2 Day Shipping vs. 1 Day Shipping – The Cost Difference

May 2, 2019


Amazon’s announcement concerning the shift from free Prime 2 day delivery service to free Prime 1 day delivery service created a stir from everyone including shippers to last mile delivery providers. Beginning in North America, Amazon plans to initially invest $800 million in its network towards this impressive goal, eventually expanding it globally. Retailers Target and Walmart are fast on Amazon’s heels as they too invest in their own last mile delivery networks. Meanwhile, FedEx, UPS and other providers are investing in their networks to speed up deliveries. Will this be the end of ‘free shipping’? It’s doubtful as consumers expect it. According to DynamicAction, retail transactions with free shipping increased 13% in North America in 2018 and rose 8% through April 15 of this year. Amazon set the expectation for 2 day shipping and now they are raising the bar as first to the market with the expectation to 1 day shipping. Can retailers afford this new expectation? By using UPS data for a shipment originating from the West Coast as an example, premiums increase at minimum by 64% for destinations to zone 7 and 8 and up to 180% to destinations in zone 4. In addition, the average premium increases 87% when one switches from 2DA to NDA. FedEx data will likely produce similar results. According to SME’s VP of Analytical Solutions, Melissa Runge, “This shift from 2-day delivery to 1-day delivery will at minimum double shipping costs. Shippers will need to seriously consider the costs of shifting towards same day delivery. There are alternative solutions that can be considered such as in-store pickups and third-party location pick-ups as well as carrier options.” What should retailers do?

  1. Review your shipping invoices. Have your costs increased since last year?
  2. There are different types of ‘free shipping’ such as minimum purchase, subscriptions and flat rate shipping. What kind of ‘free shipping’ are you offering?
  3. The list of last mile delivery providers is growing. Perhaps it’s time for a change.
Learn more by visiting www.spendmanagementexperts.com or, email us at solutions@spendmgmt.com, or call us directly at 404-902-5390.

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2 Day Shipping vs. 1 Day Shipping – The Cost Difference

May 2, 2019


Amazon’s announcement concerning the shift from free Prime 2 day delivery service to free Prime 1 day delivery service created a stir from everyone including shippers to last mile delivery providers. Beginning in North America, Amazon plans to initially invest $800 million in its network towards this impressive goal, eventually expanding it globally. Retailers Target and Walmart are fast on Amazon’s heels as they too invest in their own last mile delivery networks. Meanwhile, FedEx, UPS and other providers are investing in their networks to speed up deliveries. Will this be the end of ‘free shipping’? It’s doubtful as consumers expect it. According to DynamicAction, retail transactions with free shipping increased 13% in North America in 2018 and rose 8% through April 15 of this year. Amazon set the expectation for 2 day shipping and now they are raising the bar as first to the market with the expectation to 1 day shipping. Can retailers afford this new expectation? By using UPS data for a shipment originating from the West Coast as an example, premiums increase at minimum by 64% for destinations to zone 7 and 8 and up to 180% to destinations in zone 4. In addition, the average premium increases 87% when one switches from 2DA to NDA. FedEx data will likely produce similar results. According to SME’s VP of Analytical Solutions, Melissa Runge, “This shift from 2-day delivery to 1-day delivery will at minimum double shipping costs. Shippers will need to seriously consider the costs of shifting towards same day delivery. There are alternative solutions that can be considered such as in-store pickups and third-party location pick-ups as well as carrier options.” What should retailers do?

  1. Review your shipping invoices. Have your costs increased since last year?
  2. There are different types of ‘free shipping’ such as minimum purchase, subscriptions and flat rate shipping. What kind of ‘free shipping’ are you offering?
  3. The list of last mile delivery providers is growing. Perhaps it’s time for a change.
Learn more by visiting www.spendmanagementexperts.com or, email us at solutions@spendmgmt.com, or call us directly at 404-902-5390.

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  • Categories