Consumers aren’t satisfied by rapid shipping, they want their orders now, and they want them delivered free.
“Holiday Shipping 2015: Faster, Faster,” a new report from Fung Business Intelligence Centre Global Retail & Technology (FBIC), has revealed that the growing popularity of online shopping has boosted the appeal of companies that can offer free and rapid delivery.
While unprecedented demand from e-commerce may make that promise difficult to keep, FBIC is maintaining its estimate of a 3-4% year-over-year increase in holiday sales (from $626 billion to $633 billion).
Shipping has gone from being a necessary but mundane part of e-commerce to a major selling point, as free and faster shipping drives sales, said executive director-head of global retail & technology Deborah Weinswig. However, the expansion of free shipping has overwhelmed delivery services, and many retailers have already stopped guaranteeing delivery by the holidays. Only the U.S. Postal Service will deliver packages on Christmas Day.
“Consumers needed to order holiday gifts earlier this year, since an abundance of free shipping has led to shippers facing delays due to the unprecedented volume of packages, and some retailers have experienced early cutoffs for sending packages via ordinary shipping methods before the holidays,” Weinswig said.
Amazon, which pioneered free two-day shipping with its Prime service, has since introduced one-day and even one-hour service with Prime Now. Other retailers have also embraced one-day shipping. The Free Shipping Day promotion (this year on Dec. 18) was created to extend the online shopping season and smooth out delivery concerns, and some 985 retailers participated this year. In addition, several retailers are working with innovative delivery startups, including DoorDash, Deliv, Curbside and Postmates. Even so, the report said some shoppers avoid shipping altogether by purchasing gift cards or using e-gifting.
“This year, the shipping industry was caught flat-footed by the explosion in orders, leading many to miss targets and causing some retailers to curtail guaranteeing delivery by the holidays,” Weinswig said. “Those consumers desiring even faster shipping can turn to e-gifting or perhaps delivery by drone in the future.”