Same-day shipping is the newest expectation in convenient online shopping, but physical and technological limitations are ever-present

Jaws dropped when Amazon announced that they plan to spend $800 million this quarter on warehouse and infrastructure improvements as they move to free one-day shipping for their Prime members. Similarly, there was much ado in 2005 when they introduced free two-day shipping to their loyal Amazon Prime members and the fee was only $79. Now it is expected that the hype of one-day shipping will only last so long as the convenience and speed of same-day shipping becomes more important than ever to consumers.

Customer experience is projected to overtake price and product as the key brand differentiator by 2020; meaning, the product journey is now the customer journey — putting shipping and fulfillment at the center of improving the customer experience. Differentiating your brand is critical and starts with initiating one of today’s toughest, but most necessary, shipping processes: same-day delivery.

Same-day shipping is actually not a new concept – cities such as New York City, Chicago, LA, and DC have all been extending same-day shipping, albeit limited options, for decades. What is new however is how enterprise, crowd-sourced and incumbent carriers are being utilized. According to Gartner, by 2020 same-day delivery will drive up logistics costs as a percentage of revenue by 50%. Simply offering same-day shipping as an option, even at an extra cost, shows millennials and Gen Z that you are serious about keeping up and offering the most convenient shipping methods – not offering same-day shows a weakness to consumers.

The same-day and instant delivery market is expected to account for 20% of standard parcel revenue by 2025, which is huge compared to the 1% it covered in 2018. While the need to successfully utilize a same-day shipping strategy has never been more obvious, both physical and technological limitations are ever-present. A common myth surrounding same-day shipping is that a single carrier can supply all of a shipper’s same-day delivery needs. This isn’t true as coverage varies greatly by carrier. Not one single carrier covers coast-to-coast shipping, so you need to supplement the missing areas with different carriers who cover those spots. The time to tweak your shipping processes and perfect your warehouse systems is now – getting into the game prepared will put you three steps ahead. [3 Reasons Going Multi-Carrier Saves More than Just Peak Season]

The Carriers

There are already several carriers that offer same-day shipping, giving companies the option to shop between them for the best deals and convenience.

  1. FedEx Same Day: FedEx’s fastest local shipping option for customers, offering door-to-door residential and business delivery of time-sensitive parcels within hours, by uniformed FedEx drivers in branded vehicles
  2. DHL Parcel Metro: A new fast and flexible service for online retailers that meets consumers’ increasing demand for same-day and next-day delivery = no longer offered = shows volatility.
  3. USPS Metro Post: Metro Post is a same day delivery service from the United States Postal Service® available only from participating retailers through in store and online purchases. Currently requires an NSA.
  4. Deliv*: Crowd-sourced last-mile delivery solution that powers same-day delivery for retailers and businesses in 1,400 cities across 35 markets (*Deliv has since been acquired by Target. Learn more here.)
  5. Postmates: Connects customers with local couriers who can deliver anything from any store or restaurant in minutes
  6. Instacart: Groceries delivered from local stores in as fast as 1 hour
  7. Shipt: Through a user-friendly app and a local network of reliable shoppers, Shipt connects members to fresh groceries and everyday essentials
  8. Traditional Couriers such as bike messengers have been delivering real-time packages for many years.

Of the carriers listed, only two are enterprise level carriers, FedEx and USPS. However, they only have coverage in select cities and require enterprise level documentation and experienced integration support. USPS has proven reliable, but FedEx is too new in the arena to make a determination yet. Deliv, Postmates, Instacart and Shipt all fall under the title of “Crowd-Sourced Carriers”. The coverage between them varies greatly, but they accept modern documentation strategies and their integration support varies.

Things to Remember

Whenever implementing a new shipping strategy, there are bound to be limitations and restrictions, and that holds true for same-day shipping options. It is imperative that your technology is able to communicate with each other; your OMS/POS needs to be able to integrate with shipping software implemented at store-level and speak to which items can be shipped out from which locations without jeopardizing walk-in sales. Front-of-house and warehouse labor must be adjusted to be sure that pickers are organized, and that customer service is not compromised in order to fulfill same-day deliveries. With new delivery expectations, space becomes a hot commodity. Making room for new packaging, labels and void fill all become important, while still keeping in-store items available. Keeping up with inventory is more important than ever – it’s crucial to communicate between stores and warehouses regarding items in-stock with accuracy. Regarding shipping, finding the right carriers is key – you may need to supplement coverage areas with a couple carriers and still have to work to find the right price. Lastly is perhaps the most important part of the process – customer awareness! What good is it to have same-day shipping if no one knows? Especially with new technology and updated offerings getting the word out is extremely important.

Current Players

Retailers such as Walmart, Amazon and Target are already offering same-day shipping to their shoppers. Walmart offers next-day delivery with a minimum order of $35 on some of their most popular items, though only available currently in certain cities. Amazon recently upgraded their shipping options to include one-day delivery at no additional cost for their subscribers of Amazon Prime. Target shoppers looking to receive their items same-day are able to choose this shipping option for only $9.99 per order. These stores are just a few of the many that are realizing the potential that shipping options can have on their customer experience.

Getting it Done

So you’ve made the (right) decision to begin looking into implementing same-day shipping with your business – what next? Here are some helpful steps to building a same-day strategy:

Evaluate Options
What services will you offer for same-day shipping? What costs will be associated with these services, and what part of that will you charge your customer? What inventory sources will be available to ship from – will you have DCs, stores, 3PLs, and manufacturers? (Remember you may have to combine several carriers).

Internal Data Communication
What systems are you using – e-commerce suite, ERP, OMS, WMS? They all need to communicate accurately with each other. Do you utilize Multi-Carrier Shipping Software? What are your business rules?

Customer Interaction
49% of shoppers are more willing to shop with you if same-day delivery is offered. Be sure that all eligible items are clearly marked on your website and target to the customers who live directly in your contract-covered areas. 61% of online consumers between 18-34 are willing to pay more for same-day delivery, so show them you offer it.

Execute to Customer Expectation
Acknowledge fulfillment times and back order policies – and stick to them. Keep your servers updated and automate with business rules. If there is more than one carrier that covers the same area, rate shop them against each other and get the customer the best possible price.

Whether your business is just learning about same-day shipping and considering dipping a toe in the water, or if you are in the final stages of implementation, one thing is for sure – the time is now. Start by implementing ProShip’s shipping software, then work with staff to be sure that the common trials of offering same-day shipping don’t plague your organization. Show consumers that you’re serious about customer service – and about keeping your promises.

More Information: On-Demand Webinar

***Did you miss Justin Cramer, Global Project Management Director and Co-Founder of ProShip, give a webinar on “Driving Sales with Same-Day Delivery”? No problem! You can watch on-demand here.