Amazon Prime launched a movement of 2-day deliveries, which has shifted from a competitive advantage to an expectation today. Walmart has Walmart TwoDay Delivery, eBay has eBay Fast ‘N Free, Wish has Wish 2-day, and even individual D2C websites are sporting 2-day delivery tags.
Marketplaces and independent shops across the web leverage fast shipping as a standard practice of business.
If you’re selling online, fast shipping is quickly moving from nice-to-have to increase sales, to must-have to maintain sales. Understanding why can help you to evaluate fast shipping as part of your own sales strategy, while delivering the right shipping speed offerings to provide results.
The Prime Effect
When Amazon first introduced discounted 2-day shipping in 2005, it was to a relatively small audience of new “Amazon Prime” subscribers. Few then would have thought that a bookstore, which had been in business since 1995 and turned its first profit of just 1 cent per share in 2001, would define eCommerce as we know it.
Today, Amazon owns 52.4% of eCommerce sales in the U.S. and 13.7% globally. Much of that massive success is attributed to Amazon’s take on fast shipping, allowing eCommerce to move from an inconvenient necessity for out-of-the-way consumers, to quick gratification for shoppers worldwide.
With more than 112 million Prime subscribers, Amazon now nets more than $13.3 billion in subscription fees alone, and a large percentage of subscribers use the service for its fast shipping benefits.
That success prompted eCommerce giants to take on Fast shipping in an attempt to compete in the space.
Walmart launched a 2-day delivery program, and then opened it up to everyone without any subscription needed. Walmart also introduced Express Delivery, for 2-hour delivery at over 2,000 stores.
eBay started out with eBay Guaranteed Delivery, which then evolved into eBay Fast ‘N Free for products that offer free 3-day or fewer fulfillment.
Wish is an exciting new marketplace that offers Wish Express (5-day delivery) and Wish 2-day delivery exclusively through Deliverr.
Google Shopping has also introduced a fast shipping option, wherein products are tagged with “Free 2-day” or “Free 1-day” delivery badges to highlight fast shipping options to shoppers.
While these eCommerce giants introduced fast shipping to compete with Amazon, you also have to do it to compete with them, and to succeed on their marketplaces.
Customers Prefer Fast (and Free) Shipping
Anyone looking for a product on Amazon can easily check a little box in the sidebar, indicating a preference for 2-Day shipping. eBay, Target, and Walmart now do the same, allowing customers to filter out products that won’t arrive as quickly as they expect.
- 76% of customers say they’re more likely to order items if they can get same or next-day shipping.
- 85% are more likely to buy a product with 2-day shipping, but 88% will pick “free” over “fast” in most cases.
- COVID-19 resulted in changing expectations for delivery. 45% of customers now expect longer wait times but slower delivery actively reduces brand loyalty. Exceeding expectations and delivering in 4 days or less boosts customer loyalty.
- 47% of customers are willing to pay $2.99-$5.99 for 2-day shipping, but most expect to see a free shipping option as well.
- 52% of shoppers list fast shipping as extremely important in making a purchase decision.
- 77% of abandoned shopping carts relate to no or slow delivery estimates or high shipping costs.
- 67% of Amazon customers have filtered for 2-day shipping.
Essentially, the cost and speed of shipping can dramatically affect sales. With customers actively filtering for fast shipping on some marketplaces, not offering it can reduce total exposure and sales. In other cases, lack of free, fast, or transparent shipping options directly contributes to shopping cart abandonment.
While fast shipping contributes to increased sales, it also contributes to customer loyalty. For example, customers consistently leave better reviews when products arrive within 3 days.
A survey by Clutch, a B2B market insight firm, shows that 45% of customers are unwilling to place a second order with a brand that delivered later than promised. If you do promise fast shipping, make sure you can back it up.
Tip: Learn when it’s time to shift from in-house to outsourced fulfillment.
Consumers value fast shipping. That’s important in a world where, until recently, brick and mortar accounted for more than 85% of all sales in the U.S. Quick gratification is essential to the customer experience. It also increases the likelihood of impulse purchases, because customers looking for a quick shopping fix also want fast delivery.
Free Shipping vs Fast Shipping
While fast shipping is crucial for almost half of consumers, many also want free shipping. Balancing the dual demands for fast and free shipping can prove costly for small businesses, especially as big marketplaces offer more and more ways to qualify for faster and cheaper or free shipping.
While, obviously, the golden standard is the fast and free used by Walmart, Target, and Amazon, many small businesses simply can’t afford it without heavily cutting into profit margins.
In many cases, the best alternative is to rely on an outsourced fulfillment partner to simplify and reduce costs. 3PLs leverage economies of scale to reduce total warehousing costs. Many also utilize inventory and warehouse management to reduce distribution times and costs by better allocating inventory.
Outsourcing Inventory and Fulfillment
Eventually, most small businesses won’t be able to grow and scale while keeping fulfillment completely in-house. At the same time, using marketplace solutions, like Fulfillment by Amazon, can be restrictive to separate channels.
Finding a fulfillment partner like Deliverr, that offers infrastructure as a service and keeps your SKUs close to demand to speed up delivery times, is a great option.
Offering fast shipping is a great way to increase conversions, delight your customers, and stay competitive in the current landscape. You need to ensure you can keep up with increased demand and high-velocity seasons.
With 95% of consumers increasingly considering next-day shipping to be “Fast” and 2- or 3-day shipping to be “normal,” it’s increasingly important to offer fast shipping across your marketplaces. Instead of running to keep up with your competitors, go on the offense and offer lightning fast delivery affordably with the right partner.
Deliverr’s FBA-like multi-channel fulfillment comes with clear pricing, easy onboarding and a hassle free experience so you can focus on growing your eCommerce business.