This article was originally published by Deliverr, which is now part of the Flexport brand. Its contents were edited to fit the voice and tone of the Flexport brand. With Deliverr’s services (DTC fulfillment, B2B distribution, and Last Mile delivery) now an integral part of Flexport’s end-to-end supply chain and technology capabilities, we’re able to arm merchants with logistics superpowers as a single entity of supply chain experts.

Customer acquisition cost (CAC) is at an all-time high, with direct-to-consumer brands experiencing up to a 60% increase compared to just six years ago. While the reasons for this uptick may be different depending on the industry you sell in, there are a few key factors impacting the broader retail industry and merchants’ Shopify sales:

• Proliferation of channels
• iOS privacy changes
• Increased competition
• Post-pandemic inflation

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.

iOS Privacy Changes

Digital and social users want more control and transparency over how your brand uses their data across channels.

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.

Post-pandemic Inflation

Consumer purchase power is down while prices are skyrocketing. According to the U.S. Bureau of Labor Statistics, the purchasing power of the dollar declined roughly 7.5% between 2021 and 2022 due to inflation. A significant amount of consumers (53% to be exact) are reducing their spend as a direct result and are more apprehensive about buying outside their means.

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, and labor.

Tackle Customer Acquisition Costs Head-on and Drive Shopify Sales With Fast Shipping

We’ve seen brands experiment with creative tactics to increase conversions and sales on their Shopify-enabled sites to offset these additional costs, such as leveraging customer reviews, implementing virtual shopping experiences, and even more far-out tactics such as 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 60% of shoppers now expect their orders to ship free and arrive within three business days.

The secret to offsetting customer acquisition costs and increasing Shopify sales is simple: offer lightning-fast shipping.

Lower your customer acquisition costs and increase Shopify sales with fast delivery promises. Flexport’s Shopify Fast Tags are shipping badges enabled on your store’s product details pages and at checkout to help drive increased conversions and enhance the customer experience with your brand.

In general, consumers are more likely to place an order from your Shopify site when fast delivery options are available. This was proven in a recent analysis of Flexport merchants across popular categories which returned an average sales lift of 34% when Shopify Fast Tags were enabled versus not:

• Home & Garden: +66% average sales lift
• Food: +63% average sales lift
• Apparel: +44% average sales lift
• Health & Beauty: +40% average sales lift
• Baby: +23% average sales lift

Learn more about how we calculate sales lift for Shopify Fast Tags here.

How Do Shopify Fast Tags Work?

Shopify Fast Tags are automatically generated on your product listings and at checkout 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 Tags coverage by ensuring your inventory units are in-stock in all five key areas of the Flexport fulfillment network (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.

What are the benefits of Fast Tags?

We’ve been working on implementing several updates to our Shopify Fast Tags program in 2023, including:

• A new pricing model that makes Shopify Fast Tags FREE for all merchants,
• Faster standard shipping options, with most orders arriving in 3 days nationwide,

and…

• Shipping and delivery dates will now be shown in Calendar days (when the order is expected to arrive) versus Business days, allowing for more accurate and faster delivery around weekends for your customers (coming soon).

Current Flexport merchants have reaped the benefits of Shopify Fast Tags for years for a few key reasons:

1. Reliable Delivery Builds Brand Credibility and Trust

Undeniably, when carriers fail to meet service level agreements for your business, your customers’ delivery expectations are also missed. Shopify Fast Tags allow you to exceed customers' expectations with consistent deliveries that arrive by the promised delivery date.

2. High Coverage Availability Helps You Reach More Customers

On-time delivery starts with smart inventory distribution across warehouses. Analyzing how and where your business can place inventory close to your customer base is crucial to reduce delivery costs and increase on-time delivery.

If you aren’t managing fulfillment operations on your own, partners with a large network of cross-docks and fulfillment centers like Flexport are able to place your inventory closest to your customers based on real-time demand and keep it available for sales at a high caliber.

Increase Your Shopify Sales by up to 34% Today

The next time you’re struggling to lower your customer acquisition costs, consider elevating your customer experience with a fast shipping promise via Shopify Fast Tags. Activate Shopify Fast Tags now in your Seller Portal account, or learn more about our full scope of DTC poroducts and services.