February 01, 2011
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Shutl makes shoppers 48% more profitable to retailers

I’m told our retailer pitch is a tad long… so thought would distil down to what really matters over a series of blog posts.  This is the 2nd in the series.

Why does profitability matter?

I know this is fairly obvious but worth covering off anyway… Although a newcomer to the industry, I have pretty much gleaned that retail is all about buying low & selling high, whilst creating a shopping experience that justifies the surplus value implicit within the transaction.

It follows then that the more customers converting at the highest possible price, the better…   Afterall, turnover is vanity, profit is sanity.

In my previous post I showed how Shutl improves the shopping experience – which, in turn, implicitly increases the likelihood of them returning (topic for future post).  These points alone have the potential to make a significant improvement on a retailer’s bottom line, however we also see Shutl as a means for a retailer to improve the profitability of their customers by increasing both Average Order Value (AOV) and conversion (particularly of higher value purchases).

Measuring Profitability

We have pretty cool data on our retail partners, regarding both their Shutl and non-Shutl orders.

On average over the last 10 months, across all of the retailers we work with, our orders have had an AOV 131% higher (yep, you read it right… 131% higher)  than across their normal (non-Shutl) orders.

Furthermore we have also discovered that our orders are, on average, 37% more likely to convert than the retailer’s normal (non-Shutl) orders.

So that brings us to some pretty interesting maths:

131% increase in AOV x 37% increase in conversion = 48% increase in gross profit

This is obviously very simplistic and assumes a fixed GP across all transactions and only consider transactions where Shutl was available as a delivery option… but you get the picture- these are BIG numbers.  We aim to provide client case studies in due course with a load more detail.

If you’re a retailer and would like a ballpark estimate of just how much of an impact Shutl could make to your bottom line, punch some numbers into the nifty calculator at the bottom of the page.

Why is this?

We don’t have all the answers yet… our view on the increased conversion is that shoppers are more likely to purchase because they don’t need to worry about delivery.  My previous post in the series shows just how unhappy shoppers are with standard delivery.

Perhaps AOV is more likely to be high because it is the larger baskets (size & £) where Shutl’s value proposition is most pronounced (more of a pain to collect yourself combined with the fact that delivery cost is less of an issue).  There is the consideration that where we are offered against ‘click & collect’ our conversion is also enhanced since the customer does not always collect and pay for the item.

I would be the first to admit that there is certainly a question of correlation vs causality here… but higher conversion across these higher profit items is compelling enough.  And when you couple that with increased customer loyalty from an awesome customer experience, you have a pretty compelling value proposition.

Our vision is for Shutl to become a real driver of AOV & conversion and we look forward to being in a position to share data from some of the implementations we are working on at the moment.  Watch this space!

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