As an e-commerce merchant, you are always looking for ways to reduce chargebacks and improve your customer's experience. One area that you may want to consider is your shipping service level.
Shipping service level options typically include standard shipping, expedited shipping, and express shipping. Each option has its own benefits and drawbacks. The question is, which one is right for your business?
To help you decide which one to pick, let's take a closer look at each shipping service level.
Standard shipping is the most basic and least expensive shipping option. Packages are typically delivered within 5-7 business days.
Expedited shipping is a step up from standard shipping in terms of speed and price. Packages are typically delivered within 2-3 business days.
Trivia: Do you know the difference between a chargeback and a refund?
A chargeback is when the customer requests their money back from their card issuing bank which takes it directly from the merchant’s bank account due to a problem with the product or service. A refund is when the merchant voluntarily gives the customer their money back, no questions asked.
Express shipping is the fastest and most expensive shipping option. Packages are typically delivered within 1-2 business days.
Some merchants believe that by offering a faster shipping option, they will reduce chargebacks because customers will receive their items more quickly. However, this is not always the case. In fact, offering a faster shipping option can sometimes lead to more chargebacks.
When you offer a faster shipping option, you are essentially guaranteeing that the customer will receive their items within a certain time frame. If the customer does not receive their items within that time frame, they may be more likely to file a chargeback.
On the other hand, if you offer a slower shipping option, the customer may not receive their items as quickly as they would like but they are less likely to file a chargeback because they understand that it may take longer for their items to arrive.
Managing customer expectations through clear estimated shipping dates and communicative customer service is key to ensuring your shipments don’t lead to unnecessary chargebacks.
Of course, there are other factors to consider when deciding which shipping option to offer your customers. These include the following:
Offering a faster shipping option will usually cost more than offering a slower shipping option. This is because it costs more to ship items quickly. If your margins are tight, you may not be able to afford to offer a fast shipping option.
The delivery timeframes for each shipping option should be clearly stated on your website. If you do not state the delivery timeframes upfront, customers may be unhappy with the shipping option they choose and file a chargeback.
You should always monitor your chargeback rate. If you notice that you are receiving a lot of chargebacks for orders you may want to experiment with the shipping options you use and/or offer to customers. It’s possible that expedited shipping will be your sweet spot meeting customer anticipations for their newly purchased items and managing the logistical demands that guaranteed speedy delivery entails. It’s also possible it will be another shipping option. Keep track of the data to find out.
Updating service levels regularly would help you with your business' CQI and give your customers a better experience with shopping from you which would, in turn, reduce the number of chargebacks.
Whatever decision you make, always remember to keep your customers updated on the changes. This way, there would be no misunderstandings, especially payment disputes , and your customers will be happy with their purchases.
To learn more about how your operational choices affect your dispute volume and chargeback ratio, contact us.