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How Amazon set new customer expectations for delivery
Examining the "Amazon Effect" on last-mile delivery expectations, and how Amazon's commitment to fast, free, and transparent delivery has set new industry standards.
Examining the "Amazon Effect" on last-mile delivery expectations, and how Amazon's commitment to fast, free, and transparent delivery has set new industry standards.
When it comes to last-mile deliveries, today’s customers have high expectations. Customers demand speedy, low-cost, and trackable deliveries whether they order online or from a local shop. What brought us here? The Amazon Effect. Amazon has evolved into a behemoth in the e-commerce market over the last two decades.
Jeff Bezos’ company, which began as an online bookshop, is now not only one of the world’s top consumer goods merchants, but also a worldwide logistics leader. Along the way, the brand has set the standard for customer service delivery. In this post, we’ll look at how we got here and how your company can compete.
Last-mile deliveries aren’t a new internet-era innovation. For years, people have had fresh agricultural supplies, eye-wear, and other gadgets delivered to their homes. Access to the internet, on the other hand, has expedited improvements in how people order and get items. Consumers want shops to keep up with the pace of our increasingly connected environment.
Is it any surprise that when consumers can order nearly anything with a single click rather than filling out a form or dialing a toll-free number, they expect their orders to arrive in days or even hours rather than a week? In 2019, 48 percent of online customers stated their packages arrived in two to three days, while 5% said they received their packages the same day.
Consumer expectations have been influenced by more than simply technology advancements. The industry actors that make those deliveries have defined a lot of what consumers expect in terms of how, when, and where their products are delivered. Amazon, the e-commerce and logistics behemoth, is a huge influence on consumer expectations.
Amazon sets the standard for other businesses, both online and off, with access to huge amounts of data about consumer purchasing behaviour and the capacity to harness economies of scale. By substantially investing in market share and focusing on customer service, the company has quickly raised the bar.
Shoppers today anticipate quick delivery at a low price, and they choose companies who fulfill or exceed their expectations. Customers demand optimum convenience at the lowest possible cost. While some customers are prepared to pay a premium for same-day delivery, the majority of customers are no longer willing to pay the exorbitant rates associated with overnight or fast shipping.
The Amazon Effect revolutionized last-mile delivery logistics, and what that means for merchants and delivery firms is detailed below.
Almost every online shopper in the United States has bought something from Amazon. As a result, when Amazon introduces a new level of service, it soon becomes the standard.
In 2019, 85 percent of US consumers bought something on the Amazon.com platform.
In 2019, internet shoppers in the United States spent 42 percent of their money on Amazon.
Amazon is expected to account for 38% of all US e-commerce sales in 2020, a minor decrease in market share due to changes in consumer buying habits in response to the COVID-19 pandemic.
Amazon is also gaining traction in European markets. In 2019, the company’s share of the UK e-commerce market increased to 30%. Alex Ootes, Amazon’s Vice President of EU Expansion, announced intentions to expand Amazon.nl in January 2020, allowing more Dutch firms to sell their items on the global e-commerce site. More than 20% of German consumers are predicted to have Amazon Prime subscriptions by the end of 2020.
Amazon is no longer merely an online retailer; it is also a big package transporter. The corporation has put a significant amount of money into developing its own shipping network, spending $9.95 billion on transportation in 2019. It now has a fleet of delivery vans and uses an army of subcontractors to arrange last-mile deliveries through their Amazon Flex program.
In 2019, Amazon’s own logistics network handled half of the 4.5 billion shipments sent to US customers.
Most competitors lack Amazon’s ability to negotiate reduced shipping rates or purchase more warehouse space during peak demand periods. Consumers who are familiar with Amazon’s performance anticipate other shops to perform similarly. What expectations do you have? Below are three of the most significant alterations in consumer expectations brought on by Amazon.
After a consumer made a purchase in 2000, it took an average of 7 to 10 days for the shipment to reach at their home. Amazon launched its Prime membership program in 2005. Prime members paid a yearly fee in exchange for 2-day shipping on most goods, among other perks. While Prime shipping was not free, Amazon’s membership model meant that customers no longer had to consider shipping prices when making purchases, and their shipping costs remained constant regardless of how frequently they ordered. 94.6 percent of customers anticipate retailers to deliver their orders within 1-2 days.
Amazon’s decision to guarantee two-day delivery was a watershed moment in the e-commerce supply chain. To compete with Amazon’s speedy and low-cost delivery service, large retailers such as Walmart and Target have to enhance their distribution infrastructure.
Average shipping times decreased as 2-day deliveries became the industry standard.
In 2019, Amazon upped the ante by guaranteeing 1-day delivery to Prime subscribers. In 2020, the firm said that shoppers near some of its metropolitan distribution or mini-fulfillment facilities would be able to receive same-day delivery. Some clients can place an order before 8 a.m. and have it delivered by 1 p.m. the same day.
