Do consumers now expect two-day delivery?

Discussion
Source: Amazon Fulfillment
Nov 17, 2016
Tom Ryan

While free shipping has become a requirement for many online buyers, is speedy delivery that far behind?

According to Deloitte’s 31st annual holiday survey, only 42 percent of shoppers surveyed consider three-to four-day shipping “fast” — a significant drop from the 63 percent who said so last year. Instead, the wide majority (83 percent) of shoppers consider fast shipping to mean delivery within two days or less.

The heightened expectations around speedy delivery and influence of free-shipping offers were also evident in how much shoppers wanted to pay for expedited shipping this holiday season compared with last year.

For two-day shipping, consumers would pay an extra $1.50, down from $2.40 in 2015. The willingness to pay extra also fell notably for next-day shipping ($3.20 versus $4.00) and three-to-four day shipping (50 cents versus $1.10.) For same-day shipping, the extra cost consumers said they would pay remained fairly close, $4.80 versus $5.10.

Deloitte believes the rising shipping expectations are due to Amazon’s “Prime effect.” The Prime service includes free two-day shipping as its most popular perk.

While free shipping can be absorbed as an expense, expedited shipping takes sophisticated warehousing and back-office execution as well as strong partnerships with UPS, FedEx and other third parties.

And Amazon continues to raise the bar. Its third-quarter shortfall was blamed on investments to open warehouses and shipping items with shorter delivery times.

“There’s a lot of things that we’re doing to shorten the time to delivery,” Amazon CFO Brian Olsavsky said in a media call with reporters after the company’s quarterly earnings report last week. “We acknowledge that’s expensive, but it’s certainly a great part of our value proposition, and customers love it.”

DISCUSSION QUESTIONS: Is Amazon’s fast delivery becoming as important a differentiator as free delivery? How much more challenging will it be for retailers to compete on fast versus free delivery?

Braintrust
"It is absolutely evident that physical retailers possess multiple advantages that Amazon cannot match and never will."
"Once again the answer is not that simple. Not everything requires one- or two-day shipment."
"I figure Amazon has built in a throttling technology to keep its distribution centers from imploding this holiday."

Join the Discussion!

23 Comments on "Do consumers now expect two-day delivery?"

Notify of

Sort by:   newest | oldest | most voted
Max Goldberg
BrainTrust

Amazon, through its strong lead in e-commerce, has set the standard for consumer shipping expectations. Few, if any, retailers can compete in shipping. Unless they have the infrastructure they shouldn’t try. It’s better to set consumer expectations and meet them than to try to compete with Amazon and fall short.

Tom Dougherty
BrainTrust

It’s not a challenge, it is a MUST. The fastest delivery available changes the bar. Retailers know that the low-cost provider sets the pricing ceiling. Anything less than tomorrow is a bridge too far.

Shep Hyken
BrainTrust

Amazon has set — and continues to set — the standard for delivery; free, two-day, two-hour, etc. Think about how expectations have changed over the years. It used to be that if you ordered something it would take four to six weeks for delivery. You were thrilled when it showed up closer to four. Companies recognized the power of faster delivery and used carriers like FedEx and DHL to increase times to several days versus several weeks. Over time, the expectations of faster delivery became higher and new standards were set. Amazon knows what their customers expect and want. They test to see what resonates with their customers and what they are willing to pay for it. For now and the foreseeable future, all companies (not just retailers) should be studying what is working for Amazon. Currently they are the standard.

Dr. Stephen Needel
BrainTrust

The ability to delay gratification may well be going, going, gone. In choosing an online vendor, we would assume price and then speed of delivery are the two main factors. I would think total price — product cost plus shipping. So free delivery may not be that big of a deal. Can other retailers compete? Perhaps not and perhaps they shouldn’t — instead, maybe they should make a larger profit.

Ken Lonyai
BrainTrust

Amazon has raised expectations and will continue to do so to pull away from the pack. Aside from delighting customers, each new incremental service improvement chips away at competitors, especially mom-and-pops that cannot absorb new costs and that do not have logistics and inventory control anywhere near Amazon’s capabilities.

It’s a clever and powerful strategy where they capitalize on the human desire for ease and instant gratification (sort of), while simultaneously making competitors uncompetitive. Even other big rivals like Walmart, Best Buy or Macy’s eventually have to step up and meet new consumer expectations, which becomes both a logistical and financial burden, keeping them a little off balance and forcing them to play catch-up rather than innovate or develop their own strengths.

