Ecommerce Parcel Delivery Speed: How Important Is It?

Conventional wisdom for teens applies to parcel delivery speed, too. Just because everyone is doing something, doesn’t mean you should do it.

While fast delivery might be advantageous for some brands, it’s not right for every online seller. Despite that, there is a broadly held perception that B2C brands must get it there faster and faster to keep pace with Amazon’s latest delivery-time target.

The faster your eCommerce parcel delivery speed, the more it will dig into your profit margin. More importantly, consumers don’t care nearly as much about running with the fast crowd as retailers think.

Here are the top considerations for online sellers wondering if they must delivery in two days or less, or whether customers are really just fine with three-, four- or five-day delivery.

Cheap and Free Trumps Faster Ecommerce Parcel Delivery Speed

Given all the hype, you may be surprised that ultrafast delivery isn’t the top priority for most online buyers – not even close.

It’s clear that if a consumer doesn’t absolutely, positively have to have it same-day, they’ll accept a longer delivery time to save money. The top two reasons shoppers worldwide buy directly from brands are a better price (53%) and free delivery (49%), followed way down the list by fast delivery (36%), according to Wunderman Thompson.

Money talks with consumers and the importance of free shipping comes through loud and clear. Free shipping is the top consideration when it comes to delivery options for 69.2% of America’s online shoppers, according to Statista.

Sustainability may also be playing a role in influencing consumers’ delivery speed preferences at checkout. While you’d expect online shoppers to automatically select the fastest free delivery time, retailers are starting to see consumers choose the delivery option they perceive to be most sustainable. For these buyers, being responsible world citizens trumps immediate gratification. They know that a slower delivery time saves fuel, reduces emissions, and puts less strain on trucks and other resources.

High Shipping Costs Are Hurdles to Offering Free and Fast

In a recent episode of the Unboxing Fulfillment podcast, Giles Taylor, President of Trans-solutions, which advises businesses on successful freight transportation programs, observes that free and fast shipping is unsustainable on its current trajectory.

“Online retailers used to charge a shipping and handling rate that was based on the money spent,” Taylor explains. “But Amazon came around and turned all that upside down by giving away free shipping.”

When other retailers started offering fast and free shipping, they could initially get away with it because interest rates were low, he says. Now that they can no longer borrow money cheap, it’s a different story.

“The tide is changing a bit, even with Amazon,” he adds. “I think everybody is taking a harder look at the cost of free shipping. It is a big piece of your cost. It really dips into your gross margin.”

And Then There’s How Many Warehouses You’ll Need

The other main question for online sellers is – how much investment is required to facilitate deliveries faster than three to five days?

It all comes down to dispersing warehouses close enough to consumers to enable a fast delivery. Putting inventory closer to your customer lets you ship fast while minimizing parcel shipping costs – your largest fulfillment expense.

Standing up warehouses is expensive though – and to create a national network, you need a lot of them. Staci Americas Fulfillment’s own network uses 18 fulfillment centers to provide 1- to 2-day ground delivery to 95% of the U.S.

Just how many warehouses you’ll need depends on factors that include everything from your brand’s SKU count to where your customers are concentrated. These factors and others are discussed in our eBook on rightsizing your eCommerce fulfillment network.

Is Faster Ecommerce Parcel Delivery Even Necessary?

With all the obstacles to speeding up delivery timeframes, it’s important for eRetailers to determine if it’s really even necessary. The answer depends on these factors.

Uniqueness of the product: If your product is a commodity, shipping speed along with price and free shipping become differentiators. You may need to offer fast delivery to sweeten the deal. On the other hand, if you have a distinctive brand and products that buyers will wait for, you may have the luxury of delivering slower and at a lower cost.

Consumer expectations: What is your market’s expectation when it comes to delivery speed and free shipping? Demographics play a role. For example, 77% of baby boomers expect free shipping for orders under $50 but only 58% of millennials believe the same per National Retail Federation research. Product categories play a role too. Delivery speed matters the most to buyers of gifts, flowers, computers and software. It matters the least to buyers of pet supplies and home and garden products, according to Invespcro.

The competition: Knowing what your competitors are offering in terms of delivery speed and whether they offer free shipping enables you to match or beat their service.

Shipping strategy: What’s best for your brand and bottom line? Will paying more for fast eCommerce parcel delivery pay off in repeat purchases? Will saving on slower delivery enable you to pass the savings on?

Advantages of Offering Fast Delivery Options

1. Reduce cart abandonment. Many online shoppers will abandon their cart if they’re unhappy with the delivery options – especially if they need fast delivery. Some don’t offer it as standard but as a higher-cost additional option.

2. Enhance customer experience. To the customers who need their purchase fast, you can be a hero and reap the grateful reviews and repeat sales.

3. Gain competitive advantage. Not every competitor is willing or able to offer fast delivery. In situations where speed matters, you win.

4. Enable impulse buys. Offering fast delivery options lets you be the solution for buyers in a hurry. Rushed shoppers don’t deliberate. That means fast sales.

Disadvantages of Offering Fast Delivery Options

1. Increases shipping costs. Any way you look at it, the costs for fast parcel eCommerce delivery speed will be higher.

2. Requires significant investment. Fast delivery hinges on retailers locating inventory near customers. That requires additional warehouses and the added racking and fulfillment equipment that go along with it.

3. Multiplies inventory costs. Multiple warehouses positioned near consumers means you have to duplicate your inventory in each one. The higher levels of inventory tie up capital.

Your Options When Delivery Speed Matters

Increasing eCommerce parcel delivery speed makes sense for some retailers. Here are some ways to play the fast delivery game when you don’t have the budget of a Walmart or the network of an Amazon.

Offer Fast Delivery for a Limited Geography. The major retailers do it. They can’t offer the same fast delivery everywhere – to the wilds of North Dakota for instance. Offer fast delivery within a do-able radius of your existing facility or facilities. You’ll still need to adjust processes and coordinate transportation – just not on a national level. If you have retail locations, you can base deliveries from there as well or offer buy-online-pickup-in-store (BOPIS) service.

Offer Fast Delivery for a Limited Time. Dial up your turnaround time for special occasions when there is a demand for fast delivery, like Christmas or Mother’s Day. Offer it as a promotion, loyalty perk or a way to increase total order amounts through a minimum order requirement. Two-day or better delivery doesn’t have to be every day.

Outsource Fulfillment Services to Achieve Fast Delivery. Leverage a 3PL with a large national network or multiple 3PLs that together can provide fast delivery to select areas you serve. This enables you to stock inventory in fulfillment centers close to where you are delivering.

Get Customers to Pay for Fast Delivery. Use less overt ways of recouping costs, like folding shipping into product price, offering free shipping as a perk to push sales, upselling and cross-selling, or making fast and free delivery a benefit of membership.

Cut Costs to Help Offset Fast Delivery Expenses. Taylor makes this suggestion, “There are always things we can do to be smarter about how we ship, including negotiating better parcel rates, optimizing inventory movement, designing smarter packaging and doing more accurate data management.”

Put Your Ecommerce Fulfillment on the Fast-Track

No matter what your views on eCommerce parcel delivery speed, a 3PL can help you scale your operations to grow your sales faster and more cost effectively. Talk to the experts at Staci Americas, part of the Staci global fulfillment network, about the best shipping and fulfillment options for your brand, your products, your customers and your bottom line.