Fast Delivery is No Longer an Option for eCommerce Retailers

Most small eCommerce retailers blame Amazon for aggressively marketing and promoting fast and free delivery. And eBay started a big push to get more sellers to offer 2 to 3-day guaranteed delivery.

Fast delivery is now a necessity in eCommerce. And a report by same-day logistics services provider Dropoff, Inc. drives home this business reality.

First, let’s look at key findings from the report:

• U.S. consumers expect companies to keep up with Amazon: 43% expect companies to have ‘much faster delivery times’ than last year (up from 35% in 2017).
• 75% of consumers want a more professional delivery service – and their desire is increasing (72% in 2017).
• 88% of consumers want the ability to track their shipments in real time.
• Trust in peer-to-peer services remains staggeringly low and virtually unchanged year-over-year. Only 14% of U.S. consumers say they trust peer-to-peer delivery services like Uber, Postmates or Deliv to deliver their packages. (13% last year).

Dropoff, Inc. asks a simple question, but one that eCommerce retailers must ask themselves if they wish to stay competitive.

How many customers are you willing to lose before you start offering faster delivery?

When 99 percent of U.S. consumers say “Fast Delivery” is important when making a purchase decision, the above question must be answered by small business eCommerce retailers.

43 percent of U.S. consumers expect companies to have “much faster” delivery times in 2018, a 23 percent increase over last year.

If the eCommerce retailer’s target audience is millennials, the pressure to offer faster delivery is even stronger. 50 percent of millennials expect companies to provide faster delivery times in 2018 than a year ago.

And nearly 1/3 of consumers indicated they feel frustrated when a company doesn’t offer same-day delivery.

While urban respondents may skew this metric as major metro consumers already receive same day delivery from large eCommerce companies such as Amazon and local supermarket chains, the desire for same-day or next day delivery is spreading beyond dense population centers.

There are also some categories that have a higher expectancy for a same-day delivery option.

• Groceries – 64 percent (19 percent)
• Health Care Products – 46 percent (4 percent)
• Specialty Snacks – 42 percent (7 percent)
• Alcohol – 41 percent (5 percent)
• Household Products – 28 percent (5 percent)

Note: The first number is the percentage of consumers that want items delivery same-day and the second number in parentheses is the percentage of consumers that have received items same-day.

You may realize the top-5 categories above are typical Supermarket product categories, but the totality of the report shows that faster delivery is an important purchase consideration in virtually all product categories.

The “Amazon Effect”

In an ironic twist, the “Amazon Effect” may have prompted the company to purchase Whole Foods Market to compete with local supermarkets. National and regional supermarkets were already experimenting with same-day local delivery options.

The study found Amazon shoppers aren’t committed to making purchases solely from the online retail giant if companies match the delivery options and flexibility Amazon offers.

About 65 percent of U.S. consumers who shop on Amazon are willing to order from another retailer if similar delivery options are available.

There was a clear concern here for Amazon as Supermarkets were beating them at their own game and the retail giant needed a quick fix.

Consumers Want It Now

Furthermore, the so-called “Tech Adopters” are 19 percent more likely to abandon an online purchase because of slow delivery times. And 59 percent of the same demographic is willing to pay a higher price for faster delivery.

In other words, they want it now and they are willing to pay a little extra to get it now!

Same-day delivery does not mean free delivery. “Standard” delivery times of 2 to 3 days are currently the norm for free delivery in the U.S., so there is room to charge extra for next-day or same-day service.

With time, that may change. But even Amazon stated in recent quarterly earnings calls that delivery costs are their biggest concern.

Unless the company feels they need to make a competitive move to offer free same-day delivery, it is likely the status quo of charging a fee for same-day and most next-day delivery service will continue for some time.

Even as Amazon expands their own logistics network with Amazon SWA or DHL, there is still a significant cost to same-day and next-day delivery.

Investors are keen to hear about cost reductions on the logistics side of Amazon.

It would seem counterproductive to incur higher shipping costs by offering expedited free delivery options that consumers are still willing to pay extra for.

In its conclusion, Dropoff, Inc. stated:

“Retailers who are concerned about the added cost of the service should consider this: nearly half of consumers say they’ve paid extra for faster delivery in last 12 months. And 74% of consumers say that after receiving same-day delivery it would make them more likely to purchase from that retailer again, showing there is huge potential to drive ROI.”

The report by Dropoff, Inc. includes a lot of other important data points for consideration by small business eCommerce retailers. To receive a free copy, follow this link.

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