What Fast Fulfillment Means to Consumers
The unprecedented growth of the e-commerce industry has been front-page news – as have the global supply chain disruptions that followed. Most retailers’ supply chains were not prepared for the abrupt switch in transportation and fulfillment needs or the sudden spike in consumer demand.
With supply chain disruptions making waves in even mainstream media, you might have thought consumers would loosen their expectations for fast and free shipping. However, recent consumer survey data revealed that since the onset of the pandemic:
- 33% of consumers have higher expectations for fast shipping
- 40% of shoppers have higher expectations for free shipping
- 42% of shoppers expect a two-day shipping option for every online purchase.
3 Unexpected Benefits of Fast Fulfillment
Most merchants know faster fulfillment will lead to a better customer experience, but there are actually benefits to nearly every aspect of your business when you prioritize a better delivery experience for your customers.
1. More Sales
According to consumers, promising fast shipping sells. A 2021 consumer survey revealed:
- 69% of consumers are more likely to click a display ad that mentions fast/free shipping
- 77% are more likely to purchase an item if it can be delivered to them in two days or less.
Google Shopping’s extensive consumer behavior research showed that online shoppers are highly motivated by “the Power of Now.” This prompted them to launch their Free and Fast shipping tags, which point out to browsers which listings offer fast and free shipping based on their location and product availability.
Early testing found a 9% increase in overall conversion rates for Google Shopping listings displaying a fast shipping tag. For small to mid-sized businesses (SMBs), fast shipping is an opportunity to convert shoppers at the top of the sales funnel, driving more sales from the bottom up.
2. Better Customer Retention
While fast shipping promises can attract new customers, delivering on those promises can help retain them. 79% of consumers say they are more likely to make a second purchase from a merchant after a positive delivery experience.
While acquiring new customers is certainly important, retaining existing customers can significantly contribute to the growth of your business. For one thing, retaining customers is less expensive than acquiring new ones – some experts estimate by nearly seven fold.
Loyal customers can be converted to brand advocates who rate, review, and recommend your products to others.
3. Higher Average Order Value (AOV)
The promise of fast shipping entices shoppers to add more items to their cart. In fact, 84% of consumers admit they have added something to their cart to qualify for free shipping.
Not only do higher AOVs increase top-line revenue, but they also help to offset pick, pack, and ship costs, driving up the profitability of each sale. If your fulfillment partner charges less for additional selections, you can discover economies of scale that compound the profitability of a higher AOV.
You can incentivize shoppers to meet your minimum order qualtity (MOQ) by offering bulk discounts (creating a greater perceived value) and offering flexible payment options.
What Fast Fulfillment Means to Retail Partners
LS2 Helmets Sees the Brick and Mortar Game Has Changed
Today’s consumers have endless options when it comes to sales channels. If a shopper can’t find the product they want in-store, they can hop online and purchase the same product elsewhere before leaving the store. This puts retailers in direct competition with ecommerce platforms like Amazon.
LS2 Helmets, the country’s fastest growing motorcycle helmet brand, learned that the pressure from online competitors had changed their retail partners’ delivery expectations.
- The Challenge: Phil Ammendolia, President & CEO at LS2 Helmets U.S., found that if he couldn’t get shipments to his retail partners in two days or less, shoppers would y order from a competitor who could ship it straight to their front door. Retailers were hesitant to stock his product if he couldn’t compete with e-commerce shipping speeds.
- The Solution: LS2 partnered with an on-demand warehousing partner that helped them forward-stock their inventory closer to their retail partners to enable faster delivery.
- The Result: LS2 can now reach 70% of their customers in two days or less. Delivery times were decreased by up to three days on West Coast shipments.
Drive More Retail Sales with Faster Fulfillment
O2 is a clean alternative to traditional, sugary sports recovery drinks. Their primary retail partners were independently-owned CrossFit gyms, where their target customers were working out and being introduced to O2.
- Challenge: Retail sales weren’t the top priority for most busy gym owners. Gyms often wouldn’t place replenishment orders until after they were already sold out of O2. Every day that O2’s product spent in transit to their retail partners was a day that the shelves sat empty and sales were stagnant.
- Solution: O2 distributed their product closer to their gym partners to ship to them in one-two days after a replenishment order dropped.
- Result: With two-day delivery, gym partners were able to restock shelves quickly to get retail sales flowing again.
How Merchants of All Sizes Can Have Faster Fulfillment
Fast fulfillment is not just for large enterprises and legacy retailers. Modern supply chains are built with flexibility and scalability in mind, and by implementing the following three tactics, businesses of all sizes can offer fast fulfillment to their customers.
- Distribute inventory closer to end customers. If you’re fulfilling orders from a single warehouse, chances are you’re either suffering from slow delivery times (shipping products all the way across the country via ground) or inflated delivery costs (using next-day air services to meet your customers’ one- to two-day delivery expectations). By adding additional warehouses in strategic locations, you can actually deliver to your customers within a day or two via UPS Ground for the fastest and most affordable shipping rates.
- Partner with an on-demand warehousing partner. Often, small to midsize businesses (SMBs) don’t feel they can afford to carry the additional inventory needed to stock multiple warehouses. An on-demand warehousing partner will aggregate your inventory with other merchants’ so you can stock smaller amounts of inventory in multiple locations.
- Prioritize technology. Another barrier for many SMBs is finding out exactly where they should be stocking their inventory to enable fast ground shipping to all of their customers. The cost of having a consultant recommend warehouse placement can be prohibitive, but Ware2Go’s self-service tool, NetworkVu, uses machine learning to build a free fulfillment network based on your own shipping and order data.
The supply chain is transforming to provide the same flexibility that digital sales channels have created for SMBs. With a focus on technology and strong partnerships, SMBs can compete for market share with fast fulfillment that yields higher sales, better customer retention, and higher average order values.