VIENNA, Va. — June 15, 2023 — Consumers have made clear that speed matters, with 97% calling faster delivery an important factor in their online purchasing decisions. As a result, retailers are prioritizing how to meet consumer expectations around faster delivery in order to differentiate competitively. According to a new study by leading e-commerce parcel carrier OnTrac, 72% of large online retailers plan to invest in two-day delivery over the next two years. While the majority of retailers named faster delivery as their primary strategy to stay ahead of the competition, the study reveals that retailers also view meeting consumer expectations around speed as one of their greatest challenges. As such, retailers are increasingly seeking solutions like carrier diversification in order to get items to their customers faster.
OnTrac commissioned the study with Hanover Research to survey 150 C-Suite, VP, and director level supply chain professionals at large retailers about the challenges they are currently facing, how they plan to respond, and areas in which they plan to invest. The research, including takeaways and recommendations for e-commerce retailers, is outlined in OnTrac’s whitepaper.
Key insights from the study include:
- Faster delivery is retailers’ primary differentiating strategy: Seventy-two percent of retailers plan to invest in two-day delivery over the next two years. In the short-term, nearly two-thirds (60%) plan to offer two-day shipping as their standard delivery commitment during the 2023 peak season, up 11% from 2022.
- Eighty-nine percent of retailers are using alternative carriers: Initially fueled by the pandemic, retailers continue to rely heavily on alternative carriers today, citing faster delivery (66%) and cost savings (36%) as the top reasons for using alternative carriers. The carrier diversity trend is expected to keep pace, with 53% of retailers indicating they will use alternative carriers in the next 12 months.
- National carriers are implementing surcharges and rate increases: Sixty-eight percent of top online retailers experienced an off-schedule price increase on top of general rate increases in the last 12 months. To compensate for higher shipping costs, 87% of retailers have opted for slower shipping, despite consumers’ clear demands for faster delivery, putting them at an increased competitive disadvantage and risk of losing customers.
- Ninety-eight percent of retailers are already using buy online, pick up in-store (BOPIS) and click and collect: Despite its growth, retailers are still grappling with significant challenges created by BOPIS. Retailers surveyed expressed numerous concerns largely stemming from the physical stores themselves, including operational and staff challenges (55%), fulfillment struggles due to high volume (51%), and lack of store availability (51%).
“As we move into the post-pandemic era, retailers must take proactive measures to meet consumer expectations and drive growth, or else lose business and fall behind,” said Josh Dinneen, Chief Commercial Officer of OnTrac. “This study provides actionable recommendations to help retailers build supply chains that create competitive advantage through faster home delivery, greater flexibility, and cost savings.”