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A recent headline on an internet business news site caught my eye: “Survey – Online Shoppers Not Enticed by Same Day Delivery.” I found that most interesting, since in this age of instant gratification I just assumed that QUICKER was BETTER. But the article went on to clarify that “Only 9% (of the 1,500 survey respondents) said same day delivery is a positive factor in their decision to make online purchases, while 75% cited free delivery.” Very Interesting, no?
FREE DELIVERY! What a concept. In reality nothing is ever FREE, right?
We have all heard of Just In Time (JIT) delivery. But with the rise of the online retail shopper, retail companies constantly seek ways to differentiate themselves from the competition in the mind of the shopper. Transportation (i.e., product or merchandise delivery) is a key arrow in the retailer’s sales quiver. If the retailer offers a range of delivery options that vary according to the urgency of the customer’s need, and if the price escalates as the ship-to-delivery time gets shorter, the shipping price can become the decisive factor in the mind of the savvy shopper.
What better differentiator than FREE SHIPPING?
Now let’s look at this from the retailer’s side. What do they strive to do? Yep, they work to minimize the cost of transportation for each delivery, using whatever leverage they can bring to bear on their carrier of choice. BUT, without a comprehensive Supply Chain Strategy that is specifically designed to support the standard delivery times that are necessary to attract and retain customers, and without the right tactical carrier delivery support and capability, the desired level of sales and revenue generation will not be possible.
One might think that the faster the delivery, the more likely the sale. But as the survey shows, there is a limit to what the customer is willing to pay for, even if the transportation cost is buried in the price of the product to create the illusion of FREE SHIPPING.
Again, this depends on the individual shipping cost. Less is typically better in the mind of the shopper. Price is probably the primary determining factor, but other factors may also come into play, such as reliability of the carrier, the carrier’s ability to deliver the package damage-free, and shipment tracking in transit. The reality is that the Transportation Manager needs to ensure that the tactics employed for shipment delivery meet the customer’s Speed Needs and provide a level of Freight Expense and Service Capability that makes FREE SHIPPING a feasible alternative for the company to offer to the customer.
So, does Transportation influence the online shopper’s purchasing decision? YOU BET!
The Growth of E-Commerce - Part 2