Amazon started the online shipping speed race with Amazon Prime’s two-day delivery. Today, Amazon Prime Now, available in 30 cities across the country, offers two-hour delivery. Now, other online retailers are following suit, with some even offering one-hour shipping. How can your small ecommerce business compete (and do you need to)? With the holiday online shopping season coming up, here's what you need to know about customers' expectations for online shipping.
First, what's considered fast shipping these days? The Wall Street Journal reports that in 2015, 63 percent of online shoppers considered three- to four-day delivery “fast.” In 2016, that percentage fell to 42 percent. In fact, 11 percent of online shoppers don't even consider two-day delivery "fast" anymore.
While that's still a small percentage of online shoppers, the number of shoppers expecting rush shipping is projected to grow. According to Brigg, by 2018 over $4 billion in merchandise will be shipped via same-day delivery. Already, 18 percent of consumers say fast delivery is the number-one factor in choosing their “favorite” online store, and more than one-fourth (26 percent) of online shoppers have abandoned a shopping cart because they discovered the shipping time was too long.
Still, fast shipping is not yet the default option for online shoppers. In UPS's 2016 Pulse of the Online Shopper study, only 3 percent of consumers say same-day shipping is option they usually choose. In a 2016 Deloitte survey, 71 percent of consumers said free shipping is the most desirable "perk" or promotion online retailers can offer. The same survey had some disturbing news: 80 percent of respondents don't think they should have to pay for three-day or four-day shipping, while the majority wouldn’t pay more than $5 for same-day shipping.
In certain markets and for certain products, however, some online retailers are offering one-hour or 90-minute shipping times, which beats even Amazon's same-day shipping guarantees. Such speedy shipping times are typically limited to certain markets with robust courier systems (such as New York City and San Francisco), or to luxury online retailers (such as Farfetch) whose upscale customers don’t mind paying $20 for one-hour shipping. But how long will it take until the concept trickles down?
To get a head start on the super-speedy-shipping trend, smart e-commerce retailers will start investigating their options now. Here are some factors to consider.