How 2 Day Shipping Works

Many merchants offer 2-day shipping as a way to increase sales, but it's expensive. Learn how it works and how to offset costs.

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Online shopping was already gaining popularity when the COVID-19 pandemic hit. Now, online purchasing has become part of the lockdown lifestyle. With mega-retailers like Amazon and Walmart offering free two-day shipping, the customer expectation bar has been set very high. But for smaller merchants with less cash flow, offering free shipping, let alone two-day shipping, isn't practical or profitable.

So, how can you realistically offer free two-day delivery for your online store without breaking the bank? Read on to learn the different options.

How Does 2-Day Delivery Work?

The standard rule for next-day shipping or 2-day delivery is that there is a cutoff time to accept the packages every business day so that you have time to send them forward and guarantee the quick delivery time. For example, if a parcel is dispatched for shipment after the cutoff time on a Thursday, it will often be shipped on the next shipping day, Friday.

Of course, because the next working day is Monday and not Saturday, the package might reach its destination by Tuesday. Thus, 2-day deliveries come with particular conditions about cutoff times, package weight and dimensions, and shipping zones. Most standard domestic deliveries, as well as APO and FPO mail, lie within the continental United States. So, ground mail covers most of the zone distance between the point of origin and the destination.

Air shipping vs. ground shipping

The two primary means of 2-day shipping are air and ground shipping. Air cargo is among the fastest of delivery options, but naturally, it is also the more expensive method. On the other hand, ground shipping costs less than air shipping and is more suitable for shipments where the zone distance is shorter.

Ecommerce merchants usually offer 2-day delivery options through ground shipping by placing their inventory in multiple fulfillment centers and warehouses. A popular choice for on-ground express shipping is USPS, known for its varied mail classes and services.

How fulfillment centers work

Whether you choose internal or external order fulfillment, fulfillment centers work on the same basic principles. Upon order placement, the products are taken from the inventory, labeled and packed, and sent for shipment. Some 3PL companies offer store pickup or store the inventory at their warehouses before order placement. If you’re handling freight on your own, you might place your own order for the shipment. 3PL companies usually partner up with several shipping carriers to oversee the shipment process and extend reach.

How Offering 2-Day Delivery Helps Your Business

Sure, 2-day shipping seems like a no-brainer from the customer's standpoint, but sellers might be wondering about the direct impacts it can have on your business. Here are a few points emphasizing the benefits of having a 2-day shipping policy.

Improve customer experience

Successful ecommerce is not just about the products but about the whole experience. Guaranteeing that your customers will receive their products in a few business days is a natural attraction for impatient consumers. 2-day shipping thus improves customer experience, and it also reduces the chance of buyer's remorse.

Reduce cart abandonment

Imagine you're a customer, and you're at the checkout page and aren't sure about the purchase, but then you see ads for free 2-day shipping. Chances are that you'll be more likely to confirm the purchase. 2-day shipping also attracts customers who procrastinated and need their products soon.

Build customer loyalty

Delivering consistent 2-day shipping (or any guarantee) builds consumer trust and thereby loyalty. This fact is really Amazon's secret: fast shipping combined with consistent performance.

How to Keep 2-Day Shipping Costs Down

While 2-day shipping is desirable for increased customer satisfaction and the resulting sales conversions, it can often be quite expensive to manage. So, how can you save some money on the shipping costs? Let's take a look.

Use a wider network of fulfillment centers

The easiest way to offer 2-day ground shipping is to expand your network of fulfillment centers. By distributing your inventory across more centers, you can more efficiently ship quickly across more shipping zones and reduce transit times.

Limit 2-day shipping to specific area codes

Realistically, not all zones and zip codes are equally accessible. Setting zone exclusions on your free 2-day shipping policies can allow you to offer 2-day shipping where your business can afford to. That's why Alaska and Hawaii are often excluded from faster shipping policies.

Leverage ground shipping

Air shipping is often expensive and can inflate the total shipping costs. When possible, always try to opt for ground shipping to protect your profit margins.

Have the customer pay the higher shipping fee

Even if offering free 2-day shipping isn't viable for your business, you can still offer customers multiple faster shipping options for a premium. For customers who cannot wait, this option will help win the sale. You can also calculate the average costs and build the higher shipping costs into the product price. Remember, always test policies on a smaller scale before making sweeping decisions.

Set purchase minimums

Before advertising free shipping for all orders, look at the numbers and determine the threshold that will keep your business from going bankrupt. May retailers, even huge ones like Walmart, set a purchase minimum before offering customers free shipping. Setting minimum purchase thresholds ensures you don't lose money on expensive shipping for lots of small orders.

Conclusion

By now, you should have an idea about how shipping costs work and how you can try to offer 2-day delivery options without putting undue strain on your company's budget. 2-day delivery is excellent for improving customer experience and building brand loyalty, so it's wise to consider.

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