Today’s shoppers expect lightning-fast shipping speed. That's not news to anyone within the retail industry. Amazon.com knows it, brands know it, and retailers know it.
But how fast exactly do consumers expect online orders to arrive? Less than two days, according to a recent Deloitte study. The study found that 83 percent of consumers define fast shipping as two days or less. Less than half (43 percent) consider three days to four days as “fast.”
Amazon is likely the driving force behind these growing customer expectations, as the marketplace giant has managed to guarantee two-day shipping on approximately 46 million products, with Prime membership, according to a study by investment firm Robert W. Baird. In effect, shoppers today know that it's possible for their orders to appear on their doorsteps within 48 hours, and so they've come to expect nothing less.
Another factor contributing to this expectation is what consumer psychologist Dr. Kit Yarrow describes as the “I want what I want when I want it” phenomenon. Consumers will choose to purchase in the channel that can provide the products they want when they want them.
This phenomenon has blurred the lines between brick-and-mortar and online expectations. If shoppers can go to a local Target store and leave with a new TV on the same day, why can’t they get a TV delivered just as fast (and for the same price) when purchased online?
Therefore, the cold hard truth many retailers face today is that to attract and retain customers, they need to improve shipping speed. And they need to do so without breaking the bank.
3 Strategies for Faster Fulfillment and Delivery
Improving shipping speed is simple in theory. Just look at what Amazon has done in the past few years — invest in more warehouses with more inventory and improve supply chain management to speed up fulfillment and delivery times.
For most retailers, however, this isn't a realistic option. It’s too costly to make large, up-front investments in more warehouses, inventory and employees, as well as better technology. So instead, many retailers are re-evaluating resources they already have, such as their own brick-and-mortar locations and their relationships with brands and suppliers. Here are three tips:
1. Use your brick-and-mortar stores strategically.
Retailers can use their physical stores to improve shipping speed by exploring “order online and pick up in-store” offerings, or actually using brick-and-mortar locations as warehouses for “ship from store” offerings. In most cases, consumers live closer to a retailer’s physical store than an actual warehouse, so shipping to stores can often get packages closer to customers, faster.
And there's a major ancillary benefit to this strategy — when you push customers to pick up their products in-store, you increase foot traffic and, ideally, incremental sales.
2. Drop ship with brand or supplier partners.
Another strategy for improving shipping speed while avoiding up-front investments is drop shipping. Retailers can offer a brand’s or other supplier’s products digitally without investing in the inventory up front, and they can rely on the brand or supplier to deliver the products directly to customers. Not only does drop-shipping allow the retailer to sidestep inventory investments, but it also optimizes shipping by cutting out the middleman and relying on suppliers that already have the infrastructure in place to make faster deliveries.
3. Work with third-party logistics providers.
Third-party logistics providers have warehouses all over the country that “rent” space to retailers. Retailers can store inventory in a distributed network of warehouses and then deliver to customers from the closest warehouse. These optimized routes drastically cut down shipping time and can enable retailers to meet aggressive delivery promises more cost efficiently, while also avoiding sizable warehouse investments.
Thanks to Amazon’s growth and innovation, consumers no longer view fast shipping as a perk — it’s now an expectation. And as brick-and-mortar sales decline, retailers must act fast to retain and attract loyal customers.
Fortunately, retailers can improve shipping speed without breaking the bank by leveraging current assets and partnerships. In the world of retail, a simple shift in strategy can truly go a long way.
Erik Morton is the vice president of strategy and corporate development at CommerceHub, a distributed commerce network for retailers and brands.
Erik Morton is the senior vice president of product and strategy at CommerceHub, a distributed commerce network for retailers and brands.
Erik is responsible for product, strategy and corporate and business development at CommerceHub. He has 15+ years of experience spanning technology, public markets, finance, strategy and operations. Erik joined CommerceHub in 1999 and returned to the company in 2012 after founding and running ecommerce software provider Initiate Commerce and serving as head of products and services at Merit Pages.