Survey: Free, two-day shipping already table stakes for brands

Standard shipping windows of three to five days are no longer enough to satisfy consumers’ high expectations.

Seventy-six percent of consumers expect free two-day shipping with a minimum purchase of only $40, according to a study from Fabric. What’s more, 61% of consumers expect free next-day shipping, and 52% expect free same-day shipping (both with a minimum purchase of $40.)

As to why consumers have such high expectations, the report said it’s because eight out of the 10 biggest retailers in the U.S. offer free two-day shipping, which represents 71% of retail sales of the top 65 retailers (non-grocery).  Also, 40% of the top 10 retailers offer free next-day delivery, a proposition that’s nearly impossible for all other players, according to Fabric.

The study, “Fast and Free: The One-Way Ratchet of Consumer Expectations,” found that free shipping is difficult and expensive for brands to provide at any speed. The cost of standard shipping for a high-volume brand has increased by 71% in the last five years. More than a quarter of the National Retail Foundation Top 100 list retailers do not even offer standard shipping for free, much less at the speeds that consumers now demand.

Given that fast shipping is enormously challenging for brands to provide from a financial, operational, and strategic perspective, the findings serve as a wake-up call to brands that standard shipping windows of three to five days are no longer enough, according to Fabric.

The study noted that shipping prices have skyrocketed, and fast deliveries are complicated to execute from a logistical and strategic perspective. According to Fabric, the solution is to move fulfillment operations closer to where consumers live.

“Retail is always changing, and it’s not easy to predict what the future holds, but it’s clear from these results that the stakes have never been higher,” said Colin Coggins, chief commercial officer, Fabric, on-demand retail platform designed to enable brands to realize fast fulfillment at competitive unit economics. “Brands need to embrace a distributed fulfillment strategy, combined with automation, to meet and exceed consumers’ expectations today and tomorrow, without driving up costs.”

The Fabric survey was based on 700 responses from 500 consumers and 200 senior retail and brand managers.