As e-commerce penetration continues to surge, both the cost of delivery and retailers’ delivery estimates are also growing.
That’s according to the latest report from Shippit, the commerce delivery platform that powers hundreds of millions of deliveries for 4,000 retailers across the Association of Southeast Asian Nations (ASEAN) region.
Since 2018, retailer-advertised delivery costs and time estimates for standard shipping increased from US$9 and two days to US$10.26 and 5.6 days respectively, while express delivery increased from US$12 and 1.4 days to US$14.24 and 2.3 days.
Collating data from thousands of retailers and shoppers, as well as millions of deliveries across Australia, Shippit’s landmark, Australian-first State of Shipping Report 2024 sought to understand how fulfilment and consumer delivery is evolving and how retailers are adapting their ecommerce and logistics strategies as customer expectations for speed and reliability rise.
“Given digital transformation, propelled by the pandemic and the macro economic trends it stimulated, delivery has evolved from an operational afterthought to a defining feature for online retailers,” explains Rob Hango-Zada, Co-Founder and Co-CEO at Shippit.
“Its impact on the customer experience, loyalty and, therefore, revenue for Australian retailers is significant – and will continue to grow as Amazon continues to train consumer expectations down under.
Rob Hango-Zada, Co-Founder and Co-CEO at Shippit
“Today, consumers want choice, convenience and reliability and they are gravitating towards the retailers who can offer that. The complexity for Aussie retailers has increased massively, with more optionality and transparency than ever. The way retailers are balancing costs with all of these demands has been eye-opening.”
Delivery estimates up but actual times down
While delivery estimates are increasing, Shippit’s study – which comes as global giants like Amazon and Temu rapidly grow their market share – shows that actual delivery speeds, based on data from hundreds of millions of transactions on the Shippit platform, are actually improving.
The average delivery today takes 2.2 days, down from 2.6 days in 2023 and significantly less than the retailer-advertised 5.6-day estimate, showing retailers could be inflating their estimates to avoid falling short of customer expectations.
Critically, when competing with newer retailers that provide free, next-day shipping, this is an existential threat to incumbents.
Disparity between supply and demand of same-day shipping
Express shipping instances have shot up by 136% since 2018, according to Shippit, as consumers – trained by major players like Amazon, Doordash and Uber Eats – favour receiving goods as fast as possible.
However, there is a growing disparity in the supply and demand of an even quicker form of delivery: same day. Fewer than one in ten (9%) retailers currently offer same-day shipping, yet three in five (61%) customers would happily pay for it.
For consumers contending with well-documented cost-of-living pressures, free delivery is perceived as table stakes but has decreased significantly, falling from 81% of retailers in 2018 to 70% in 2024.
What’s more, the average minimum spend threshold to qualify for free delivery has increased 20% in just six years. This indicates that the squeeze on margins is forcing retailers to implement cost-recovery strategies, rather than finding greater efficiencies in the delivery process itself.
“For shoppers, it is certainly a mixed bag,” adds Rob.
“Increasing delivery costs along with the need to spend more to access free shipping from a shrinking number of retailers is cause for concern.
“Improving delivery speeds, on the other hand, is promising, and the growing number of carrier options for next or same-day delivery demonstrates the industry’s commitment to meeting today’s consumer expectations. It’s simply a matter of how quickly retailers can embrace them.”
Rob Hango-Zada (left) and William On, Co-Founders and Co-CEOs at Shippit
Forward-thinking retailers
While more than three-quarters (78%) of surveyed retailers are actively enhancing or intend to invest in their last-mile delivery capabilities, the remaining 22% have no plans to do so. Real-time data analysis ranked as a priority investment, with AI/automation and personalisation frequently in the top three.
Operational efficiency is also crucial, with 23% of retailers prioritising inventory accuracy and visibility and supply chain optimisation – clear recognition of the need to meet customer expectations, while simultaneously optimising fulfilment processes and improving profitability.
Joshua Rich, eCommerce Operations Lead at Freedom, explains that ensuring customers have an exceptional experience remains integral to company strategy.
“As consumer habits change and online penetration increases, ensuring we’re delivering on delivery is a key operational focus,” he adds.
“We strive to provide customers with optionality. Irrespective of whether they want to buy in store, online for delivery or click & collect, we want to ensure it’s accurate, reliable and convenient every time. The impact that has on our retention rates is noticeable, and so we’ll continue to invest in our last mile, because, ultimately, that’s an investment in our customers and our bottom line.”
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