Lyle Bunn (Ph.D. Hon)
BrainTrust

Shipping speeds require new terminology. Two-day shipping is more “immediate” with three-to-five being “fast.” What is more important is to accurately reflect the expected receipt at the door in the order confirmation and updates on shipping status (i.e. “your order is ready for shipping,” “your order has been shipped.”). This clarifies vendor performance while at the same time allowing the retailer to point to shipping services as “the hold-up.”

Adrian Weidmann
BrainTrust

We live in a nano-second world where we expect immediate gratification. As shoppers when we finally make that purchase decision, we expect to enjoy and experience that post-purchase adrenaline rush immediately. Any delay in that experience tempers the shopping journey. The speed of delivery is a critical component of that journey. Amazon has set the standard and expectation for fast delivery. Retailers have been slow to respond to understanding the importance of speed of delivery to the shopping and purchase decision. Because of this, retailers need to make sure that they address any out-of-stock issues. Nothing turns a shopping journey sour faster than making the journey to a store only to find what you’re expecting is not on the shelf. It just happened to me in a specialty grocery store and it bothers me still, four days later! I’ll get over it but I’ve already found an online source!

Ori Marom
Guest

Amazon’s operational excellence today constitutes its main competitive advantage. The whole point of offering fast last-mile delivery at a low cost is that no other retailer can probably match such performance. Amazon is just looking to drive in the last nail.

So what should be physical retail’s response be to Amazon? I don’t think that retailers should try to out-Amazon Amazon. Just let them do their thing.

It is absolutely evident that physical retailers possess multiple advantages that Amazon cannot match and never will. People are social beings and brands need to meet them in physical locations that they cannot readily find elsewhere. It is a mystery to me why the industry is in such dire straits.

Ken Lonyai
BrainTrust

“Never” is a very strong statement. Amazon has its foot in the door of physical retail and according to reports might be ready to kick it open, at least in grocery. And when it comes to commodity/CPG items, product discovery is out the window, so physical retail is at a disadvantage unless it can compete on price and availability. In fact, we now buy most packaged grocery items online which yields a 15 to 20 percent price advantage and multiple conveniences, however we buy from others and not Big A.

Al McClain
Staff

Yes, consumers expect two day delivery, or faster. Amazon is very good, but they do have a few vulnerabilities. As a Prime member, for south Florida at least, two day shipping is not always two day shipping. Many items are not available for Prime or two day shipping, and ordering on a Wednesday afternoon, sometimes even Prime eligible items say they won’t arrive until Monday. Granted, many items are often delivered in two days, but I find myself going elsewhere if I really need something fast. So, brick and mortar and other e-commerce operators have opportunities, they just have to figure out their strong points/niches and capitalize on them. Chewy.com is one pet superstore doing a good job and offering shipping comparable to Amazon’s, without the cost of Prime membership.

Ed Rosenbaum
BrainTrust

We recently used chewy.com and found them to be excellent in both customer service and shipping. We are also in the South Florida market.

Richard J. George, Ph.D.
BrainTrust

Probably not as big as free delivery, but definitely a significant positive differentiator. Like the cat who tasted fresh tuna, there is no going back to the canned variety. Amazon continues to focus on one of its four core principles, namely, commitment to operational excellence. Unless competitors can do it better or faster, then they need to consider other differential advantage options.

Tom Redd
Guest

Amazon has set a threshold for retailers regarding delivery — but not a good example in maintaining strong margins. They are good in overall e-commerce but other retailers have fair-priced delivery, better service and produce strong margins. Amazon lost money to get a lead and mindshare, but many of their products are trash from knock-off vendors. They are cleaning this issue up but not fast enough.

Quality is number one — online or offline. Getting junk shipped fast does not stick with many shoppers.

Tony Orlando
BrainTrust
This topic continues to make headlines, especially with the holiday season upon us, and Amazon will be the winner no doubt. They are the Walmart of online and there is nobody even close to the powerful position they are in. Consumers want everything right now and want it at rock-bottom pricing, and can you blame them? As we speak, I will have to absorb over $1500 in losses just on turkeys this year. It may not sound like much, but for me it is, and all the trimmings we sell for baking and staple goods are marked down to very low margins, and we don’t deliver. The economy we are in as retailers is changing very very fast, and Amazon is 10 miles ahead in the marathon of delivering goods to your homes. Can someone catch up? This is the challenge for all online merchants, knowing that unless they offer the free delivery, along with ultra low pricing, they will soon perish as consumers are even less loyal online with smaller merchants than they are… Read more »
Ross Ely
Guest

Unfortunately for online retailers, fast shipping is becoming as much of a requirement as free shipping. These retailers need to focus on their operational ability to execute and deliver orders as much as they do on their marketing and promotion. Differentiating against Amazon with unique products and services is certainly possible, but low-cost/free shipping and fast delivery are now table stakes in the online retail game.

