In the world of online retail, both large and small retailers are always looking for ways to be innovative when it comes to acquiring and retaining customers. One of the emerging industry trends is the ability to get products to consumers quicker – either through expedited or even same-day shipping – to make consumers less likely to shop at direct competitors (especially if they have a brick-and-mortar presence). So what is the impact of offering expedited eCommerce shipping options and how does it affect online retail brands? Here are a few things to know…
Overnight shipping can be expensive and vary greatly in price – The retail cost of offering an overnight shipping option depends on several factors including the number of fulfillment centers, product placement in those fulfillment centers, and staffing availability. Depending on the size and destination of the order, some orders can cost more than $30 to ship overnight – usually a price too steep for many consumers.
Leverage brick-and-mortar stores to help with overnight shipping – One way to compete with leading online retailers and cut down on overnight shipping costs is to use stores as local fulfillment centers. This initiative is usually not as easy as it sounds, as certain staff will need to be trained on order fulfillment processes and will need a specific work area to fulfill online orders.
Utilizing technology to automate the ideal shipping locations – Retailers that utilize omni-channel solutions such as ship-from-store can use technology to determine where products are across all fulfillment center and store locations. The same solution can also automate where an order should ship from for the fastest delivery, cheapest shipping, or the ideal combination of both. This technology helps to increase conversion rates and improve customer satisfaction as consumers in general pay less and receive their orders faster.
Same-day shipping is still, and may always be, geographically limited – Especially in a large country such as the United States, the idea that a person in rural Idaho can order and receive an item from several online retailers in the same day seems unlikely. Many of the well-publicized “same-day shipping” initiatives are limited in product scope and located in cities with consumers that have disposable income and value immediacy.
You don’t need to be a major retailer to offer same-day shipping – One myth is that only major online retailers can afford initiatives around same-day shipping. There are now several companies (mostly regional) that will act as “couriers” for retailers in markets where distribution centers or high-volume products are located. Adding same-day shipping can be a unique selling point, especially for brands that have sales focused in a specific region or country.
Same-day shipping can be a “green” initiative – One of the major indirect benefits of same-day shipping is the positive impact the process has on the environment. Same-day orders go through fewer hands and have less transit time, lowering the carbon footprint of each order. Retail brands, depending on their culture and customer base, can use this benefit as a marketing tactic when promoting a same-day shipping offering.
In conclusion, the offering of expedited shipping options in eCommerce is primarily focused at consumers with expendable income and in specific locations because additional costs must be paid by retailers to launch these new initiatives. With this said, retailers continue to view these options as innovative ways to capture new customers and to prevent the loss of sales to competitive brick-and-mortar locations. It will be interesting to see how same-day delivery continues to evolve within the industry, especially as major online retailers are now leading initiatives in this area for the very first time.