The logistics industry is ever changing and many of the challenges posed to companies are inspired by practices initially adopted by ecommerce giants such as Walmart and Amazon.
Same day and next day shipping are one of those challenges that has become an industry norm as smaller retailers and operations continue to struggle to keep up with increased demand. No matter the company’s size, every business is expected to offer the delivery options expected by consumers. If a retailer fails to meet those delivery options, they risk losing business to competitors.
Read on to learn more about what is next day shipping, considerations regarding next day shipping and facts about next day shipping that illustrate its popularity.
What is Next Day Shipping?
Next day shipping is a quick package delivery option that guarantees that your order will be packaged and shipped within 24 hours. Demand for next-day delivery is increasing throughout the ecommerce industry as customers want their purchases delivered in the shortest time with the cheapest fee possible.
As stated, ecommerce giants such as Amazon and Walmart are industry leaders in the next-day delivery realm. Examples of each of their next day shipping include Amazon with their Prime subscription which makes members eligible for next day shipping, Target’s free 24-hour shipping program for loyalty cardholders and Walmart offers next day shipping with no membership fee.
Retailers have been forced to compete against these giants with no other choice except to offer the same services to their customers. The cost and speed of a delivery can be the difference between making or losing a sale.
How Much Does Next Day Shipping Cost?
There are several factors to consider when determining shipping cost for both domestic and international delivery including package weight, dimensions, shipping distance and time frame of delivery. A one-size-fits-all solution is just not possible.
All major carriers, including the USPS, FedEx, and UPS, offer next day delivery services. Next day shipping USPS is offered with Priority Mail Express; FedEx next day shipping is offered with FedEx Standard Overnight, FedEx Priority Overnight or FedEx First Overnight; UPS next day shipping is offered with UPS Next Day Air Early and UPS Next Day Air.
Next Day Shipping: Three Considerations
Next day shipping is a major convenience to customers, but it comes at a cost. Offering next day shipping will present warehousing challenges and environmental concerns that should be weighed and considered when shipping to consumers.
Here are three things you should think about before offering next day shipping:
- Actual cost to retailers
A next day shipping option is offered by 90 percent of online retailers, but with an extra charge which can be up to four times the cost of standard shipping. Next day shipping with high shipping costs defeats the purpose and is a major turn off for customers. This increased shipping cost can result in losing sales to customers who are unwilling to pay extra for expedited shipping.
A retailer with one distribution center has an average next day shipping cost of $27 per package. With 10 distribution centers that cost is decreased by more than 60 percent to around $10. For an ecommerce giant like Amazon that has numerous distribution centers at strategic locations all over the nation their 24-hour shipping cost is amazingly under $5. This is a large reason Amazon can offer free next day shipping to their Prime members.
Only 11% of customers will be able to be reached by most ecommerce retailers with strategically placed fulfillment centers in a day with ground shipping. But 91% of buyers can be reached through ground shipping in a day by Amazon with its extensive warehouse and logistical capabilities, which makes it easier to offer next day delivery with Prime subscriptions. Other smaller retailers must resort to air shipping to keep up which quickly can make costs explode.
Most retailers are being forced to subsidize the cost of next-day delivery to be able to battle for customers and stay relevant.
- Environmental concerns
Faster delivery options keep customers coming back for more but creates a significant environmental impact to be considered. Carbon emission can be reduced by up to 90% when groceries are combined and delivered to customers with their orders instead of them going individually to grocery stores.
When the need for an item is immediate it becomes increasingly difficult to combine items and deliver them at the same time. This negates the environmental benefits and efficiency of consolidated deliveries.
Delivery vans that are carrying next day packages are carrying fewer items which translates to more vehicles on the road leading to higher greenhouse gas emissions. A delivery van making only a few deliveries creates up to 35 times more emissions than a fully loaded van.
- Logistical challenges
Your warehouse locations will affect your ability to provide next day delivery to customers.
This is something Amazon understands all too well, which is why they have a far-reaching warehouse system across the United States.
This warehouse network allows Amazon to offer next day shipping, enables them to tap into great shipping rates with all major carriers and to ship a multitude of orders quickly.
A study conducted by McKinsey, revealed that you would need 20 distribution centers to be able to compete with Amazon. 5-6 shipping zones must be shipped across on average by a retailer that has only one distribution center. This increased delivery distance causes delays and cuts into a retailers’ bottom line due to higher shipping rates. Very few retailers can afford overhead costs and lease obligations that come with running distribution centers in separate locations.
You need to take advantage of a partnership with warehouse providers that have access to strategically placed facilities to reduce order delivery time and costs to be able to offer next day shipping.
Integrating your ecommerce business with these warehouse networks and reliable third-party fulfillment providers will enable you to offer your customers low cost expedited deliveries which has become expected in ecommerce.
20 Facts About Next Day Shipping
- In 2020, 73% of people reported they were shopping more online than they did in previous years.
- The total volume of parcels shipped in the United States hit 20 billion in 2020.
- 2020 totals for parcel delivery volume increased by an estimated 70%.
- The most popular categories for online purchases include clothing, household items, groceries, cleaning supplies and electronics.
- Online sales accounted for 18% of all retail spending worldwide in 2020.
- Nearly half of consumers (44%) said they would wait for two days for orders delivered via fast shipping.
- The holidays continue to be the leading shopping season and online holiday shopping is only increasing, as 57% of consumers shifted their purchases through online sales channels in 2020 alone. (That includes all generations, except seniors, preferring online formats to physical store formats when making purchases.)
- That survey also found that 56% of GenXers and 55% of millennials prefer online formats to physical stores.
- More than 70% of consumers cite convenience (77%) and free shipping (72%) as their top reasons to shop online.
- 41% of consumers are willing to pay a charge for same-day delivery while nearly a quarter (24% of shoppers said they would pay more to receive packages within a one-or two-hour window of their choosing.
- This has led to a greater emphasis on shipping benefits as well, as 72% of Amazon Prime users cite unlimited free delivery as the most important benefit of the service.
- Beyond Amazon, 61% of U.S. and 68 % of Canadian shoppers said free delivery (in general) is their top consideration for most purchases they make.
- That same report revealed 82% of consumers in the U.S. were willing to have bought more items to take advantage of a minimum spending ‘free delivery’ option.
- Consumers say that digital retailers often meet their delivery speed expectations nearly 50 % of the time (45%).
- 42% of customers report they were previously affected by a breach of personal information, while 38% say they are somewhat likely to allow a retailer to digitally find them in-store for special promotions and offers
- In return for sharing personal data, 61% of customers say they want some sort of promotion in return.
- The high demand for same day delivery cannot be overstated, however, most retailers are falling short of this expectation with just over 50% offering same-day shipping.
- What do consumers consider fast shipping? According to 97% of consumers, same day shipping is considered “fast” while 95 % consider next day shipping to be “fast”.
- Only 20% of consumers were willing to forgive retailers for delivery disruptions due to supply chain issues in 2021.
- 46% of consumers ranked reliability as one of the top attributes they look for when choosing a brand or retailer to purchase from.
Final Thoughts
Next day shipping is only becoming more popular and is an expected service by consumers. To stay relevant as an online retailer you must be able to offer next day shipping and an ecommerce shipping solution like ReadyShipper X can help you provide that service to your customers. Schedule a consultation with one of our professionals today!
