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Fulfillment and delivery

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Rising demand for fast and free shipping

Consumers continue to demand free, fast shipping and more fulfillment options. Retailers are literally racing to consumers’ doorsteps to meet rising expectations. NRF’s 2017 State of Retailing Online found that fulfillment costs per order had risen 31 percent over 2016 as retailers continued to invest in areas such as omnichannel capabilities and training for associates to process in-store orders.

In Time for Christmas

Faster fulfillment and shipping was a major theme during the holidays. More than nine in 10 holiday shoppers said they planned to take advantage of free shipping in 2017; during Thanksgiving weekend alone, nearly half of holiday shoppers said a free shipping offer convinced them to make a purchase they were hesitant about. A number of major retailers such as Walmart, Target and Best Buy have begun offering free two-day shipping on many items. In addition to free shipping, holiday shoppers also turned to other fulfillment methods such as buy online, pick up in store, with 49 percent saying they planned to use BOPIS to purchase items during the holidays.

Free Shipping Can Make or Break a Sale

Free shipping is now a competitive necessity. Half of online shoppers said they will typically either back out of a purchase if they don’t qualify for free shipping (47%) or add additional items to their carts in order to meet a shipping minimum (51%). Further, consumers expect free shipping regardless of price point, with most consumers saying they expect delivery to be free even for orders under $50.

Two-day Delivery is Becoming the Standard

Shoppers are also developing new expectations for faster shipping. Nearly four in 10 online shoppers expect retailers to offer free two-day delivery. Gen Z is actually closer to Baby Boomers than to Millennials when it comes to expectations for free two-day shipping, though that may change both as faster shipping becomes standard across the industry and as Gen Z comes into its full purchasing power.

Many national retailers are already expanding same-day capabilities. Target recently acquired delivery service Shipt to offer same-day delivery to half of its stores by the summer of 2018, and Best Buy extended the service to 40 cities in December through crowd-sourcing service Deliv. Macy’s also announced in August it would offer same-day delivery in select locations.