- Should the E-Commerce Industry Scale Back Two-Day Shipping? - December 29, 2019
Once a consumer purchases an item online, the clock starts ticking. Their expectations have aligned with the two-day shipping standard set by large corporations like Amazon.
According to a Clutch study, 48 percent of online shoppers surveyed said they typically receive deliveries within two to three days after making a purchase.
While the quick turnaround is convenient, there’s a cost to meeting that high standard: startups who are fighting to compete are paying the price. If you’re an e-commerce entrepreneur, you may want to evaluate the implications of speedy deliveries before offering the service to your consumers.
Small businesses struggle to keep up
E-commerce giants such as Amazon, Walmart and Target offer rapid delivery services down to one-day shipping. The golden standard they’ve established pressures small businesses to follow suit or risk falling behind, as it’s likely that small businesses target audiences have been exposed to (and expect) these shipping models: A 2019 logistics study by Clutch concluded that 85 percent of online shoppers have ordered items off Amazon in the past six months.
When large companies invest in rapid shipping, it’s an investment in scaling their business, as well as a competitive strategy to attract and retain leads. And it’s much more difficult for small businesses with fewer resources to make the same investment.
Amazon’s quick delivery is backed by its consumer-centric strategy that’s consistent across its company values and supply chain model. Many bootstrapped startups can’t emulate this kind of strategy without significant costs. Small businesses must streamline what they produce, over-communicate delivery speed or seek third-party help to increase their shipping speed, according to Clutch.
Adjusting operations involves many moving parts. If there are delivery mishaps, it will cost small businesses much more than the same mistake would a large company. And after a late delivery, 45 percent of customers are likely to stop purchasing products from that business, according to Clutch.
Entrepreneurs should be aware that two-day shipping may stretch their company’s capabilities and ultimately undermine their operations.
Often, resources aren’t used efficiently during time-pressed delivery schedules. The transportation sector generates the largest share of greenhouse gas emissions by economic sector, according to the EPA.
While deliveries can be sustainable if products are combined into one vehicle, time-pressed deliveries can result in emptier trucks.
“I don’t think the average consumer understands the environmental impact of having something tomorrow versus two days from now. The more time you give me, the more efficient I can be,” Patrick Browne, director of global sustainability at UPS, said.
Retail giants like Amazon have spent years optimizing their logistics operations so that inventory centers are close to consumers. They have R&D resources dedicated to innovating best practices.
However, small businesses don’t have this option. When small businesses struggle to keep up, their operations cost both themselves and the environment. It’s important to consider the environmental effects of increased efficiency before attempting to drive down delivery time.
And if sustainability is center to your brand, your customers will not be happy to learn of any unsustainable business practices. Millennial and Gen Z customers in particular are more apt to spend more money on products that are eco-friendly: nearly 75 percent agree that they would fork over the cash for ethical offerings.
E-commerce takes a holistic approach
E-commerce companies should consider all the stakeholders involved when making the decision to decrease their shipping time. In particular, the increased efficiency may come at a price that small businesses simply cannot handle. The bottom line of your business may suffer in return for one-to-two-day delivery turnarounds.
Would consumers, if given all the information, still choose quick delivery?
Entrepreneurs should balance their consumer-centric priorities with the health of the resources that enable their companies to function in the first place.