The Companies Who Are Making Two-Day Shipping a Reality for Retailers

When online customers click the buy button, they readily expect their purchases to arrive within 48 hours. But behind the scenes of these sped-up delivery times are a fleet of logistics companies trying to make that shipping journey as seamless as possible.

“Today’s shoppers expect to access products when they need them, at the right price and in a way that fits into their daily lives,” said Ryan Kelly, VP of e-commerce marketing at FedEx Services. “Most online orders are placed after 4 p.m., but 64 percent of online shoppers expect orders placed by 5 p.m. to qualify for next-day delivery.”

Despite such expectations, providing fast shipping is more challenging than consumers realize. In a country as large as the U.S., strategically placed distribution centers are necessary to effectively deploy inventory within a two-day shipping window. That’s far easier to execute for large retailers, but for smaller firms, which often rely on a fast shipping promise to attract customers, it can be problematic.

“When merchants are doing it themselves out of their own garage or warehouse, they can’t offer anything at two-day shipping,” said Michael Krakaris, co-founder at logistics startup Deliverr.

Fedex employee holding Fedex package
FedEx ships to 220 countries and territories worldwide and offers a year-round, 6-day national network on FedEx Ground.
CREDIT: FedEx

To solve this problem, Deliverr entered the market to provide shipping services for companies of any size. It integrates orders from multiple retailers like Walmart, eBay and Amazon, and fulfills them all from Deliverr’s warehouses in neutral packaging. Through this solution, merchants can acquire the Prime label on Amazon and the two-day badge on Walmart, which can help them stand out from their competitors — on Walmart especially.

“The shoe coverage on Walmart at two-day shipping is very minimal,” said Krakaris. “Walmart has around 14% of the gross merchandise volume of Amazon but only 1% of the competition. From a merchant standpoint, that introduces a lot of opportunity.”

Deliverr is able to provide fast shipping despite being smaller than its competitors by using data from previous sales to inform inventory strategy. By knowing where items are most popular and therefore where they are most likely going to be shipped, retailers can position their product ahead of time so it can travel the shortest distance and arrive faster.

Logistics companies UPS, DHL and FedEx are also incorporating data analytics into their solutions in a move to be more efficient for their clients.

Lower-value shipments, such as phone accessories, account for approximately 80% of DHL’s shipping volume.
CREDIT: DHL Express

“We work with our customers to drive costs out of the supply chain,” said Lee Spratt, CEO of DHL E-Commerce Solutions Americas. “We work with them to look at where they should deploy their inventory, how much of that inventory should be deployed for a specific geographic footprint. That’s something we never would have done 10 years ago.”

Once the day of arrival is confirmed, shipping companies must look to the time and process of receiving the package. While consumers want fast delivery, their own schedules aren’t always able to accommodate a package that arrives earlier in the day. Delays that may incur from missed deliveries, or even returned packages after multiple failed attempts, undermine the promise of two-day shipping.

To combat this while balancing security with convenience, many companies have introduced pickup options and services such as UPS’ My Choice program. When a consumer signs up for free with My Choice, he or she receives alerts about the package’s delivery day and is able to reschedule delivery or reroute the package to a nearby UPS Access Point.

“UPS Access Point locations are convenient places — such as The UPS Store, neighborhood delis and grocery stores, and other local businesses with evening and weekend hours — that offer easy package drop-off and pickup,” said David Carder, director of global retail and e-commerce strategy. “There are nearly 9,000 UPS Access Point locations across the United States and over 28,000 worldwide.”

UPS offers a reverse logistics solution in partnership with Optoro, a returns optimization platform.
CREDIT: UPS

Even when everything goes right in delivery, some items will need to be returned — a process that remains the biggest challenge for many shipping providers. In a UPS online shopper study, 75% of consumers said they have shipped returns back to the retailer, and 79% said free shipping on returns is important when selecting an online retailer.

FedEx’s Kelly explained that footwear in particular has a traditionally higher return rate due to customers’ intentionally buying multiple sizes and then sending back the pairs that do not fit.

While Deliverr has not yet rolled out a returns solution and DHL is still fine-tuning its offering, FedEx and UPS both allow customers to drop o a return at a physical location; the inverse of the popular “buy on-line, pick up in-store” model. UPS also offers returns management tools for its merchants, including an exchange service.

“E-commerce brands need to have a strong returns network,” said Carder. “Research continues to show that to succeed in e-commerce, retailers must offer comprehensive returns services, which are clearly stated upfront, and provide an easy-to-return online experience.”

Watch the video below to see how digitally-native brand Allbirds is thriving in e-commerce:

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