Now that the first quarter has drawn to a close, merchants are coming to terms with the reality of the priorities they’ve undertaken. With the all-important holiday season rolling out earlier and earlier each year, the window of opportunity is suddenly looking narrow to launch new features and functionality in order to meet year-end goals.
So it should come as a relief that one item can definitively drop off the list: same-day shipping. While media hype surrounding Amazon drones is flying fast (as it were) and new same-day delivery services are popping up right and left, for most merchants, the potential benefit of rushing to provide this service while it’s in its nascency industry-wide is far outweighed by the potential backlash if shipments are late, not to mention the potential drain to the bottom line.
For starts, research has repeatedly shown that consumers value free over fast when it comes to shipping. Fully 50% of shoppers have chosen a slower delivery timeframe in order to qualify for free shipping, a study by UPS and measurement firm comScore found; 57% say they’re willing to wait 7 days to receive items ordered online, and the same percentage report being willing to wait an additional 3 days if it means their orders ship free. Similarly, Business Insider found that fully 92% of shoppers are willing to wait four days to receive goods. And technology researcher Forrester found that shipping costs were second in importance only to essential product costs as a factor for consumers deciding where to shop online.
Secondly, the cost of successfully executing a same-day shipping program is significant — and with consumers largely unwilling to foot the bill, it’s not surprising that so far just a few merchants with significant economies of scale, such as Amazon and Walmart, are taking up the challenge.
That doesn’t mean same-day shipping won’t rise in importance in the future, or even next year. After all, while consumers value delivery cost over speed, they also cite the immediate availability of products in-store as a top reason they don’t buy online; even if they conduct research via phones or desktop computers beforehand, most consumers are close enough to stores that the convenience of popping into physical outlets for immediate post-purchase gratification trumps the efficiency of online ordering, which is why 75% of the forecasted growth in web-influenced sales through 2018 is projected to come from in-store purchases. But that statistic also suggests an opportunity: if the costs of same-day delivery drop, merchants just might convince shoppers to skip the trip and finish the order they started online.
Additionally, same-day shipping is a higher priority in 2015 for merchants who meet multiple key criteria. Among them:
- The brand has big plans for Asia. In the densely-populated urban capitals of China and India, same-day delivery is increasingly common, and further innovation is on the way, with Chinese ecommerce giant Alibaba already testing drone delivery in Beijing. Merchants with a footprint in these countries need to adapt to local custom and find a way to meet local expectations.
- The audience is young and urban. The millennial city-dweller presents an ideal target for same-day delivery service for a number of reasons: urban areas afford merchants the potential to achieve economies of scale with their same-day shipping programs, and 39% of consumers aged 18 to 34 are interested in same day shipping — a percentage 34% higher than for the general population. By offering same-day delivery, merchants can serve young professionals who already rely on takeout food delivery, and who may have discretionary income to spare.
- Ship-from-store capabilities are in place at a number of locations. Same-day shipping requires that merchants tap every existing means at their disposal to meet the deadline, including a tightly-networked array of physical stores with sufficient inventory and staff to fulfill online orders, and quickly.
- The brand specializes in high-margin products. Because same-day shipping is such a costly proposition, and because only for select product categories are shoppers willing to entertain paying more than $10 for the service, only merchants who can afford to subsidize costs to some extent should consider it.
For most merchants, though, investing more heavily in existing fulfillment operations is a better bet for 2015. Merchants should consider investing in these alternatives:
- Earlier and better messaging of shipping costs and delivery timeframes. While it’s long been a best practice to display total order costs in the cart and to message delivery options on product pages, many merchants still don’t do so. The problem is especially acute on mobile devices, where even in the cart merchants are unlikely to list all the available shipping options and their timeframes, according to MarketLive’s whitepaper on path-to-purchase optimization.
- Ship from store and store-to-store delivery. As referenced above, merchants need to develop the technology and staff to transform retail outlets into local distribution hubs before they undertake same-day shipping. And meantime, such investments can help store associates locate “endless aisle” items out of stock at their locations, while online orders can be processed from nearby locations to speed delivery — even if it’s not within 24 hours.
- Blanket free shipping for loyalty club members. Close to three quarters of U.S. consumers participate in a loyalty program, and of those participants, four out of five routinely redeem rewards. Active club members are willing to pay higher prices; while 79% of participants say they expect membership to save them money, fewer than 45% of active club members say price is more important to them than the brand name. Merchants should reward these behaviors by cutting the best possible shipping deal for club members — whether blanket free shipping, periodic free shipping, or just free shipping on their birthdays.
- A friendlier returns policy. Fully two-thirds of shoppers peruse merchants’ return policies before purchase, according to comScore/UPS, so brands offering free or flat-rate return shipping or easy in-store returns have the potential to earn significant traction.
Are you contemplating options for same-day shipping? Why or why not?