Deliv CEO Daphne Carmeli wrote an extensive article at the CB Insights blog about why free same-day delivery and its effects on online retail businesses. The direction this is going is obvious as the author is the CEO of a same-day delivery solution “focused on last mile logistics and same-day delivery for thousands of businesses “. Nonetheless, the arguments are important. Same-day delivery is often overlooked as a solution to growing almost every part of an online retailer’s business; mainly because it is a very costly and process-intense solution.
It’s easy to overlook the upsides, given the costly ‘downsides’.
Consumers want convenience. That simple idea has been proven over and over, and same-day delivery is yet another example: offering consumers the convenience of fast, direct delivery is often met with a dramatic increase in delivery volume.
The graph above shows the results achieved by one national retailer when it dropped its $8-12 delivery fee to offer same-day free shipping for a promotional period. The decreased fee resulted in a 600% increase in delivery volume.
The increase in volume was largely netted from new orders — not simply from customers who would have received their items through different means — showing that consumers responded to the new convenience-focused delivery option with new levels of activity.
(Highlights by me)
Free same-day delivery increases conversion rates:
a 3 – 5 day shipping timeline often gives consumers just enough of a reason to second guess a purchase (especially if a free same-day option from Amazon is just a few more clicks away).
Free same-day delivery lessens the risk of customers getting cold feet.
The mere existence of same-day delivery changes the shopping behavior:
History has proven that incentivizing consumers to spend more for convenient shipping works, and free same-day delivery is no exception.
Offering the speed and convenience of free same-day delivery above a certain purchase value is a logical progression for the online shopping experience. In our experience with one retailer (per the basket size chart above) 62% of orders surpassed the threshold set for free same-day delivery, with a plurality of those purchases (46%) more than doubling the minimum purchase value.
Services like Amazon Prime in the US increasingly make same-day and next-day delivery into table stakes. Even besides that, more convenient delivery options bring with them immense potential to grow business that goes far beyond what one might think.
The important aspect here is not that same-day and next-day delivery make the shopping experience slightly better and thus slightly increase orders. No, the important aspect is that same-day delivery changes the overall shopping experience to something new.
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