Warehousing & Fulfillment

Redefining Fast Shipping for 2020 Consumer Expectations

Warehousing & Fulfillment
October 15, 2020
6 min read

Ware2G0’s 2020 merchant survey reveals that consumer expectations for fast shipping continue to evolve, and merchants are tailoring their fulfillment models to meet the growing demand.

A Look Back: The History of Fast Shipping

When Amazon Prime launched in 2005, 2-day shipping was a novelty and what Jeff Bezos himself said felt like “an indulgent luxury”. This novelty, however, soon redefined Amazon customers’ understanding of fast shipping, and the convenience of 2-day delivery forever changed consumer shopping habits. It opened up the world of online sales to entire new product categories from home goods to toilet paper and even groceries.

Many major retailers, seeing Amazon’s expanded offerings cutting into their top line revenue, quickly followed suit. Now, the largest brick and mortar retailers are even launching competing subscription services and turning their focus to growing their ecommerce divisions. Today’s customer expectations for fast shipping don’t differentiate between large retailers and small to mid-sized merchants, and businesses of all sizes must offer speedy delivery promises in order to compete.

When Ware2Go’s merchant partner ECR4Kids decided to take their products into the direct to consumer marketplace, they were surprised to find how fast shipping expectations shaped consumers’ choices.When Ware2Go’s merchant partner ECR4Kids decided to take their products into the direct to consumer marketplace, they were surprised to find how fast shipping expectations shaped consumers’ choices.

In an effort to understand the state of this growing consumer expectation, Ware2Go’s recent merchant survey gathered responses from merchants of various sizes to understand how businesses are responding to meet this growing demand.

Fast Shipping Now Means 2-Day Shipping

Survey data showed that merchants of all sizes have noted customer demand and recognize the importance of fast delivery.

75 percent of merchants know fast shipping will make them more competitive but only 60 percent are offering it

Additionally, merchants that do offer 2-day shipping have seen measurable business outcomes:

Fast shipping brings better reviews, more repeat customers, and higher cart conversion rates

What’s more, research shows that a 2-day delivery promise is not only a valuable tool for increasing cart conversions and customer satisfaction, but is a powerful converter at the top of the sales funnel.

Google Shopping’s consumer behavior research prompted their Free and Fast annotation program that prioritizes listings offering free 1 to 2-day delivery in the browser’s zip code. In early testing Google saw a 9% increase in overall conversion rates for listings that displayed a fast shipping annotation.

Chalkboard for sale through Google Shopping with Free and Fast Shipping annotation

How Merchants Are Responding

2-day shipping has clearly become the new standard, and although 75% of merchants know that offering 2-day shipping will make them more competitive, only 60% are actually offering it. Merchants who don’t currently offer 2-day shipping overwhelmingly cited cost as their main obstacle to overcome.

35 percent of merchants find forward staging inventory too costly 33 percent next day air too costly

So how can merchants lower the cost of 2-day shipping to become more competitive? For one thing, the rising model of on-demand warehousing allows small to mid-sized merchants to aggregate their inventory with other merchants’ in order to negotiate lower warehousing space and labor costs. These partnerships allow merchants of all sizes to disperse their inventory across strategic warehouse locations to achieve affordable 1 to 2-day ground shipping to their customers anywhere in the country.

Often referred to as the AirBnb of warehousing, the on-demand model also allows businesses to limit their fixed asset investment by leasing space and labor as needed and freeing up working capital to invest in business drivers.

And as our merchants noted in the survey responses, expanding a fast shipping promise nationwide drives up conversion and customer retention rates, increasing top-line revenue. Many businesses will find that this increase in revenue offsets any additional costs associated with building a more comprehensive fulfillment network.

On-demand warehousing, leasing space and labor, and increasing revenue make fast shipping more affordable

A Look Ahead: The Future of Fast Shipping

As smaller merchants step up to compete with Amazon and big box retailers’ 2-day delivery standards, large retailers are continuing to push the envelope to offer faster and faster delivery. In addition to distributed fulfillment centers for next-day delivery, big box retailers have increasingly come to rely on BOPIS (Buy Online Pickup In Store) models that easily allow for same-day fulfillment.

Forward-thinking SMB’s are already looking to the future and anticipating the next phase of customer expectations for delivery speed. To stay ahead of the curve, these businesses should prioritize partnerships with fulfillment providers that innovate on the enterprise level and make best-in-class technology accessible and scalable for businesses of all sizes.

To learn more about how Ware2Go is leveling the playing field for businesses of all sizes through its nationwide warehouse network and cutting edge fulfillment technology, reach out to one of our logistics experts.

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