In naming the invention that most changed ecommerce, you’d have a hard time arguing against Apple’s iPhone, launched in 2007.
After all, the iPhone and its smartphone relatives led the way in the mobile commerce revolution. It made shopping apps a part of our everyday life. It fueled responsive design, laid the groundwork for order-online-pickup-in-store and empowered consumers with real-time information like they’d never been empowered before.
But there is nothing like a good challenge and so, I’d argue that an innovation two years earlier was actually a bigger disrupter. In 2005, Amazon announced a new program called Prime that promised two-day shipping to those who paid an annual membership. It’s already become difficult to appreciate what a jolt Prime was to the ecommerce world.
It’s hard to appreciate the difference that Prime and two-day shipping made, in large part because two-day shipping has become “normal” by virtue of Amazon’s offer. Two-day shipping is now just part of the ecommerce scenery.
Not only have consumers come to expect two-day shipping, the fact that consumers expect two-day shipping is driving all kinds of strategies and innovations in the ecommerce sector.
Ecommerce is scrambling to keep up with two-day shipping
Brick-and-mortar stores are now looked to as fulfillment centers for retailers not named Amazon. Stores are scrambling to offer buy-online-pickup-in-store — a service that is harder than it sounds given the need for superior inventory management, a new breed of fraud management and extensive training for associates now given new responsibilities.
The truth is consumer expectations are headed in only one direction — toward even higher expectations. It’s a truth I talked about with Arthur McManus when we met up at Shop.org late last year. McManus is a senior vice president with FitForCommerce, a retail consultancy. He shared his take on the current and future state of ecommerce delivery in the video clip below.
It’s an important point that McManus brings up. Sure, for retailers, getting to the place where they can offer two-day shipping is crucial, but it can’t be at any cost. Retailers, after all, need to stay in business. Losing money on every order is no way to do that.
And there is pressure beyond speed. eMarketer research shows that consumers say the benefit that most encourages them to buy online is not fast shipping, but free shipping.
In fact, in a Walker Sands survey referenced by eMarketer, 80 percent of respondents said free shipping is what most encourages them to buy online. The next biggest motivator was “next-day shipping,” chosen by 36 percent of respondents (who obviously could pick more than one factor).
I would point out a couple of things. First, it’s possible free shipping was such a popular selection, because fast shipping is simply assumed in the Amazon era. I’ll also point out that if you add up the other options that respondents could choose from — next-day shipping, same-day shipping and two-hour shipping — 93 percent of respondents picked one of those answers.
About 90 percent of online consumers say fast delivery is key
And what do those responses have in common? They are all offers of fast shipping. In other words, while 80 percent of respondents said free shipping is their biggest motivation to shopping online, 93 percent said receiving their orders within two days was their biggest motivation for shopping online.
Consider, too, what is happening in the market. Last month, Target announced it was buying same-day shipping company Shipt in order to provide same-day delivery of “all major product categories at Target” by the end of 2019. Walmart, of course, is not standing still. A year ago, the Bentonville behemoth began offering free two-day shipping on 2 million items, without an annual membership fee.
Not coincidentally, Walmart’s online revenue was up 50 percent in the most recent quarter, according to The Wall Street Journal.
Remember MacManus’ advice about not going broke in an effort to provide fast shipping? Obviously companies like Target and Walmart, with annual sales of $69.5 billion and $486 billion respectively, have the wherewithal to pull off fast shipping.
Smaller competitors are going to have to be resourceful — taking advantage of scattered physical stores to have inventory close to customers and turning to order automation management, fraud review, picking, packing, delivery and customer support.
It will be difficult, but not impossible. And if it’s any consolation, there is always the chance that something new, a game-changer, is coming.
And it might be just around the corner.
Photo by iStock
Contact Mike Cassidy at m[email protected]; follow him on Twitter at @mikecassidy.