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| 3 minutes read

Delivering on demand: How many days is too many?

As e-commerce became ubiquitous over the last few years, consumers consistently kept lowering what they considered an acceptable delivery wait time for free shipping further and further. This trend may now be stabilizing.

Consumers appear to be settling at just over three days of wait time on deliveries with free shipping, around the same as in 2021. 


In 2012 the acceptable delivery time was five-and-a-half days, and it had been on a downward trajectory ever since. For a typical shipper with a multi-node regional network, one-day fulfillment plus two-day ground shipping is very achievable and, in many instances, potentially even cost-effective. As things stand, however, anything below three days exceeds the capability of most delivery networks to make free shipping economically viable even after raising the minimum spend threshold. This year’s result, then, is good news.

There are several possible explanations for expected delivery time to not have dropped this year, including the revival of in-person shopping as recovery from the pandemic continues. Consumer expectations may also have been modulated by rampant news coverage of congested supply chains and ports as well as overburdened delivery providers. However, more than 40% of surveyed consumers consider waiting four days or longer unacceptable.

The availability of free shipping remains critical when making the purchase decision for delivery. Almost three-fourths of the consumers surveyed by AlixPartners said it has a great impact, with only 4% saying it was not a consideration. Consumers had been more willing to pay for delivery last year, but that deference to the difficulties of the pandemic seems to be over.

Slightly fewer number of consumers are using the buy-online- pick-up-in-store (BOPIS) option than last year -- 6.9% versus 7.6%.  Consumers most utilize pickup options in cases of immediate need or due to shipping costs. BOPIS, which often presents impulse-purchase opportunities for retailers, seems to be leveling off into a consistent use rate after having seen an initial uptick during COVID-19 store shutdowns.

Changing returns norms

As shippers begin to make returns policies tougher in the face of escalating costs and dwindling warehouse space, the era of returns that would get shipped back for free with no questions asked may be ending. And consumers largely seem to be amenable. We found that as many as 60% of consumers are willing to drive to return an item in store, particularly if the alternative is paying for return shipping. 


As BOPIS flattens, this may be the next foot traffic and profit driver for retailers through supplemental sales during the same visit.

The challenge for retailers is still how to reprocess returns profitably once they do get back to the store. The National Retail Foundation expects $761 billion in products sold in the U.S. last year to be returned, which, at 16.6%, is more than double 2019 returns levels as a percent of total retail sales. But there are definite opportunities to streamline returns logistics.

Same day sticks

The demand for same-day deliveries has increased to 5.2% from 2.7% only five years ago. 


This growth over the years shows that this is a service that consumers have come to expect, even though they are typically charged for it. Nowhere is this more obvious than in grocery orders. We found that consumers’ willingness to pay for same-day grocery delivery has edged up even from last year.

A third of consumers in this year’s survey would pay $5 or $10 for same-day grocery delivery. A fifth would pay even for next-day delivery. It is worth noting, however, that on average over the last three years, increasing the same-day grocery delivery fee from $5 to $10 results in demand falling by approximately 50%.

While all categories have expectedly seen a dip in delivery from last year as consumers get increasingly comfortable with shopping in person, some continue to benefit from habits developed during the height of pandemic lockdowns. For the second straight year, fresh and frozen groceries are the most popular product for home delivery. 


Since 2014, demand for grocery delivery has more than doubled. The new normal appears to be settling higher than pre-pandemic figures. As things get back to usual, however, demand for delivery of products for pets and health and medical supplies are back to 2019 levels.

Conscious consumers?

Three-fourths of surveyed consumers said they do not mind if their order arrives in multiple packages over multiple days. This provides shippers opportunities to combine orders, ship between distribution centers, and use other similar tactics to both keep shipping and fulfillment costs low and help reduce their environmental impact.

Of those who do not mind multiple packages as long as shipping was free for the extra deliveries, 60% would be willing to wait between a few days and a week.


Click here to download the 2022 Home Delivery Report.

Learn more about AlixPartners' Annual Home Delivery Survey and view past survey results, here.

Tags

operations, logistics, retail, transportation, consumer products

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