Retailers’ holiday promotions and a shift in consumer buying habits generates heavy demand for Monday deliveries by FedEx.
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But many offer free shipping on many orders. Among respondents to the survey, 16.9% said 76-99% of orders ship free; 14.8% said 51-75%; 17.3% said 26-50%; 16.5% said 11-25%; and 17.7% under 10%. Only 10.5% said they charge for shipping all orders. Many e-retailers require a minimum purchase amount for free shipping, including 62.3% in the survey. A quarter of respondents that set such thresholds—25.3%—said the minimum order required is at least $100. Nearly 35%, though, reported a minimum amount of less than $50.
At least one fulfillment and delivery expert says it's likely more e-retailers do, in fact, impose minimum purchases amounts for free shipping than is reflected in the survey. "Pretty much all web sites have minimum purchase amounts except for a week or two in December," says Fiona Dias, chief strategy officer at ShopRunner, which offers two-day shipping for orders from "hundreds" of retailers for a $79 yearly membership fee. That's the same price Amazon charges for its Prime service that promises free two-day shipping on all orders.
But that too could change, and in favor of consumers. "Minimum order amount is the next thing that's going to fall," she says. "Consumers hate thinking about having to put another item in the basket."
Retailers also are eyeing the progress of the same-day delivery programs by much larger e-commerce operators—that is, Amazon, eBay and Google. "We have yet to see a negative business impact from the same-day delivery options that a few large retailers are launching, which I think goes back to our value-driven customer base," says ShoeMetro's Stuempfig. "No question there is a market for same-day delivery but the price has to be right."
Of course, bolstering fulfillment and delivery comes at cost. The survey found 55.1% of respondents said they expect to pay more for fulfillment, compared with 12.0% who expect no change and 32.9% who anticipate paying less.
Some of those decreases likely stemmed from improvements that respondents have already made. The survey found 44.1% of respondents had upgraded their fulfillment, inventory or order management software during the preceding 18 months. That compares with 34.2% who had beefed up fulfillment staffing, 31.8% who began using suppliers to drop-ship orders to customers, 20.4% who had increased their reliance on third-party fulfillment providers, and 13.1% who had contracted with local and regional carriers for deliveries.
That latter option is not without headaches, though. "Regional carriers have helped to mitigate shipping cost growth to an extent, but not without significant resources to negotiate, implement and manage these programs," Stuempfig says. "We go into every year expecting freight increases but constantly evaluate carriers and renegotiate based on our growing package volume."
Those investments also could help e-retailers get products to consumers more quickly without absorbing too much extra cost. The survey found that the average order-to-ship time is less than 12 hours for 10.6% of respondents. 48.9% said it takes them less than one day to ship an order; 25.5% said less than two days; 6.0% less than three days; 1.7% less than four days; and 7.2% more than four days.
The leading challenge for e-retailers on the fulfillment and delivery front in 2014 seems pretty clear, experts and merchants say. "Even though customers prefer free shipping, they are expecting delivery times to be faster every year," says Dahlstrom, of Vitacost. "The challenge is to optimize delivery networks in a way so that we can continue to provide free shipping but get it to the customers more quickly."