Why Sellers Must Offer One-Day Free Delivery (and how to get it right)
Article By: Manish Chowdhary
Amazon Prime customers ordered billions of items with free one-day delivery in 2019. With 6.5 billion packages delivered in 2019, one-day delivery already makes up for 15% of Amazon’s total volume. This is impressive given that this program launched just ten months ago.
Amazon has been a pioneer in setting new customer expectations. Online shoppers weren’t really asking for free two-day delivery until Amazon made it available as part of its Prime membership in February 2005 —that changed the online world forever. Today customers expect free two-day shipping on all their online purchases anywhere. Amazon is at it again and now getting the customers addicted to free one-day delivery. If you are a third-party seller, you too now must adapt to offering free one-day delivery if you wish to maintain high visibility, especially on marketplaces. It won’t be long before Amazon will prioritize two-day offers organically over the others when it comes to buy box occupancy. Without one-day offers, you might also have to spend more on ads in order to drive traffic to your listings. So, getting your ducks in a row now will pay dividends soon besides contributing to more sales now.
It’s, however, no surprise that offering one-day delivery is both very expensive and stressful, given the high performance standards demanded by Amazon. Where there are challenges, there are opportunities. This is one such opportunity that growth-minded Sellers can capitalize on today before the others catch on the bandwagon.
Successful one-day delivery program requires operational excellence. Without a reliable fulfillment team and the right technology, it will be difficult to achieve the metrics required for the program: 99% on-time shipment rate, 95% on-time delivery rate, and <1.5% cancellation rate.
Below are some best practices we’ve learned at Cahoot that will help you prepare for one-day deliveries:
Getting orders out on time
One-day shipping means all orders received before 2 PM on a business day must ship out the same day. Pay close attention to the following:
• Thoughtful storage strategy. Keep in mind that picking staff would spend most of their time walking through the warehouse, and a well-thought-out storage strategy would go a long way in improving operational efficiency. It is good practice to segment products and store them separately based on popularity and affinity. Don’t forget to regularly audit this because demands may shift due to product life cycle and seasonality.
• Efficient Picking Methods. Picking is a crucial step in the fulfillment operation, and errors in picking would result in a lot of wasted time. Clearly marked bins for different SKUs and automated picking can improve the accuracy tremendously.
• Automated Label Printing. With little time to process orders especially towards the cutoff times, it becomes paramount to generate the best shipping labels automatically from your shipping software. Manually comparing services and carriers is prone to human errors and takes away precious time that can be spent elsewhere.
• Properly trained staff. It is imperative to make sure the workers (especially seasonal staff) can navigate your warehouse quickly, safely and pick-and-pack accurately. You can start the new workers with standard orders as they improve their speed and performance before fulfilling one-day orders.
Delivering orders on time
Below are some pitfalls to avoid in the fulfillment process that delay package arrivals:
• Address verification and label quality. Having correct address down to the zip code +4 including “floor” or “suite” where applicable, makes a difference. Make sure your printed labels are clear, bold, and easy to read and not faded or dull (may happen to laser printers).
• No distinct sounds and smells. Packages with odd smells and sounds would get pulled aside during sorting at the carrier facilities for further inspections. So, while packing make sure to seal scented products properly and to turn off items or toys that make noises.
• Pick the right carrier and service. Lastly, make sure the carrier you’ve selected for 1-day orders has an excellent record of on-time delivery. A cheap but questionable service is not suitable for one-day delivery because you’ll be penalized heavily for late deliveries.
Maintaining a low order cancellation rate
Having orders with no items to fulfill them due to inventory issues can force you to cancel an order, which will hurt your performance metrics. To improve inventory accuracy and visibility, implement a Warehouse Management System (WMS) and/or an Order Management System (OMS) and do not rely on human-managed spreadsheets.
Making one-day delivery profitable nationwide
There are limitations to having a single fulfillment center for one-day delivery. A guaranteed next-day express shipping service is four times as expensive than the economical ground shipping. Unless you skyrocket your price accordingly, you won’t be able to make money off the transaction.
The simplest way to expand your fulfillment nationwide is through outsourcing. There are marketplace-owned services like Amazon FBA and Shopify Fulfillment Network, which offer good rates nationwide, but charge extra for one-day orders. There are also third-party logistics providers that offer nationwide reach but typically have minimum-commitment contracts and upfront fees, but many do not have the ability to support all the Amazon Seller Fulfilled Prime requirements. Outsourcing could also make it difficult to maintain your hard-earned negotiated carrier rates because most providers like to use their own accounts for shipping for the mark-up.
A new option for offering one-day delivery nationwide is to use a peer-to-peer order fulfillment network such as Cahoot, where top-rated sellers collaborate by pooling their resources to offer one-day and two-day shipping at the price of ground shipping or less. Cahoot offers the most economical way for brands and retailers to offer fast shipping to its customers on all sales channels without sacrificing their profit margins.
Stop by booth #103 at the Prosper Show. We would like to meet and answer any questions you may have. You can also find us on Twitter @LetsCahoot
Manish Chowdhary, Founder & CEO, Cahoot