Charles Dimov
BrainTrust

No doubt Amazon has been the big game changer. So stop playing their game. It’s not about catching up with Amazon. You’re not likely to succeed. Instead, focus on the omnichannel retail message!

“Why wait for two days when you can have it RIGHT NOW?” With inventory visibility online, show your customers how easy it is to order and pick it up immediately. When they do come in to pick up the item, make sure they have a positive, quick, efficient and value-added experience. Then, the next time, there won’t be a doubt about where to buy and they won’t want to wait for Amazon’s SLOW, SLOW two-day service.

Change the retail game to your own advantage!

Herb Sorensen
BrainTrust
There are two points I want to make on this. In the second edition of Inside the Mind of the Shopper I divide the entire world of purchasing into two basic categories of purchases: 1. Surprise/Delight/NOW! and 2. Routine/Autopilot/Frustration/Angst. The first of these categories is heavily (but not solely) driven by immediacy. The need for something RIGHT NOW. It’s still shocking to me to see people refusing to recognize that in very nearly every store in the world, the SINGLE ITEM PURCHASE is THE dominant purchase. That is, more people walk into that store and walk out with a single item than any other number. (Two is the second most common, then three, and in supermarkets, FIVE is the median number — half buy more and half buy less.) It isn’t just convenience stores — this is just as true of a Walmart Supercenter! The reason for this is the ALWAYS “communal pantry” nature of the store. That is, rather than relying on your stock at home or elsewhere, you run to the store to… Read more »
Kim Garretson
BrainTrust

I’m wondering if others have experienced Amazon offering to pay you with $5 in credit in your account if you choose five-day free shipping. I had it happen to me three times in one day a couple of weeks ago, but not since on another half-dozen orders. I figure Amazon has built in a throttling technology to keep its distribution centers from imploding this holiday.

W. Frank Dell II
BrainTrust

Once again the answer is not that simple. Not everything requires one- or two-day shipment. I just bought this year’s Hess truck for my grandson. Two weeks would have been fine. It arrived in four days by a combination of FedEx and the United States Post Office. Speed is not the answer for everything purchased on the internet. Online retailers need to understand what their consumer wants and requires.

Ed Rosenbaum
BrainTrust

Amazon has become and continues to be the gold standard. They changed customer service expectations. Others are waiting to see what Amazon does and then follow the lead. It is interesting watching it develop. There are two winners, Amazon and the consumer.

William Hogben
BrainTrust

Everyone offers fast delivery, Amazon offers fast delivery CHEAP. That’s the real differentiator and unless other retailers start setting the expectation of cheap and fast delivery, people will continue to start their product searches at Amazon.com.

Retailers with physical footprints need to take advantage of that now, before Amazon’s 2000 grocery stores open….

Ken Morris
BrainTrust

Consumers want products wherever and whenever they want it and whenever is becoming “right now!” Consumers’ expectations are elevated and a lot is driven by Amazon’s continued quest to speed delivery times. While shoppers love free shipping, getting the product faster is probably a bigger motivator in purchase decisions.

While we think U.S. consumers are demanding with expectations of 2-day or 1-day delivery, it is nothing compared to what is happening in China. Like Amazon’s influence on customer expectation in the U.S., Alibaba has raised the bar on consumers’ expectations of delivery times in China. But instead of 1 or 2-day delivery, consumers in major cities in China are coming to expect 2-hour deliveries. This expedited expectation will eventually be the norm for U.S. consumers and retailers will need do find creative ways to deliver on this promise, like crowd-sourcing delivery via individuals or third-party services like Uber.

This challenge is only going to become worse. Just beam it to me … the fun never stops.

Joan Treistman
BrainTrust

The article and comments bring to mind our impatience when our smartphones, tablets, laptops or desktops take “too long” to boot up. How frustrating if there’s a 30 second delay. And yet there was a time when a few minutes was expected and acceptable. There are more examples of how our behavior and expectations are shaped.

The comments and observations above call attention to directly competing with Amazon on fast delivery. However, there may be a more effective approach if retailers consider how they spin their own delivery policy and philosophy to the satisfaction of customers. There may be others, but of course “free” shipping is one approach that can overcome an extra day or two … or maybe more. And free shipping for returns could be the deal maker.

wpDiscuz
Braintrust
"It is absolutely evident that physical retailers possess multiple advantages that Amazon cannot match and never will."
"Once again the answer is not that simple. Not everything requires one- or two-day shipment."
"I figure Amazon has built in a throttling technology to keep its distribution centers from imploding this holiday."

Take Our Instant Poll

Is fast or free delivery more valuable in the Amazon Prime model?

View Results

Loading ... Loading ...