During the first half of 2020, Amazon’s delivery roll was hindered by the rush to satisfy increased demand during the epidemic. Despite this setback, researchers believe that online buyers’ desire for speed will continue to grow, and merchants will be expected to enhance their capacity to meet the increased demand.
How can retailers and logistics companies keep up? Local businesses and couriers may not be able to match Amazon’s economies of scale, but they do have a competitive advantage when it comes to providing speedy, same-day delivery. Walmart, Target, and Best Buy were among the first to convert their retail sites into mini-fulfillment operations.
If they could get same-day delivery of household products, 76 percent of respondents indicated they would be more likely to order from a local business.
Because of their close proximity to their consumers, these establishments are able to fulfill some online purchases in as little as 24 hours. Small and medium businesses can also take use of an expanding industry of independent couriers who use apps like Postmates and Instacart to receive real-time notifications of local delivery requests.
Amazon Prime is one of the company’s most successful expansion tactics. One of the reasons that Amazon’s 150 million Prime members spend an average of $1,400 per year on the e-commerce platform is the free shipping that comes with membership.
Even for orders of $50 or less, 75% of customers expect free delivery, and 65% of customers research shipping prices before adding products to their cart.
But, if Prime members must pay, why is delivery thought to be free? It’s all in how you promote yourself.
Prior to the Prime free shipping benefit, customers could choose from a variety of shipping alternatives, but they’d have to pay for each one, which included a price for expedited delivery. This obvious reminder that their purchase came with additional expenditures was a stumbling block in the buyer’s path.
The cost of shipping was cited by 50% of individuals who responded to a poll asking why they abandoned their carts at checkout (excluding those who were just browsing).
By front-loading delivery prices, Amazon avoids bringing them up while Prime consumers are checking out. In addition, Prime membership has other perks that customers may value more than free shipping. Shipping is just another perk of membership for these individuals.
Finally, Amazon does not charge a membership fee for all of its free shipping options. Non-Prime members have a variety of shipping choices to select from, including free shipping with a minimum purchase. This, too, takes use of the psychological benefits of free and pushes customers to buy more in each transaction.
How can retailers and logistics companies keep up? According to Rakuten Intelligence, free delivery was included in 92 percent of online orders in 2018.
Keeping up with the competition involves finding a way to match this offer while maintaining a reasonable profit margin. To gain customers without losing money, several shops provide free shipping with a minimal transaction. Retailers and their last-mile logistics partners are also collaborating to optimize delivery operations and decrease fuel and labour costs by utilizing innovative technologies such as inventory management and route optimization tools.
Transparency is the latest term in customer service in the digital age. Customers want firms to keep them informed and communicate with them. Customers ordering from online shops or local establishments want to know where their items are at all times during the delivery process.
Having an accurate ETA for their orders is extremely or moderately crucial to 78 percent of local customers.
Customers who order things from Amazon can check the status of their order on Amazon’s website, from payment until delivery. Customers can also sign up for Amazon’s Text Trace service, which will send them SMS text messages with updates on their package’s status. Amazon’s interface allows customers to see when and where their products were delivered, in addition to tracking their progress in transit. Customers can use this information to look into a missing shipment or to save recently delivered parcels from porch pirates.
So how can retailers and logistics companies keep up? Local businesses and couriers can easily keep up with Amazon’s customer care when it comes to delivery tracking thanks to delivery technology like EasyRoutes. Businesses should likewise avoid making delivery commitments they can’t follow.
Consumers believe that organizations who deliver products late will lose their business 45 percent of the time.
A simple phone call to notify a customer of an imminent delivery or a delay can go a long way toward ensuring their loyalty for firms who have not yet implemented real-time delivery tracking.
Most clients, at the end of the day, desire the same thing: convenience. They want to be able to order exactly what they want, when they want it, and know that it will be delivered in good condition and on schedule.
While Amazon’s size and influence allow it to set the pace, businesses of any size can provide what customers want by putting customer service first. Individuals and small- to medium-sized fleet owners can now attain the same efficiencies as leading carriers like Amazon thanks to scalable, cloud-based logistics technologies.
EasyRoutes provides you with access to this technology. Our route optimization and delivery management tools saves time, fuel, and labour for drivers while also boosting customer satisfaction. To begin your free trial, install EasyRoutes from the Shopify App Store.
Roundtrip.ai's mission is to equip every business with the software tools they need to deliver products to their customers in a delightful way. Thousands of worldwide choose EasyRoutes to power their local deliveries across dozens of product categories, from meal kits and groceries to coffee, cupcakes, kibble, and so much more. Our easy-to-use route planning and delivery optimization app is certified Built for Shopify, a two-time Shopify staff pick, and the top rated local delivery app on the Shopify App Store.
