In the era of IWWIWWIWI (I Want, What I Want, When I Want It) shoppers, fast delivery has evolved from an added value to a buyer’s prerequisite and ultimate source of competitive advantage for retailers and eCommerce organizations. Amongst the trends set by the eCommerce goliath, Amazon, Walmart aims at reaching more consumers through ShippingPass, their subscription-based two-day delivery program.
According to Wall Street Journal, a recent survey of more than 1,000 U.S. consumers found that they expect to wait an average of 4.8 days for a delivery. What’s to add, the percentage of consumers who are willing to wait more than five days has declined 14% in the last four years. Finally, more than 50% stated that they search products online based on the available shipping methods.
As shoppers increasingly hinge their buying decisions on delivery time, retailers are pressured to make changes in their supply chains and delivery networks to accommodate the shift in demand. Managing deliveries is a complex and difficult task to accomplish profitably, but it becomes exponentially more complicated when delivering items such as home improvement goods and furnishings, which (according to that same survey) are to see an increase (30% in the next year) in demand from online shoppers.
In order to speed up their deliveries, Walmart will have to modify their well-established and centralized distribution center to now be more regionally oriented. In this case, the industry needs to wait-and-see if such modifications render profits. However, Walmart has announced that “we can offer faster and more affordable shipping because we have a unique fulfillment network that includes new large fulfillment centers, stores, distribution centers and our transportation network” in a recent company release.
It is not difficult to understand why Walmart would enter the fast-delivery race against Amazon. In order to increase sales, retailers need to eliminate as many barriers as possible between browsing and purchase, thus the appeal of decreasing delivery times. As explained by Forbes’ contributor Kathleen Kusek, programs like Amazon Prime provide the perception of free shipping after the annual fee. According to Kusek, “consumers mentally rationalize using Amazon Prime even more frequently, since the up-front membership is a sunk cost.” In this case the more free-delivery purchases one makes, the better value the membership offers. Ultimately, that gives Amazon a level of consumer loyalty that is above and beyond what most traditional brick-and-mortar retailers are able to achieve.
The fact that Amazon does much more business than Walmart.com is also a good reason why the brick-and-mortar retailer would follow in the eCommercer’s footsteps. A recent New York Times article reports that Amazon had net product sales rise 13%, to $79.3 billion in 2015, while Walmart’s global annual eCommerce revenue had risen 12% to $13.7 billion in that same period.
As Walmart hopes to achieve a level of Amazonian Consumer Loyalty through their ShippingPass (annual $50 subscription for two-day deliveries), it should take into consideration that Amazon has attached other benefits to their Prime. In addition to fast, free shipping, Amazon Prime includes perks such as household product subscriptions, one and two-hour delivery, streaming music and video, photo storage and more.
IWWIWWIWI shoppers are here to stay, so focusing on improving your delivery systems could be a valuable path to take. As long as retailers maintain a consumer-centric mindset, they will be able to discern alternate methods to offer added value to consumers. Free returns, effective tracking system and in-store pickup are just a few additional options to offer convenience and further foster consumer loyalty.
Retail is changing at record pace. Are you interested in the new reality of retail? Check out The 2016 Merchant Manual. From the top 4 trends that merchants must embrace in the year ahead, to the newest metrics by which retail success will be measured.
