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Why e-retailers shouldn't focus too much on delivery speed

18 Nov 2020
Five years ago, a 2- to 4-day delivery time was common. Now, it seems like an eternity. Today's orders are expected to be delivered tomorrow.

McKinsey forecasts that 25% of B2C e-commerce orders will be same-day deliveries in 2025, while the current percentage is less than 1%.

The trend towards shorter delivery lead times is quite understandable: it closes the gap between online and offline shopping, combining the convenience of buying things from the comfort of your own home with the joy of using the product briefly after purchasing it in a physical store.

The question is, should e-retailers really aim for ever-shorter delivery lead times? Or do consumers have other, more pressing requirements?

Same-day delivery or 'first time right?'

When it comes to same-day delivery, e-retailers shouldn't just ask themselves whether it's feasible. What's more interesting is to have a closer look at the customer's wishes. Medication and late birthday gifts aside, most orders are not that urgent. In fact, 94% of Dutch shoppers consider price the most important factor in online shopping. And 76% are willing to wait a little longer for their order to arrive if it means shipping costs are lower.

Other key factors are flexibility, clarity, and reliability. This explains the popularity of pickup point delivery, which allows the consumer to pick up their package whenever they want to.

So, rather than same-day delivery, 'first time right' should be the main goal. Only then, the consumer will know they'll receive the product whenever they need it.

Time to empower customers

Did you know 70% of consumers will be happier if they get a say in delivery lead times and shipping costs? This means it's high time for e-retailers to empower their customers. They can, for example, introduce a colored time-window system, which may look like this:

• Red stands for same-day delivery. The delivery person has to make a detour, so the customer should pay premium shipping costs.

• Yellow represents next-day delivery, as the order can be combined with other orders in the same neighborhood. Customers pay the standard shipping rate.

• Green means the e-retailer can map the best shipping route, thus minimizing shipping costs. The customer gets a discount on the total price, and their order will be labeled as a 'sustainable shipment.' E-retailers could even introduce a 'green shipping day' in a certain neighborhood, so they can deliver all sustainable shipments to residents once a week. This will increase drop density as well as the efficiency of shipping routes.

Several shipping options: a win-win situation

Flexible, longer delivery lead times are beneficial for e-retailers, consumers, and the environment. Shipping routes will be more efficient, which will translate into cheaper costs for all parties involved. Furthermore, the e-retailer and carrier can better spread the workload, as it won't be necessary to process all orders the same night. On top of that, the e-retailer may benefit from several orders being combined into one shipment, since they'll only have to pay shipping costs once.

Finally, more efficient routes contribute to less CO2 emissions, which is increasingly important to both consumers and companies — 68% of online shoppers don't mind waiting a little longer for their shipment if it benefits the environment, and two in five consumers are willing to pay extra for sustainable shipments.

So, why do e-retailers go out of their way to realize shorter delivery lead times? Rather than focusing on speed, they should allow customers to opt for the shipping option they prefer. It's a win-win situation!

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