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December 30, 2019

Inadequate Shipping Speeds Will Be an Online Sales Deal Breaker in 2020

Gone, it seems, are the days of 7-10 day shipping seeming reasonable.

Just when you thought you’d adjusted your business model to be able to successfully compete with Amazon, they’ve moved the goalposts even further back. Amazon has normalized one-day shipping, which will undoubtedly further nurture demand for speed and a new sense of what an “on time” delivery entails.

Consumers care a lot about shipping speeds. So much so that about 44% of online shoppers have abandoned an online shopping cart because the item they were seeking to purchase wouldn’t arrive on time. This is according to a Bizrate Insights survey.

Back in April, Amazon announced it would be spending $800 million to offer free 1-day shipping for members with Amazon Prime. Walmart and Target both responded a few weeks later with similar programs available in select markets. It seems when Amazon moves, everyone else must react.

According to the 2019 Digital Commerce 360 Top 1000 retailers data that the publication has available, 527 of the 1000 retailers offer 1-day shipping and 473 do not. We’re seeing a relatively even split, but as you’d expect, that number is trending towards more firms deciding they’ll have to offer it to keep up.

Consulting firm Deloitte’s 2019 holiday retail survey found 85% of consumers think free shipping is more important than fast shipping, which was defined at 2 days or less. Amazon flipped the script and created 1-day shipping essentially priced into Prime.

This is an interesting piece of information to think about. Cart abandonment aside, the literal definition of what we consider to be fast shipping has changed. 2 days was considered lightning fast, but 1 day is an entirely different concept. I need something now. I have the idea to buy it now. It will arrive tomorrow.

Analyst Michael Olson predicts that Amazon’s investment in one-day shipping for Prime members could equate to an additional $40 to $50 billion in revenue. That’s nothing to sneeze at. But it’s the seismic shift in what we expect from retailers that will have an even more profound impact on economies.

I for one am looking forward to a world where one-day and eventually even same-day shipping become cheaper and more efficient to pull off. Of course the consumer, in the end, is expected to buy more products because of this feature, which does mean we’re still going to pay for this convenience. In Amazon’s mind, they’ll be able to encourage people to buy more things.

I think that in order to keep up, companies will create price ranges of purchases where they’ll offer free one-day shipping. However, the shift won’t happen overnight for companies that don’t have the excess capital to deploy that Amazon has. 

We’ll see how this power play by the world’s largest online retailer will change the world. I’m looking forward to it, and I think the future is bright for e-commerce because of this kind of immense effect it can have on how our world works.

Bottom line here is the days of waiting 2 weeks for your new pants to arrive may be in the rearview. This is relatively crucial if you ordered them before the holidays and received them after. Let’s just say waistlines can find a way to sneakily change around this time.

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