Small Business: Racing to deliver the goods in the era of Amazon Prime

Thanks to Amazon’s speedy delivery options, consumers have accelerated expectations for faster shipping.

Many now expect to get packages within two to three days with 45% of online shoppers saying they’re unlikely to purchase from a business again if a package is delivered late, according to new data from Clutch, a research and ratings firm.

With this added pressure, smaller online retailers must learn to ship smarter and set reasonable delivery expectations.

“Small businesses need to think critically about how the delivery timeline has changed so drastically in just a few years,” says Riley Panko, senior content developer and marketer at Washington, D.C.-based Clutch.

In 2016, online shoppers expected to wait 4.8 days for a package delivery, she says, referencing a 2016 survey by AlixPartners. Today, 48% of online shoppers said they typically receive a package within two to three days, according to a recent Clutch survey.

“Amazon is pushing the boundary even further going forward,” says Panko, noting that drone delivery "isn’t far off."

Third-party logistics

With that in mind, to stay competitive some recommendations from Clutch include communicating constantly with customers about the progress of their delivery; being realistic about their shipping capabilities and seeking outside help from third-party logistics providers (3PLs) if they can’t keep up with consumer expectations.

With 3PLs, smaller online retailers can benefit from economies of scale.

For instance, Dotcom Distribution, a 3PL based in Edison, New Jersey, ships close to 5 million e-commerce packages annually across the different major carriers, says Stephen Miller, manager of sales operations.

They also have advanced technology to maximize efficiency and cost, including a Transit Management System that compares rates to determine the best one for an individual package based on the destination Zip code, shipping method and time in transit. It services approximately 70% of the population within three days via ground shipping, he says.

Negotiate lower rates

Still, if you’re looking to ship on your own, you could try negotiating lower rates for expedited services from your existing carriers, says Tony Nuzio, founder of ICC Logistics Services Inc., a Hicksville-based transportation and logistics consultant, who does that on behalf of clients.

But "expedited" still carries a greater cost than standard shipping.

“I think over time small e-tailers are going to absorb cost and absorb cost until the point they can’t do it anymore,” he says.

At some point, they will be forced to have their customers pick up part or all of the expedited shipping expenses, says Nuzio.

Still, expedited shipping should at least be an option, he says.

"The reality is that expectations [for faster shipping] are there because Amazon set the bar,” he says.

Willing to pay for speed

Nicole Larrauri, president of EGC Group, a marketing and digital services firm in Melville and Manhattan, says many consumers are willing to pay for expedited delivery.

You can even consider building that pricing into your business model. For example, some companies like Sephora offer an annual membership fee that entitles members to two-day shipping, she says.

You can also look at independently owned freight delivery companies, which might offer more competitive rates for expedited delivery vs. large carriers, she says.

And of course, communication is key.

“You have to be transparent with what you’re able to do,” says Larrauri.

Merilyn Konnerth, founder of Bellport-based Utopia Bath (sold on Etsy) and Pharmacist’s Daughter (sold at pharmacistsdaughter.com), both makers of skin care products, says she tries to deliver within about three to four days via the United States Postal Service, and her customers are good with that.

If she doesn’t have a fragrance in stock and needs longer to make it, she informs them and rarely has someone say they can’t wait.

Offering same-day or two-day delivery options would get costly, she says.

She says her customers value the fact that they’re getting a specialty product. Utopia Bath sells natural skin care products and Pharmacist’s Daughter caters to people recovering from cancer treatment and chronic skin conditions.

“It’s not a commodity,” she says. “It’s very specialized.”