In 1995, an online bookstore was launched boasting the world’s largest book collection. Over time, this bookstore rapidly grew and expanded into the Amazon we know today. What started out as a more convenient way to shop for books completely revolutionized the way consumers shop. Amazon continued to push the boundaries of online shopping and, in doing so, established best-in-class standards around Last Mile delivery.
To compete with Amazon as they continued to expand their offerings, brick and mortar stores added online shopping options. But Amazon’s massive head start and DTC roots left the competition scrambling to catch up. As competitors grew more sophisticated, Amazon continued to compete with ever-faster delivery times. Today, an Amazon Prime customer can buy an item with a single click and have it appear on their doorstep the very same day.
Retailer Promise Times
Over time, online shopping grew, greatly accelerated by Covid-19. And the industry has come a long way from books. Now, anyone can buy pretty much everything online, including groceries, clothes, medication, and furniture. Consumers have more options than ever before when it comes to where they spend their dollars online. While normal retail KPIs like price and quality still play a role, an equally important factor is ship time. To compete, retailers have continued to push delivery times lower.
The chart above shows the amount of time a retailer estimates a delivery will take at the time an order is placed and illustrates how retailers have pushed to improve this number over the past couple of years. Since January 2021, estimated lead times have decreased by a full two days, putting the average delivery time at around five days. While the industry has not fully caught up to Amazon Prime’s baseline two-day shipping, it is closing the gap.
Retailers aren’t just estimating lower lead times, they’re actually delivering.
The chart above outlines the actual amount of time it takes for a package to be delivered from the time it is ordered. As expected, this chart follows a similar trend with delivery times steadily decreasing. In fact, the week of April 23, 2023 has the lowest recent lead time at just 3.8 days. This is a full day lower than the average estimated lead time for April. Retailers are continuing to adapt their supply chains for more efficient last mile delivery, and the hard work is paying off.
While on average faster delivery times are a net win for consumers, there is a downside. With more aggressive delivery estimates comes a great potential for retailers to miss their self-inflicted deadlines.
The chart above shows the on-time performance for last mile shipments since January 2021. 2023 has seen a 3-month consecutive increase in on-time performance, but it is still falling short of this time last year. This seems counterintuitive given that lead time is faster now, but is actually the result of retailers setting more aggressive estimates. This can lead to customer dissatisfaction even though delivery times on the whole are still faster. In other words, don’t overpromise what you can’t actually deliver.
And these missed windows show in customer feedback. The chart above shows the main complaints filed by customers in April 2023. Delays are the number one complaint, making up nearly a quarter of all issues. This leaves retailers in a tough position. They run the risk of losing sales if estimated delivery times don’t compete with larger retailers like Amazon, but overpromise and they might alienate buyers.
Tactics like carrier diversification and supply chain visibility platforms like Movement by project44 can help mitigate this risk, increase efficiency, decrease lead time, and more proactively communicate when shipments have been delayed, helping maintain those customer relationships.
- To compete with Amazon’s delivery times, retailers have had to reorient their supply chains
- Retailer Estimated Lead Time has dropped consistently as online shoppers put more weight behind fast delivery times.
- Retailers are following through on this promise, delivery faster than ever before.
- More aggressive shipment estimates expose retailers to a higher risk of missing their estimated delivery time, in turn pushing down customer satisfaction despite overall faster delivery times.
For more findings like these, visit supplychaininsights.project44.com.Back to More