Online shopping continues to grow as a percentage of overall sales and each major retailer and platform is looking for ways to stand out. The main focus for differentiation right now appears to be faster product shipping. But the very differentiation that these companies are searching for is shrinking almost as fast as the delivery times.
Amazon was one of the first game changers when it came to faster order fulfillment back in 2005 by announcing 2-Day shipping on all Prime orders. They have since gone on to make a variety of premium shipping options available for their consumers.
Target and Walmart have been hot on their heels – especially in the past 12 months – as each has made significant changes to their order fulfillment processes and time. Now what seemed to be a differentiator between Amazon and the competition has become commonplace in for consumers shopping online.
Consumers are definitely the winners by enjoying better convenience through faster shipping. And it appears for now at least that the retailers and platforms are set to shell out big amounts to improve their shipping services. What is still yet to be seen is if these faster fulfillment times will actually create more customer platform loyalty.
Shipping Options on Amazon
Amazon has a variety of different shipping options that sellers can offer to Amazon shoppers. Previously, all Prime shipments were 2-Day Shipping which was one of the fastest shipping options available. Non-Prime members could pay for 2-Day shipping, but usually experienced 3-5-day shipping. All customers could additionally choose to pay for 1-day shipping.
Earlier this year Amazon started making the switch to 1-Day Prime shipping for Prime members which subsequently became the fastest shipping available. And it has been replaced again. Now, Amazon’s Premium shipping options include same-day delivery as well as 1 & 2-day shipping.
Sellers that have been selling on Amazon for more than 90 days and meet certain metrics are able to offer shoppers premium shipping. They must have a Valid Tracking Rate of 99%, On-Time Delivery of 97% or better and a Pre-fulfillment Cancellation rate of less than 0.5%.
Failure to meet those metrics means that your premium shipping can be revoked. You will then need to submit a plan of action to address the issues that caused you to not meet those metrics.
Amazon’s Shipping vs. Competitors
The increased availability of faster shipping on Amazon has come about because of desire to lead on fulfillment times, but also in response to new shipping programs rolled out by their main competitors. Target, Walmart and even Best Buy have started creating new shipping programs design to provide the most convenient fulfillment experience for customers.
Target made big waves earlier this year with their announcement of same-day delivery becoming available in certain markets. That now applies to 47 states. The expansion of their same-day pick up service is also leading to big growth – as Target’s CEO Brian Cornell revealed that they are cutting Target’s costs by 90%.
Walmart has also made online shopping more convenient for customers this year by making Next Day Delivery free for all online shoppers without any type of membership. They have since gone on to roll out same-day delivery this year – with a stated goal of making it available in more than 200 metro areas by the end of 2019.
Mega retailers like Target and Walmart are not the only ones making waves with faster shipping however. Best Buy has also announced free next day delivery on all orders just in time for the holiday season. It will be interesting to see which other retailers follow suit in the coming months. It seems that faster delivery is here to stay no matter what it is costing these retailers.
How Will Better Shipping Affect Customer Loyalty
The million-dollar question – or perhaps billion-dollar question – is do faster delivery times equal better customer loyalty. The answer does not appear to be clear. Amazon had a huge head start on faster delivery times and certainly became the dominant eCommerce retailer. But there are signs that the lead could possibly be slipping.
In 2018 – before most of Target and Walmart’s faster shipping plans were rolled out – the frequency of shoppers buying items on Amazon more than 6 times a month dropped drastically. Customer shopping preferences also reversed from the prior year. 55% of customers said they preferred shopping on Walmart than Amazon – which was up 8% from 2017. Prime Membership sign ups also seem to be on the decline with 52% of shoppers stating they had a Prime Membership in 2019 compared to 59% in 2018.
Now that more platforms are offering faster shipping times with the pricey Prime Membership it is difficult to see exactly how platform loyalty will play out. Target and Walmart’s brick-and-mortar presence seems to be helping its online sales by creating a better omni-channel experience. Both retailers have reported surges in online shopping using their pick-up services.
Convenience is certainly what customers seem to be searching for but it does not seem to be the only thing driving customer loyalty. Trust plays a major part and it is something that is still somewhat of an issue for many who purchase from Amazon – for especially big-ticket purchases. Even retailers like Nike have kicked Amazon to the curb because of their inability to deal with counterfeit products. Some research is showing that up to 15% of Amazon shoppers have had problems purchasing counterfeit products from the platform.
Target and Walmart Marketplaces have much stricter control of their 3rd party sellers and vendors which helps them prevent counterfeits from showing up on the platform. This may help them to continue to build customer trust and potentially create better customer loyalty. Faster shipping seems to be here to stay, but it will take more than that for one platform to dominate eCommerce sales.