The Rise of Expedited Shipping

Over the past five years, the number of merchants offering two-day shipping has grown by 47%. Meanwhile, demand for even faster delivery continues to climb, with next-day shipping increasing by 58% and same-day shipping skyrocketing by an impressive 164%.

More than half of consumers surveyed are willing to pay for expedited shipping, particularly for health and wellness, electronics, and apparel products. This is likely because these items are viewed by them as critical to day-to-day activities or important events. 

Merchants attribute the shift in delivery desires to several key factors. Nearly three in five respondents identify Amazon as a primary driver of the quick shift in shipping standards. The ease and immediacy provided by this eCommerce giant has set new benchmarks, pushing smaller retailers to keep up. Additionally, over a quarter of respondents point to shifting consumer opinions as another major influence. 

The Cost of Expedited Shipping

Meeting the demand for faster delivery comes at a price for merchants. Over four in five merchants surveyed report that these expectations have increased operational costs. Notably, 37% of merchants now spend more than $100,000 annually on expedited shipping (excluding staffing expenses). 

Many merchants are incorporating shipping costs into product prices (55%) or charging customers directly (35%) to help alleviate the financial burden. However, approach with caution when introducing these changes as they may not align with what consumers want.

To optimize shipping expenditures, businesses should explore innovative techniques like partnering with strategic carriers, negotiating bulk rates, or selectively subsidizing costs for high-value items. These methods can help create an attractive balance between speed, affordability, and customer happiness. 

The Challenges of Expedited Shipping

As shipping timelines pick up, so does the likelihood of issues like lost, stolen, or damaged packages. As a result, over a third of surveyed merchants cite managing shipping claims a significant challenge. Such problems not only create operational strain but also harm customer satisfaction. 

In fact, 74% of surveyed merchants acknowledge that delivery issues affect customer retention, with half describing a “strong” impact on their ability to retain customers.

Additionally, nearly three in five merchants manage shipping-related complaints internally, which can place additional strain on their resources.

These statistics point to the need for effective tools to manage claims efficiently, helping optimize processes and improve customer approval. For example:  

• Invest in claims management software: Streamline claims for lost, stolen, or damaged packages to free up resources to focus on more strategic work.  

• Enhance tracking systems: Implement real-time tracking to improve transparency, build trust, and reduce delivery-related inquiries. 

• Leverage analytics for predictive insights: Use predictive analytics to help identify and address potential shipping problems before they occur. 

Balancing Speed, Affordability, and Reliability

Expedited shipping has become a critical offering for merchants striving to meet evolving consumer expectations. While faster delivery options can enhance satisfaction and drive loyalty, they also present significant challenges, from rising costs to operational complexities.

By adopting strategies such as leveraging advanced claims management tools and investing in data analytics, businesses can navigate these challenges effectively. InsureShield® shipping insurance offers solutions to cover these areas and more to help strike the right balance between speed, affordability, and reliability.