Online Shoppers Prefer Free Shipping Over Same-Day Delivery

Online Shoppers Prefer Free Shipping Over Same-Day DeliveryOnline shoppers are willing to wait a little longer for what they ordered if the shipping is free.
Only 9 percent of the 1,500 U.S. consumers surveyed cited same-day delivery as something that would improve online shopping, while 74 percent opted for free delivery and 50 percent for lower prices as top factors, according to a survey conducted by The Boston Consulting Group (BCG).
Same-day delivery has become big a point of competition among the big-name retailers, with Wal-Mart, Nordstrom, eBay, and others starting to offer the option to consumers in selected markets.
These offers are considered a response to Amazon.com, which has been providing same-day delivery of selected items in certain cities since 2009.
“Same-day delivery will be a niche service in the near future,” said Rob Souza, a partner at BCG. “Retailers may choose to offer it to build customer loyalty, enhance brand awareness, or keep up with the competition. But it is unlikely to generate significant revenues for either retailers or carriers.”
The survey found that “affluent millennials” — ages 18 to 34 and with a household income exceeding $150,000 — who live in urban areas might be an attractive market for same-day delivery.
While these consumers make up only 2 percent of the market, their online spending is about two times more than that of the average U.S. consumer.
Retailers should offer same-day delivery for only a select number of products that are small and light, and that carry high margins, such as electronics, office supplies, and apparel, said BCG.
Affluent millennials are willing to pay up to $10 to receive a delivery the same day, according to the survey, while other consumers are likely to pay up to $6, less than the fee charged by most retailers today.
At those rates, same-day delivery would generate between $425 million and $850 million annually in delivery revenues if — as BCG’s survey data indicates — up to 2 percent of online orders are fulfilled on the day of purchase.
Despite the modest levels of anticipated revenue, several startups, such as Shutl, Zipments, Instacart, and Postmates, have rushed into the same-day delivery arena. Established carriers, such as the U.S. Postal Service and Federal Express, are also running tests.

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