How Are The Biggest Companies In E-commerce Doing Same Day Shipping?
Your customers expect short delivery times. That 7-10 day ground shipping timeline has become as antiquated as horse and buggy travel. In fact, nearly 95% of customers consider “fast” shipping not to be two-day or one-day shipping but same-day shipping.
Moreover, a Business Insider study found that 25% of shoppers would abandon an online cart if same-day shipping wasn’t available. That means you could be losing a quarter of your business by not offering the fastest type of shipping options.
That’s not all the business you could be losing. Amazon and Google are offering same-day delivery services, so they’re grabbing the majority of the customers who demand same-day. They’re dominating the market and stealing customers out from under you.
If you’re not offering same-day shipping, you’re not necessarily poised to fail… But you’re also not poised to win.
What are the benefits of same-day shipping?
Same-day shipping is going to be the future of e-commerce. What are some of the reasons you should consider offering same-day shipping for your customers?
Brick and mortar experience
The only real “problem” with e-commerce is that you can’t provide customers with the in-store experience like a physical storefront can. Customers can’t pick up the product, they can’t try it on, and they can’t interact with a knowledgeable sales associate.
But same-day shipping can actually help alleviate some of these concerns. They have access to the product that day, so they can try it on and test it out almost as fast as they would in person.
Same-day shipping allows for the same convenience as the brick and mortar—with the added experience of shopping online.
Plus, same-day shipping is improving the physical storefront experience as well. If a store doesn’t have an item in stock, they can have it delivered to a customer’s house that day. This enables that same level of instant gratification without having to wait days for an order to come in (which actually increases the return rate).
The common demographics for same-day delivery are millennials. (They’re also urban-dwelling, young, and more likely to be male.)
Millennials are known for their desire for instant gratification. This means they want their products now (if not yesterday). As millennials are taking over the e-commerce market, it’s important to meet their needs for immediacy.
Millennials are more likely to pay a premium for same-day delivery than any other type of customer as well. This is probably because millennials want fast convenience, and they’re also starting to make more money. If you want to grab this growing (and powerful) audience, it’s time to hop aboard the fast shipping wagon.
Same-day shipping is allowing for a wider range of e-commerce companies and offerings. Fresh perishables are becoming more common since they can have fast delivery times without refrigeration. Household consumables are also more popular because customers can get what they need in a flash. You notice you’re out of toilet paper in the morning, you order it online, and it’s waiting for you when you get home—so you don’t have to stop at the store on your way home from work.
Faster delivery times allow for more diversity of offerings, which also increases the number of online retailers with a variety of products.
What are the obstacles to overcome?
Same-day shipping can bring in a lot of revenue and advancement for your business, but there’s a reason a lot of companies aren’t offering it. There are a lot of challenges that you need to address in order to successfully implement same-day shipping without nose-diving your logistics into the ground.
We’ll take a look at some of the key obstacles, and the potential solutions to help hop these hurdles.
Fast shipping isn’t cost-effective. There is a serious premium for shipping quickly, especially if there is a large geographic distance. With the trucking capacity crunch and an influx in e-commerce stores and consumers, demand for shipment is astronomical—which is quickly raising the cost for even short-distance shipments.
Cost is going to be high, and we don’t expect it to lower any time soon. Companies know there’s a huge demand, so they’re going to charge a premium. Here a few things you can do to lower your costs:
Partner with 3PLs. The best way to get your costs down is by partnering with logistics providers. Smaller companies can have a large logistics network but are looking for more consistent business. They’re eager to partner with e-commerce retailers to implement fast shipping options if it means they’ll get ongoing, consistent business from you.
Put it in the budget. Same-day shipping is a marketing ploy. It’s a way for you to connect with your audience in a way that your competitors aren’t. So, it might make sense for you to put some portion of the cost in your marketing budget to monitor your financials.
Target a premium market. Likely, your customers are going to help you absorb the cost of same-day shipping. So if you’re going to offer same-day, you also want to target a customer base that is willing (and financially available) to pay that premium. For example, millennials have proved they are willing to pay higher for the convenience and speed of same-day shipping more so than baby boomers.
Same-day shipping is complex. There are a lot of moving parts that need to be considered and planned for. A lot of smaller companies just don’t have the logistical network needed to implement this kind of system.
For example, the majority of shoppers place orders after work, so there’s a bottleneck of night shipping. Paired with new trucking mandates that regulate truck driver hours, this can create a standstill for transport.
Work with a third-party provider that already has the logistics down to a science. There are a number of small to mid-size operations companies that have a network ready to take on these kinds of complexities for you. Learn about working with third party logistics providers here.
Your goods need to be where your customers are. Same-day shipping is only possible if your inventory is held nearby and can physically make it to the customer in time.
Since the majority of same-day customers are urban-dwellers, you’ll likely need to keep your inventory in city warehouses (or just outside city limits). These warehouses are costly because they take up space in areas where land is limited and sought-after (and thus more expensive).
This creates another problem as well. You need to have a deep understanding of your market, so you can make sure you’re storing inventory in those cities where the majority of your customers are. You don’t want to post up in New York City if most of your customers are in Boston.
In turn, this also means you can’t always provide same-day shipping to every customer. This can create inconsistencies in your brand that are harder for smaller companies to justify.
Image via Shutterstock.com
Consider working with a logistics company that will offer inexpensive inventory and same-day shipping within your key target areas.
For example, Darkstore is an on-demand 3PL delivery company that will store inventory in major cities and does same day delivery—but at a low price. They actually use leftover space in storage facilities, malls, and open warehouses to get low prices without paying for land. E-commerce company owners can then offer same day delivery to customers for a low 3% per item fee (min $2, max $20). They also let you track inventory, orders, and deliveries so you maintain control over your goods, even when they’re in Darkstore’s hands. (They’re only in a few cities, though, but do some research to see if there are any similar companies in your cities.)
Don’t know where your target audience is? It’s time to do demographic market research to better understand where same-day delivery will see the most success.
Amazon has same-day shipping on lockdown. They’re already well known for their fast, free shipping options, especially with Prime Now. They are also planning to invest in even more logistics and warehouses, so they’ll have even greater control over delivery times and costs across the nation.
Although Amazon is strong with same-day logistics in a number of cities, they don’t have a hold everywhere yet. There are still a lot of gaps in location, logistics, and service—which is allowing smaller businesses to come in to fill those gaps before Amazon can sink their teeth in.
A lot of companies have tried and failed to make same-day delivery work. There are so many logistics and costs associated, that retailers and logistics struggle to make it work. This means competition is very low—which also means a successful implementation could be a major competitive advantage.
So don’t be afraid to try it!
Webvan was a same-day delivery service that went bankrupt after 2 years. But it was acquired by Amazon, who learned from Webvan’s mistakes.
It’s not easy—otherwise everyone would be offering same-day delivery. But when something isn’t easy but it’s in high demand, that’s exactly where you want to position yourself in the market. It’s worth it to put in the effort, do your research, and find effective partnerships that can take your business to the next level.
Same-day delivery could be your number one competitive advantage (even over Amazon)… But you need to be willing to take the risk.
Have you considered same day shipping? Why or why not? Tell us in the comments below.