competition in e-commerce is high, and customer expectations even higher. Conversion rate optimization has become a hot topic and many brands are starting to find new innovative ways to help increase their conversion rates. 

Hive has teamed up with Karmen and Alma, two major players in the French e-commerce industry, to conduct a thorough analysis of e-commerce KPIs in the French market. While the data is based on French brands, the results are relevant to any brand around the world. 

This study was completed with the purpose of creating the most comprehensive analysis of KPIs for e-commerce brands to gain valuable insights on their competitors, compare their performance and create the best business plan for success. 

This analysis showed us that brands that outsource their logistics setup benefit from a conversion rate that is 24% higher than those with internal logistics. 

How is this possible? In this blog article, we will cover: 

• Why a higher conversion rate has a greater impact for your e-commerce brand
• The impact of choice on conversion rates
• The economic benefits of working with a 3PL
• How better fulfillment increases your conversion rate
• 3 reasons why working with Hive will increase your conversion rates

Why a higher conversion rate is so important

Your conversion rate shows how your website, marketing campaigns, and different products are performing. With proper tracking and analysis, it becomes much easier to understand which marketing campaigns work best, which website design or which product sells the most. 

This will help you create more targeted campaigns and alter your website in a way to cater to customer preferences and therefore increase conversions as you are attracting more people that have a higher likelihood of buying from your brand.

This is such an important metric as conversion rates go hand-in-hand with revenue. Since a higher conversion rate means a greater portion of visitors are turning into final buyers, you are then increasing your sales and your revenues. 

Higher conversion rates also have a major impact on your customer acquisition costs which are now spread across more sales. This makes customer acquisition more cost-effective and helps your brand maintain higher profit margins.

The impact of choice on conversion rates

Cart abandonment has become one of the biggest enemies to conversion rate optimization. This occurs when a potential customer fills their cart on your website, but never proceeds to complete the order. 

Unfortunately, some of the most common reasons for cart abandonment are linked to logistics. More specifically delivery. According to CSA, 95% of online shoppers have abandoned their cart because of a lack of choice in delivery options. 

Most consumers enjoy the benefits of choosing their delivery carriers and delivery methods as it helps them feel more in control, and confident in their purchase. A common reason for cart abandonment, according to Sendcloud, is a previous, bad experience with the delivery carrier that is offered on the site.

The same goes for the ability to choose the type of delivery: at home, express, parcel point, and many more. In fact, France is the leading country with more than 64% of online shoppers choosing a parcel point pick up rather than at-home delivery. At Hive, we ship nearly 50% of our orders to parcel point pick-ups. 

In order to respond to customer demand, logistics providers work closely with a variety of carriers to create a diverse portfolio for their merchants. This gives greater access to the different possible carriers for e-commerce brands to work with, hence facilitating the possibility to provide choice for their end customers. 

The economic benefits of working with a 3PL partner

A 3PL partner doesn’t only give you access to a greater portfolio of carriers. Logistics providers work closely with these carriers to establish the best relationship possible.

This relationship, along with the economies of scale a logistics provider can benefit from, gives them a greater negotiation power with said carriers, allowing them to negotiate more attractive prices for your brand.

Thanks to this relationship, e-commerce brands are not only able to provide a greater variety of choice, they are able to reduce delivery fees. According to a study by Sendcloud, the number one reason, with 62% of consumers choosing this for cart abandonment, is caused by shipping fees being too high.

One of the greatest ways to increase conversion rates, is to offer a free delivery to your customers. This can either be a free delivery after a certain value (“free shipping for orders over 50€”), or a simple free delivery option at checkout. 

From our analysis, we identified that brands with outsourced logistics find it easier to offer free delivery. In fact, nearly 84% of the brands with outsourced logistics offer free shipping. 

This is because 3PL partners, like Hive, provide your brand with a wider choice of carriers, including low cost options, making it easier for brands to offer free shipping.

How better fulfillment increases your conversion rates

There are many reasons why outsourcing your logistics will help increase conversion rates. Whether it’s a 3PL partner’s optimized processes, cost efficiencies, or increased focus on core competencies, the expertise of a logistics company helps e-commerce brands deliver more efficiently and with fewer errors.

With faster, error-free and efficient fulfillment, your customers benefit from a better experience. This leads to a higher retention rate, all while improving your brand’s reputation. 

Online shopping always comes with a high degree of uncertainty. Online shoppers tend to research different brands to find which is best in terms of quality, price, and reliability. When customers have a good experience with your brand, they are more likely to talk about it, leaving reviews online, posting on social media or speaking to friends and family.

This reduces uncertainty and therefore increases conversion rates. As can be seen in the graph below, brands with an outsourced logistic set-up experience a higher average conversion rate. 

3 reasons why working with Hive helps increase your conversion rate 

Working with a logistics partner like Hive is a great first step to increasing your conversion rates. Hive is a 3PL partner that focuses on optimizing e-commerce operations thanks to faster, efficient, and error-free fulfillment. Here are 3 reasons why working with Hive will boost your conversion rates:

1. Working with Hive to benefit from cost reductions

Hive works closely with a big selection of carriers around Europe, negotiating prices for our brands, and creating packages such as the ‘Hive Domestic Mix’. This package combines the service of multiple delivery carriers to provide e-commerce brands with the best possible experience, and helping them cut costs.

With cheaper delivery fees, your e-commerce brand is able to offer lower shipping fees, or even completely free delivery. This in turn helps increase conversion rate. 

In addition, Hive operates in six different strategic points around Europe (Germany, France, Italy, Spain, Poland and the UK). The Hive Pan-EU solution allows brands to store and fulfill their products in the various warehouses located in each country. 

This helps reduce shipping fees and delivery times for those selling internationally. For e-commerce brands looking to scale their operations in Europe, Pan-EU can help reduce shipping fees by up to 60% per order. This helps you reach a wider market without having to add extra shipping fees that otherwise make it too expensive for customers. 

2. Choosing the best delivery carriers with accurate data

With Hive’s carefully curated portfolio of delivery carriers, each e-commerce brand can choose the best combination for their needs. This means you can offer more choices to your customers, hence increasing conversion rates. 

At Hive, we are constantly searching for ways to improve performance. This is why Hive sends out shipment confirmation emails to end customers, along with a form asking for feedback with a Carrier Satisfaction Survey to analyze their performance and help you choose the best carriers for your brand. 

3. Boost conversion rates up to 35% with quick and reliable delivery promises

Delivery promises can play a critical role in increasing conversion rates. It reduces consumer uncertainty that is typically present when buying online and builds trust for your customers. 

Predicting that the delivery will arrive in the next 48 hours helps convince the customer to complete the purchase. Hive therefore uses an analysis of previous performances to predict how quickly a particular SKU can be delivered to a particular place. 

This solution can drive up your conversion rates to 35%.  

Delivery promises can reduce shipping anxiety and help push your visitors to actually click on “confirm payment”. Combining this with quick, and efficient fulfillment, Hive is able to reduce the lead time, hence reducing the expected delivery time.

According to Sendcloud, 45% of cart abandonments are due to estimated delivery times being too long. With Hive’s portfolio of carriers and processes, we are able to promise one to two day delivery across Europe.

So why wait? Increase your conversion rates by working with Hive today. Book a demo now and find out what Hive can do to empower your brand.