Eight of the top ten biggest retailers offer free two-day shipping, and four offer free next-day shipping
Fabric, an on-demand retail platform that enables brands to realize fast fulfillment at competitive unit economics, released its latest research report, “Fast and Free: The One-Way Ratchet of Consumer Expectations.” The report found that free two-day shipping is considered table stakes for brands and highlighted a sizable appetite for free next-day and even free same-day delivery.
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“Fast and Free: The One-Way Ratchet of Consumer Expectations.”
Given that fast shipping is enormously challenging for brands to provide from a financial, operational, and strategic perspective, Fabric’s findings serve as a wake-up call to brands that standard shipping windows of three to five days are no longer enough.
Fabric Survey: By the Numbers
Based on 700 responses from 500 consumers and 200 senior retail and brand managers, the survey findings provide insight into what consumers expect regarding shipping speeds, why they expect it for free, why this proposition is so challenging for so many brands to offer, and what brands can do about it. Some highlights of the survey include:
- Free two-day shipping is already table stakes for consumers: 76% of consumers expect free two-day shipping with a minimum purchase of only $40. That’s because eight out of the 10 biggest retailers in the U.S. offer free two-day shipping, which represents 71% of retail sales of the top 65 retailers (non-grocery).
- There’s already a sizeable appetite for free next-day and even free same-day shipping: 61% of consumers expect free next-day shipping, and 52% expect free same-day shipping with a minimum purchase of only $40. 40% of the top 10 retailers offer free next-day delivery, a proposition that’s nearly impossible for all other players.
- Free shipping is difficult and expensive for brands to provide at any speed: The cost of standard shipping for a high-volume brand has increased by 71% in the last five years. More than a quarter of the National Retail Foundation Top 100 list retailers do not even offer standard shipping for free, much less at the speeds that consumers now demand.
The results reinforce a dilemma that online retailers face: free shipping isn’t free — the cost falls on the company. But shipping prices have skyrocketed, and fast deliveries are complicated to execute from a logistical and strategic perspective. The solution is to move fulfillment operations closer to where consumers live.
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To help businesses of all sizes meet the demand for super-fast delivery without increasing overhead, Fabric offers a number of micro-fulfillment centers (MFCs) throughout the United States. MFCs take up a fraction of the space of a traditional warehouse and can fit into dense centers of commerce without sacrificing efficiency or volume. Fabric’s latest MFC opened today in Dallas and combines automated robotic fulfillment and intelligent inventory management to deliver local inventory to the right place at the right time.
“Retail is always changing, and it’s not easy to predict what the future holds, but it’s clear from these results that the stakes have never been higher,” said Colin Coggins, Fabric’s chief commercial officer. “Brands need to embrace a distributed fulfillment strategy, combined with automation, to meet and exceed consumers’ expectations today and tomorrow, without driving up costs.”