Shipping Fees Transparency on Lazada Indonesia

In this article, I will share about how we (the product team at Lazada) solved business problems (reduce shipping cost handled by Laz) by understanding customer’s motivation and looking at the customer data, following their journey and give them the right information at the right time.

More than that, we also explored more opportunity to increase AoV, basket size and encourage customer to enter their location.

Overview

Lazada Indonesia offers two shipping options (‘standard’, ‘GoJek’) depending on location of items and customers. Customer shipping fees for the ‘standard’ option will vary depending on multiple factors:

  • (Assumed) package weight(s)
  • Value of seller basket
  • Seller location
  • Customer location

Currently customers receive very little guidance throughout the purchase process on what shipping options (lead time, fees) apply to their cart selection (some info on PDP, then again during checkout).

Besides, Lazada is taking care of most of the shipping fees (free shipping) even when customers purchase a small order (below RP 50.000). This costs a lots for Lazada and the company wants to charge shipping fees for order below RP 50.000. This project aims to provide a better explanation on new shipping fees rules and prevent abandon cart on checkout, also explore new opportunities to increase Cart values.

Objectives

Decrease ‘cart abandonment’ by reducing surprises on shipping fees

Enable more “intricate” shipping fee configurations by improving communication to customer. This in turn

  • Can decreases shipping fee subsidies as they can be given out in more targeted manner
  • Can increase low-value assortment in ventures who build shipping fee structures supporting sales of low-value items
  • Encourage customer to purchase more

Analysis

Current Problems

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Understanding:

  • Shipping fee value always based on current item only (not factoring in items already in cart)
  • Customer location determines: value threshold for free shipping
  • At Checkout and Cart, Shipping fee is calculated base on order value
  • If there is 2 delivery options, free shipping policy only applies to Standard Delivery method

User Research

Personas (simplified)

Jethro: Repeat customer from Kalimantan (Kalimantan Timur, Kota Samarinda) — far away from Jakarta

  • Logged in
  • Compare products and looking to score lowest price + shipping fees
  • Familiar with Lazada Shipping Fees

Lazada objective: help Customer finding the right SKU with certainty, no drop-off during checkout (lower cart-drop-off-rate)

Eleazar: First time customer from Surabaya, looking to get diapers urgently

  • Guest user
  • Not brand-loyal — just needs diapers, mid-range price
  • Willing to pay more for Express Delivery (next day), pays by credit card
  • Might need additional baby products (wipes, baby bottle) although no urgent purchasing intent

Lazada main objective: direct user to diaper assortment available with Express Delivery (higher add-to-cart)

Lazada secondary objective: build bigger basket around initial item (higher AOV)

Suwandi: Casual browser from Jabodetabek (West Java/Java Barat, Kabupaten Bogor)

  • Doesn’t log in
  • Browse for low price products RP 50.000 — 100.000
  • Only accepts COD as payment method

Lazada objective: encourage to increase basket value to >RP30,000 (higher AOV)

Approach

Customer location is very important for setting free shipping fee threshold. Lazada needs to get customer location as soon as possible to provide a better experience throughout the purchase flows.

Get User Location in the Purchase Flow — this was also our challenges in Technical side, where we need to get customer's location and be able to know even if they are using desktop or apps. But I won't mention the technical solution here, instead is how we used design to approach the issues.

From the moment user lands on app or website:

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Following their journey:

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To the final steps:

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Case 1: Jethro

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Here are the opportunities:

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The solution:

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Provide Customer about Free Shipping Fee threshold on Product Details Screen:

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Case 2: Eleazar

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The same approach to get user location and provide the right SKUs, but also have a smart filter methods to let user quickly looking for products with faster delivery:

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Case 3: Suwandi

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Display Free Shipping Fee threshold on PDP

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Encourage Customer to add more product after adding to cart:

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On Cart:

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The results

We then adapted the design to a version and tested with a small percentage (30%) of customers in ID, the quick data shown that customer started to put in their addresses more frequently, a more deep dive into the results shows that:

For case 1: Customers easily shopped for their wanted items near their locations, however due to the shortage of assortments in rural area, customers couldn't find the products and start to drop off, this is where we should find a way to still let them turn off the filter and explore products that are far away.

For case 2: This case really worked well, we saw a big increment in orders placement

For case 3: We didn't see much improvement on the number of items in the basket, nor any steady data about how customers understand the shipping fees, so for this case we need to run a deeper user research and see more carefully how customer interact with this new features, since this case has been the major case in ID, and Vietnam also (where customers bought very cheap items).

This article only show the first part of our process in Shipping Fee Transparency Project, we kept learning from user behaviour and start applying it to different countries (VN, TH, PH).

Let me know your thoughts on the approach, what would you do differently?

Written by

Design experience at Zalo — http://thailam.site

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