Consumers today are accustomed to two-day shipping. While it may seem like only giant online retailers can afford to build this into their logistics at their scale and budget, the truth is that independent growing brands can compete in this area as well. If you run your own ecommerce website, there are several methods to offering two-day shipping, as well as different strategies around how much you pay for and charge customers for it.
In this post, we’ll dive into some key questions ecommerce brands should ask themselves and the possibilities that exist for them so their customers don’t have to look elsewhere.
My customers select slow delivery times at checkout. Do I really need a two-day option?
As one of the biggest drivers of online purchases and a best practice today, you should offer two-day shipping to as many shopper as you can. While some customers will be fine waiting a week or more for their order, you are turning away many other shoppers who need it sooner. This is important for not only consumers purchasing items that are practical or necessary parts of their daily routine, but also shoppers who need a last-minute gift, item for a trip, etc.
By adding a guaranteed two-day shipping option to their online store, many brands find an increase in sales and new customers that even become lifelong customers. When customers know they can get a product from you in that tight of a turnaround, they may also be more likely to purchase from you again in the future.
How is two-day delivery shipped?
Typically, two-day delivery is shipped via air cargo or ground shipping.
Air shipping is used most often to send packages to far away destinations and is likely the only option to get goods across thousands of miles within two days. There is a lot more coverage for air shipping if you are only storing and shipping inventory from one location. But because of the distance and airplane transportation required, air shipping is significantly more expensive than other modes.
Ground shipping is a more affordable option than air shipping, as it uses trucks to move orders to their final destination. To guarantee delivery in two days, the distance traveled for ground shipping is much more limited in terms of the number of miles reached. The transit time will depend on the shipping origin as well as the shipping destination. Companies that use this strategy often ship from multiple locations in different regions to increase coverage.
How do companies keep two-day shipping costs down?
Unsurprisingly, any type of expedited shipping can come at a cost, and shipping carriers continue to raise shipping prices. However, there are a few strategic ways to cut your average shipping cost.
- Ship from large cities (the greater the population, the better).
Keeping inventory near your customers is the easiest way to reduce the distance traveled, time in transit, and ultimate cost of shipping. With most people living in big cities, the traditional warehouse model in rural areas has become outdated and impractical.
Of course, the exact cities will depend on where your customers reside. Analyzing your sales data will uncover the breakdown of common shipping destinations or cities. You’ll want to let the data guide you to understand which locations to utilize for ground shipping.
- Target only certain zip codes.
You don’t need to roll out a two-day delivery option that displays to everyone who lands on your shopping cart. For example, you wouldn’t offer guaranteed ground shipping to a shopper in NYC if you’re only shipping out of LA. Delivery trucks can’t physically get the package there on time. To test out a two-day shipping offering, you may consider targeting customers in the shipping zones or area codes that are within the near vicinity surrounding the warehouse storing your inventory.
That way, upon checkout, the two-day shipping option will only appear for the shopper if their shipping destination zip code is a match. Fortunately, this doesn’t have to be a completely manual process. A lot of these zones are predetermined by the post office and shipping carriers, and many third-party logistics (3PL) companies have the technology that handles the zip code validation on your behalf by talking to your ecommerce store and sending data back and forth.
- Store inventory and ship orders from several warehouses across the country.
If you have a heavy customer base on the east coast but you’re shipping exclusively from the west coast, you could be saving a lot of money over time by expanding into other regions. Shipping from only one location limits the number of people you can offer affordable two-day ground shipping to. Of course, there is always air shipping, but you may see less customers converting as the price of shipping goes up.
If your customers are distributed throughout the country, you should distribute your inventory to multiple regions. This is exactly how Amazon executes its two-day shipping for Prime customers. If you run a smaller operation than Amazon and can’t own or lease multiple shipping warehouses yourself, many 3PLs have multiple fulfillment centers that enable you to spread your products out to different geographic regions. The more populated metro areas you ship from, the more customers you can offer two-day ground shipping to, and the more conversions you will see.
What are the main options for offering two-day shipping?
There are several ways brands offer two-day shipping to ecommerce customers. Here are the two most common setups.
- Keeping fulfillment in-house
When you are self-fulfilling orders placed on your store, your operation is often limited to shipping from only one location. You are responsible for taking packed boxes to the post office or having shipping carriers pick them up from you. You must map the shipping options you offer on your store to the shipping services offered by the carrier you are working with. Each carrier has its own version of two-day shipping, including both domestic and international shipments.
Guaranteed two-day shipping will depend on the exact shipping origin and destination, carrier, service, cutoff time, and days of operation. Even when two-day shipping is guaranteed, delays happen, packages get lost or stolen, and extreme weather comes into play.
- Working with a 3PL
A 3PL handles fulfillment services for ecommerce sellers including warehousing inventory, packing boxes, and shipping orders in two days. Because 3PLs operate their own network of warehouses, merchants can take advantage of their geographic footprint with locations across the nation as well as bulk discounted rates negotiated with all the major shipping carriers. This helps speed up deliveries while keeping them affordable.
Most 3PLs have integrated technology that syncs up with all the places you sell online to route each order to the fulfillment center closest to the shipping destination for the most efficient delivery. 3PLs also help you scale up or down quickly and ultimately give you time back to focus on the strategic tasks that only you can do.
Should you charge for two-day shipping?
There is not always a one-size-fits-all approach to pricing your two-day shipping option. While you shouldn’t strive to turn a profit on shipping, free shipping on the flipside isn’t sustainable for everyone. To stay profitable, it has to make sense for your margins.
If your items are cheaply priced (e.g., $10), then it may cost more to ship a single item in two days than the actual value of the item. Offering sitewide free shipping would only make sense if you sell expensive items, where your costs will definitely be covered. Offering free shipping in exchange for a certain amount of money spent is one way to increase your average order value and entice more shoppers to fill their carts. Just be wary of an increase in returns.
Learn more about offering two-day shipping
Are you looking for help in offering affordable two-day shipping? Check out ShipBob’s fulfillment services, technology, and warehouses. Hear from ecommerce merchants here on how they’ve increased their average order value by 97%, reduced their cart abandonment rate by 18%, saved 70% on shipping costs, and increased their sales by 267% in under a year by partnering with ShipBob.
