e-commerce has been growing rapidly over the last decade and is fuelling much of the rebound this “peak” shipping season. However, consumers that buy goods online are demanding faster delivery times for their purchases – yet they remain largely unwilling to pay for the transportation component of their purchases.
It’s a conundrum shippers and carriers alike will find difficult to solve over the coming years, according to a recent article by Fleet Owner.
Josh Hubbard, a director at AlixPartners, noted in a conference call by Wall Street investment firm Stifel Nicolaus & Co. that “free shipping” remains either a determining factor or an important consideration in most online purchase decisions and thus is a “necessary cost” for those looking to establish or grow their e-commerce market presence.
“Some consumers are even willing to pay a higher total order cost in order to get free shipping,” he noted. “Not only do consumers expect free shipping, but expectations for speed of free delivery are also increasing.”
Pointing to his firm’s survey data, Hubbard noted that in 2012, the average acceptable wait time for free delivery of online-purchased goods was 5.5 days. But by as of this year, that number is down to five days.
Marc Iampieri, another director with AlixPartners, added that a quarter of the firm’s survey respondents now expect free shipping in three days or less – and he anticipates such expectations to only become more widespread, reports Fleet Owner.
“.. To me, there are some pretty big implications for shippers. It means that they have to start looking at either a guaranteed two- or three-day service, or they have to locate distribution centers closer to consumers, so that there is a high probability of hitting them with ground service within two-to-three days.”
He added that younger consumers are more likely to demand two-three day shipping while the “one week or later” expectation category is dominated by the 45-65+ age range.
Iampieri said that will be pretty difficult for shippers to meet expectations for free shipping with increasingly rapid transit times, especially if the customer is accustomed to not paying for the service upgrade, or paying very little.
“Future preferences will be based on what the younger generation is saying now, and those preferences—those expectations—are for faster and cheaper.”