Do consumers now expect two-day delivery?
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.”
- Deloitte Study: Consumers Redefine ‘Fast’ Shipping – Deloitte
- 2016 Deloitte Holiday Survey – Deloitte
- Amazon shelling out record sums for shipping in push for faster delivery – GeekWire
- ‘Tis the Season for Shipping Delays and Price Spikes – IBIS World
- Amazon’s Shipping Costs Likely to Surge With Holiday Orders – The Wall Street Journal (sub. required)
- Amazon Takes Hit as Costs Surge – The Wall Street Journal (sub. required)
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?