E-commerce fights back: So do home delivery costs and consumer expectations 3
Expectations for free shipping have settled at roughly three days,
after steadily declining from five-and-a-half days a decade ago. If a
shipper wants to give the impression that an item is "in stock," then it
is critical to deliver within that window. Even if the three-day threshold
is unattainable, free shipping needs to be offered-- its availability
impacts 96% of purchase decisions. But not all free shipping is
created equal. Today, many shippers are falling short of these
expectations (figure 2). Only 48% of companies offer free shipping or
returns, and 47% are not able to commit to a roughly three-day clickto-porch
free shipping lead time.
Home delivery volumes have recovered in all product categories
this year after an expected dip in 2022 as online shopping increases
outpaced GDP and retail sales growth over the period. The trend is
powered by an uptick in all categories, including sizable momentum
in apparel/footwear, pet supplies, and cosmetics. While grocery
activity gained momentum, 60% of grocery consumers still prefer to
shop in-store. Some, meanwhile, are open to alternatives to standard
home ground service delivery. Nearly 40%, for instance, would accept
a fee of $5 or less to collect an order from a pickup location within 15
minutes of their home.
WOULD ACCEPT A FEE OF $5 OR
LESS TO COLLECT AN ORDER FROM
A PICKUP LOCATION WITHIN
15 MINUTES OF THEIR HOME
40%
Source: AlixPartners Home Delivery Survey, 2023
Our consumer home delivery survey has been
fielded for the past 10 years, during which time we
have seen expectations increase for free shipping
service level from 5.5 days delivery in 2012 to
3.3 days in 2021.
Q: Do your current distribution
capabilities allow you to commit to that lead time
for free shipping (click-to-porch)?
FIGURE 2: DESPITE THIS LEVELING, ALMOST HALF OF THE SHIPPERS SURVEYED ARE NOT ABLE TO
ACHIEVE THE CONSUMER'S AVERAGE EXPECTED SERVICE LEVEL
Q: (Exec) What is your free shipping
service level goal?
Q: (Consumer) When buying an item for delivery,
what is the maximum delivery time you will
accept to receive FREE shipping?
Yes No
53% 47%
1 Day 4+ Days
3 Day
2 Day
Executive survey Consumer survey
+2%
+23%
3%
31% 13%
21%
26%
19%
47% 40%
BACK IN BUSINESS
HAVE WE REACHED TERMINAL
VELOCITY FOR FREE SHIPPING?
EXPECTATIONS FOR
FREE SHIPPING HAVE
SETTLED AT ROUGHLY
THREE DAYS