The sharp growth of e-commerce sales has led consumers to adjust their expectations around shipping delivery windows, but new data shows that fast shipping is still greatly valued. In a survey by UPS company Ware2Go, merchants reported that 1- or 2-day shipping resulted in repeat customers, better reviews and increased revenue through shipping fees.
Ware2Go spoke to over 250 merchants, representing a variety of sizes and industries, and found that 75% believe that offering 2-day shipping does or would make them more competitive in the market. More specifically, retailers who did offer such a shipping guarantee reported that it resulted in more repeat customers (59%); higher quality online reviews (39%); and better performance against their competitors (22%).
The survey also found that such retail promises do not just provide intangible results, but increased conversions. Ware2Go reported that merchants saw an increase in cart conversion when they offered free shipping (56%); 1-2 day shipping (52%); a free gift with purchase (29%); and an in-cart discount (26%). Out of the respondents who offered 1-2 day delivery promises, 68% reported increased conversions up to 25%.
With such consistently positive benefits, it would appear that these fast shipping guarantees should be table stakes for e-commerce players. But the strain on fulfillment networks, as a result of the increase in e-commerce shipments, has made it harder for merchants to honor those delivery promises. Especially for smaller merchants who might not be able to operate a full-scale logistics operation, committing to 1-2 day delivery means investing in the appropriate support and infrastructure.
“Meeting consumer expectations for fast shipping requires powerful behind-the-scenes operations, from supply chain to last-mile delivery,” said Steve Denton, CEO of Ware2Go. “Merchants who optimize those operations through strategic partnerships are poised for success in today’s e-commerce-driven, business-to-everyone economy.”
Many merchants that Ware2Go spoke to reported using outside help; the survey found that half of respondents outsourced both warehouse and fulfillment services, while an additional 32% split these responsibilities between in-house and outsourced labor. Of those who currently operate everything in-house, 21% reported that they recognized that they should move operations to an outside provider.
This is due to a number of challenges faced by retailers when shipping their products. The most common issues were reported to be insufficient inventory management (33%); incorrectly filled orders (31%); slow delivery speeds (30%); and lack of labor availability (30%). When assessing the benefits of using a third-party for shipping management, 44% described the key benefit as being “reduced operational pain points.”
Difficulties with e-commerce fulfillment are particularly likely to affect newcomers to the market; many retailers launched new online channels during the pandemic, without an existing infrastructure in place. In order to compete with more established online sellers, merchants need to present a reliable and efficient delivery system that consumers can trust. Partnering with an experienced provider is one way to achieve that.
These survey results come after several other studies have reported that consumers have adjusted their shipping expectations as a result of the pandemic. Understanding the difficulty faced by retailers right now, consumers report an average expected wait time of 8 days, up from 5 days in 2019 – considerably longer than the 1-2 day delivery window that Ware2Go asked merchants about.
However, even though consumers might be willing to tolerate longer delays, the interest in fast shipping has not dissipated. In fact, shoppers’ recognition of current shipping challenges has led to an increased willingness to pay for speed; the Ware2Go survey found that 71% of merchants said that customers are willing to pay extra for expedited shipping. By charging for faster delivery, merchants might be able to recover some of their investment in fulfillment services.