When it comes to fulfillment, scale and operational efficiencies can make or break a business. Smaller direct-to-consumer and retail brands need to learn how to strike a viable balance between fulfillment options and keeping costs low, for both the business and the customer.
Shipping timelines, once a standard three to five days, are now set according to consumer demands. Retailers are bending over backwards to provide everything from pickup times a week in advance to same-day shipping and free returns, often at enormous cost for retailers.
One of the biggest cost centers for brands is free shipping. As of December, over three-quarters of brands in L2’s omnichannel report offered free shipping, with one in three providing this option without a spending threshold. The majority require customers to spend a median of $50 to enjoy free shipping (unchanged from 2016). For retailers that carry brick-and-mortar overhead costs, unlike e-tailers like Amazon, shipping will remain a balancing act until they can optimize the fulfillment process.
Winning brands navigate this issue by driving customers toward more cost-friendly fulfillment habits that can take advantage of existing store infrastructure or subsidize expedited delivery with well-funded startups. For instance, in the UK, many retailers fuel customer desire for click-and-collect, reformatting stores to include designated pickup areas. Others, like Nordstrom, have experimented with flat-rate same-day delivery services provided by Uber and others.