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03-12-2019

What’s the Rush? How Retailers Can Use Behavioral Science to Nudge Against Rush Shipping

We are heading into the time of year in which getting gifts for loved ones or friends has a cold hard deadline: you got to have it by the holiday you celebrate, whichever that might be. With “rush shipping”, though, it has become increasingly easier to procrastinate on our shopping chores.

In 2018, Americans spent over $513 billion dollars shopping online and all indicators suggest that the 2019 holiday buying season is poised to exceed all previous records. To lure shoppers, particularly at this time of year, “rush shipping” (often offered for free) is defined as 2-day delivery. But when did shoppers come to expect purchases to be delivered so quickly? Amazon could be credited with starting the trend with Amazon Prime. For an annual fee, Prime Members get free shipping and access to things like discounts at Whole Foods and watching Amazon original content online.

Expecting 2-day rush shipping has become a habit, and many other online retailers have had to follow suit. But tight delivery windows, particularly during the holiday season when so many consumers are defaulting to faster shipping options, can hurt efficiency and, ultimately, the environment.

What is the environmental impact of “rush shipping”?
Earlier this year I participated in a CNN online interview in which Patrick Browne, Director of Global Sustainability at UPS, framed up the problem like this: “Time in transit has a direct impact on the environment; the more time you allow (UPS) to deliver the package, the more efficient we can be with our network.”

How exactly does that play out so negatively in terms of environmental impact? If a consumer buys two items, one may be at a local fulfillment center but the other item on the other side of the country – retailers must use an airplane for that one item, while the other is dispatched on a truck that’s not full.

Browne continued: “On average, it’s 8x more energy intensive to use an aircraft to deliver a package than a truck. Now you’re delivering fewer packages, with more miles driven, more fuel, more emissions, more impact on the environment”.

Clearly, choosing rush shipping poses a problem for our environment and for us all. So, what can we do to nudge people out of this behavior?

Applying a behavioral science lens to the rush shipping phenomena

Behavioral science is an academic field of study that concerns itself with human behavior and whose insights can be used to modify the way people make choices and act. The choice of whether to select rush shipping or not can be understood and analyzed through this lens, but before we are able to modify this decision, we need to first explore what’s driving the behavior in the first place: Is it retailer-driven or customer-driven? In the case of rush shipping, we know that market norms are driving this behavior given that retailers offer rush shipping as a competitive default. This behavior is thus considered to be offer led, as opposed to demand led. Because of this, there should be an opportunity to challenge some assumptions linking back to customer behavior and motivation. For example, if retailers pose the question: “do you really need all purchases (product categories) to be delivered so fast?” From a business perspective it would be useful for retailers to know the categories in which consumers would be most willing to compromise. What if we could get consumers to differentiate the norm by product category?

Now of course, since “rush shipping” is actually becoming the standard, retailers would certainly need to provide a “nudge” to counter forces that generally make consumers want their purchases as soon as possible. If we want consumers to choose longer delivery options, then we need to offset this bias. The question then becomes, what visible benefit could be provided immediately to them? What other pain-points could retailers offer to solve against in exchange for a longer delay? For example, retailers could offer a service framed around “convenience” where your delivery is guaranteed on a certain day, place and hour. Not necessarily fast but delivered in a way that you are certain to be able to collect it at a given time, all your packages at once.

How can retailers nudge their customers?

Given the established expectations that have been set regarding shipping and the need to counter present bias, retailers need to offer visible and immediate benefits to the customer for choosing non-rush options. This “positive choice” should be carefully crafted with a combination of nudges that draw on ideas like immediate rewards, visible impact, social proof, endorsers, ego management… and certainly price advantages or delivery format benefits, to make sure it can counter existing habits at the moment of selection. Nudge theory offers us a few suggestions to consider:

Reframing: One powerful nudge is to reframe the options. We can re-label non-rush shipping as “green shipping”. In other words, retailers could remind customers of the value that they create for the environment and their lives by choosing slower shipping.

For example, next to the Standard Shipping option it could read “I am cool with having it delivered in the most efficient way, minimizing the environmental impact, and I am getting a share in the cost saving as a discount, yay!”

This approach can be reinforced by labeling slow shipped packages with a green label or package, which signals to the consumer (and their neighbors) that they made a responsible choice for the environment, leveraging the power of ego and social norms, both powerful drivers of human behavior.

Default: Many experiments on defaults across topics relating to sustainability demonstrate that if you position green energy options for consumers as a default, even if they are more expensive than non-green options, consumers are more likely to choose green. Based on the success of defaults, another nudge could be to set the “non-rush shipping” option as the default and to reinforce it by explaining to consumers that this is beneficial for the environment.

Rewards: Another nudge tied to this theme might be retailers giving “Green Shipping Points”. The points could be exchanged for discounts or other perks. They could even by symbolic, labeling the consumers as “Green Customers” and giving them some sort of visible status or badges. Amazon has adopted a very similar approach offering redeemable rewards for shoppers choosing the “no rush option” but they haven’t leaned into the “green” messaging

So what can retailers do next?

With retailers facing a slightly abbreviated number of shopping days this year between the US Thanksgiving holiday and Christmas, no doubt it will be tempting to encourage last minute sales with the message that consumers can “still get purchases delivered by Christmas” by opting for rush shipping. So, what can be done to help consumers make a conscious choice?

Of course, each retailer can look to address this challenge independently as inspired by some of the ideas presented here. However, an opportunity also exists for the industry to collaborate on this mission and create new norms. This can be supported at the retailer level, through clever communication, recognizing and celebrating shifts in consumer selection of non-rush shipping as the norm. As more and more consumers see their peers adopting a behavior that is good for the planet, behavioral science tells us they will be more likely to make similar choices themselves. We refer to this practice as “nudging for good” and we have seen evidence that it is not only good for the environment; it is actually good for business.

We may be too late to influence a material change in consumer behavior for this year’s holiday retail season. But working together, brands and retailers can apply a behavioral framework from which to encourage non-rush shipping for all purchases throughout the year. So let’s work together to encourage “what’s the rush?” delivery and nudging for good . . . for the benefit of retailers, consumers and the planet.

Jenic Mantashian is the Executive Vice President leading the BVA Nudge Unit in the US and is passionately committed to the application of “nudge theory” as an effective means of solving the most challenging problems faced by companies, non-profits and public sector organizations. To talk to Jenic about behavioral science and the full spectrum of Drivers of Influence, Nudging for Good and other ways to influence sustainable choice, she can be reached at jenic.mantashian@bvanudgeunit.com.

You can hear her in the CNN interview mentioned above here.

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