June 20, 2023

Speed still rules in home delivery, study finds


Nearly three-quarters of large online retailers plan to invest in two-day parcel delivery over the next two years, a sign that e-tailers take seriously the value of speed in consumers’ online purchasing decisions, according to a survey commissioned by regional parcel carrier OnTrac. Two-day delivery is expected to be the standard for the upcoming peak season.

The survey, conducted of 150 executives across multiple retailers, found that meeting consumers’ expectations for speed is both their greatest opportunity and challenge.

Nearly half of all millennials have said they would try a carrier that promised fast delivery, according to the report.

Among other findings was that 89% of retailers are using carriers other than FedEx Corp. (NYSE: FDX) and UPS Inc. (NYSE: UPS). Initially fueled by the pandemic, retailers continue to rely heavily on alternate carriers. About two-thirds cited faster delivery as the main reason and 36% said that cost advantages are the primary driver. The carrier diversity trend is expected to keep pace, with 53% of retailers saying they will continue diversifying their carrier use.

Sixty-eight percent of retailers said they experienced an off-schedule price increase on top of record general rate increases over the past 12 months. To compensate for higher shipping costs, 87% of retailers have opted for slower shipping, according to the survey. This puts them at odds with consumers’ clear preference for faster delivery, placing them at a competitive disadvantage and risk of losing customers.

About 83% of retailers surveyed would switch from FedEx and UPS in return for up to 20% cost savings, according to the survey.

About 98% of retailers are using buy online, pick up in-store (BOPIS) and click-and-collect options. Despite its growth, retailers are still grappling with significant challenges created by BOPIS. Retailers surveyed expressed concerns stemming from the stores themselves, namely operational and staff challenges, fulfillment struggles due to high volume and lack of merchandise availability.

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