There are many purchasing drivers behind every online sale, but two of the most common variables are delivery speed and cost. But, for every customer survey that shows consumers prefer speed over cost, another shows the opposite. While offering both might sound like the ideal solution, that isn’t always logistically possible, financially viable, or strictly necessary.
In today’s blog, we explore free vs fast delivery in-depth, looking at the benefits, implications, expectations and considerations for your eCommerce fulfilment team.
Customers want free shipping
The best things in life are free, or so the famous saying goes. There’s a tonne of psychological research into what happens in the human brain when you offer something for free; but, when it comes to free shipping, we’re mainly concerned with:
- Value – increasing the perceived value of a shopping cart.
- Risk – reducing the associated risk of purchasing.
- Reciprocity – triggering a need to reciprocate the “gift”.
Together, these factors influence the subconscious mind to perform actions such as adding more products to the shopping cart, clicking the “buy” button and returning for more. It’s why customers still regularly cite delivery costs as significantly influencing their purchasing decisions, despite fast shipping dominating the adverts and banners of online marketplaces.
However, there are implications of offering fast shipping, especially for your fulfilment operation:
Free shipping costs money – money that either squeezes your profit margin or inflates your product prices.
Experts attribute the rise in eCommerce returns to free shipping, with customers ordering products they don’t intend to keep because there are no financial consequences of doing so.
Further reading: Reverse logistics – the state of eCommerce returns in 2020
Free shipping is wildly popular during the festive season, when budgets are tight. This leads to an increase in orders at an already busy time of the year, which many in-house fulfilment departments struggle to accommodate.
Customers want fast shipping
However, if you believe Amazon, then you believe that customers prefer fast shipping. In fact, they want it so fast that Amazon has increased its Prime delivery speeds to same-day and next-day to lure more customers.
Fast shipping, too, has its psychological triggers, including:
- Immediacy – satisfying the need for instant gratification.
- Risk – reducing the risk of orders not arriving on time.
- Scarcity – creating an urgency to meet the delivery cut-off time.
Likewise, these factors work together to encourage impulse purchases, spark conversions and bring repeat custom. It’s why online marketplaces are scrambling over one another to offer faster delivery options.
But, again, there are implications for your fulfilment strategy:
Expedited delivery services cost more – a cost that you must pass onto the customer or absorb yourself.
Not everyone has the resources, technology or team to process orders quickly enough to meet fast shipping expectations, which can cause delayed deliveries, missing items and negative reviews.
Many fulfilment departments are restricted by the delivery options and cut-off times of their shipping carrier. For example, Amazon Shipping doesn’t allow you to book collection times, which limits your ability to provide next-day delivery.
Relevant resource: Amazon shipping – pros, cons and everything in between
Customers want both, or neither
So how about both? The logical solution to free vs fast shipping is offering both – that way you appease all customers, regardless of their primary purchase motivators. However, when you offer both, you take on both sets of implications – making order fulfilment and returns costly and challenging to keep on top of.
And, not everyone wants free or fast shipping.
For low-cost items, some people prefer slow delivery because it means they’re guaranteed the lowest price possible. For luxury items, some shoppers prefer paying for delivery because it implies you’ve spent time and care packaging and posting their order.
What is the solution?
The solution isn’t discovering what customers prefer or offering both; it’s understanding what is best for your brand. How do you do this?
Who is your customer?
First, who is your customer? Just because most Amazon customers want fast delivery, it doesn’t mean your customers do. For example, Millennials and Gen-Z care more about shipping speeds, whereas baby boomers are more motivated by cost (they’ve lived in a world where Amazon took five days to deliver – they can wait two).
Work with your marketing team to understand your customer personas and learn what drives their purchases.
What do you sell?
The products you sell greatly influence whether free shipping, fast shipping or both are important to your customers. Someone buying high-end, customised furniture will likely expect a longer delivery lead and more expensive shipping fee than someone purchasing a low-cost, everyday product.
When are your peaks?
The time of year affects urgency and, accordingly, the need for fast shipping and the willingness to pay for it. A quick Google Trends analysis shows that searches
for “next day delivery” peaks at Christmas, Valentine’s, Easter, back to school and Halloween.
What are your blockers?
An important consideration is what would make free and fast shipping viable for your business. If it’s order value, set a minimum spend; if it’s customer lifetime value, implement it into your loyalty program; and if it’s capacity, look for an eCommerce fulfilment provider to help.
Can you deliver?
Finally, it’s crucial if offering free or fast shipping, you can deliver free or fast shipping. This means:
- Price – it’s common for product prices to absorb the cost of free shipping, but increase your prices too much, and you could price yourself out of the market and lose existing customers.
- Reliability – fast shipping requires the necessary tools and resources because if you fail to deliver items on time, you will fail to retain customers.
- Cut-off times – next-day deliveries are useless without late cut-off times, so use a fulfilment provider who offers the latest cut-off times possible.
Quality – never sacrifice quality for speed or costs. Ever.
It’s an interesting debate and, in some ways, it’s a non-debate. Fast and free shipping won’t drive conversions or customer lifetime value alone – you need a reliable fulfilment operation to deliver what you promise.
Synergy Retail Support helps you to deliver your fulfilment strategy, regardless of whether that’s free shipping, fast shipping or both. We partner with you to power affordable online deliveries that exceed customer expectations.