Same-Day Delivery: Is the Reward Worth the Risk?
by Jarrett Streebin
Consumers today are becoming less patient with shipping times by the minute, with many expecting packages to show up at their doorstep at lightning speed. Approximately 56 percent of millennials expect same-day delivery and 26 percent of U.S. online shoppers abandon their shopping carts when shipping times are too high.
To accommodate this consumer shift, two-thirds of retailers plan on offering same-day delivery by the end of 2021. Is this a sustainable pivot for retailers? Is it worth it?
An overview of same-day delivery
Amazon was one of the first major retailers to offer same-day delivery in 2009. They started offering the service in seven cities, charging Prime members $6 and non-Prime members $15. Over the next five years, they saw customers embrace same-day delivery, purchasing 10x the number of items with same-day delivery by 2014.
Companies like Amazon have thrown hundreds of millions of dollars into making same-day delivery possible for their customers. While retail giants like Amazon and Target can continue offering same-day delivery, it doesn’t make sense for every retailer to follow suit.
Determining if same-day is a fit
If your business has the time and resources to put into same-day delivery, it’s an avenue worth exploring. Before you blindly follow other retailers offering same-day delivery, consider whether or not it's possible for your business to feasibly offer this as an option.
Ask yourself the following questions.
Can you afford it?
Same-day delivery will definitely increase your shipping costs and require improved operations. Does your business justify it? Are the customers willing to pay the additional cost or do you want to subsidize it?
An easy way to reduce the cost of same-day deliveries is to utilize regional carriers, which are often much more economical.
How fast can you pack orders?
Speed is an integral facet of same-day delivery order fulfillment. Companies that offer same-day delivery often make group picks, pulling the same item for multiple shipments to cut down on travel times. If your order processing queue is already small and consumers aren’t consistently ordering the same products from your store, consider how same-day shipping will further reduce packing efficiency.
Do you have the truck capacity?
Moving products quickly means getting them onto trucks as soon as possible. Truck space is competitive and finding last-minute openings on trucks that are already filling up could be a logistical challenge. If you’re already having a difficult time securing truck space, same-day deliveries will only worsen this pain point.
What do your customers value?
Having a good understanding of your customer base can go a long way in helping you determine whether or not same-day delivery is worth it. For example, corporate social responsibility comes into play with same-day deliveries, requiring more trucks, more driving, and more fuel. As 87 percent of consumers will have a positive image of companies that back environmental issues, speed isn’t everything in today’s market.
It doesn’t make sense for every retailer to jump on the same-day delivery train, as one in five Americans doesn’t trust delivery times from retailers as is. Shortening the delivery timeframe only makes order fulfillment that much more difficult, which could result in unfulfilled promises that could damage your business’s trustworthiness.
If you choose to opt-out of same-day delivery it can result in an increased focus on improving customer experience by providing free or low-cost shipping, accurate tracking, and delivery consistency.
Whether you decide to offer same-day delivery or not, knowing the pros and cons enables you to make an informed decision that best suits your customer base.