E-commerce businesses have spent the last three years chasing consumer demand in the last mile. When nearly all shopping moved online during the pandemic, shoppers pushed retail brands for faster and more convenient delivery options, regardless of cost. As inflation crept upward and consumers became more hesitant about spending, those same shoppers became less concerned about delivery speed and more concerned about cost.

With inflation expected to begin its decline sometime in 2024, many brands are left wondering what consumers will expect next. Will shoppers shift back to demanding speed at any cost, or will they be willing to wait an extra day or two for a cheaper option?

Your 2024 Last Mile Should Be Speedy, Cost-Effective, and Flexible

The answer may not be easy to swallow, but the fact is that consumers have come to expect last-mile deliveries to come quickly without any added cost.

Speed: The Amazon Effect Strikes Again

When Amazon launched free two-day shipping for Prime members in 2005, the retail industry found itself forced to compete as consumers began to expect the same service from other online sellers. This phenomenon was quickly dubbed “The Amazon Effect” by supply chain and retail professionals. Fast forward to 2023, and most online retailers have fallen in line with two-day delivery expectations. Unfortunately, two-day deliveries are no longer the standard.

In a 2023 consumer survey by the Baymard Institute, 24% of consumer respondents said they would abandon their online shopping cart if delivery options were too slow. This consumer demand for same-day delivery continues to grow, and retailers are taking notice. In a 2022 survey of 500 retailers, 99% of respondents said they plan to offer same-day delivery by 2025.

And, of course, there’s a new Amazon Effect at play—consumer expectation for ultrafast delivery. Amazon has invested in same-day delivery capabilities in more than 90 cities across the United States and continues to expand those capabilities. Similarly, Walmart now offers express ultrafast delivery until 10 p.m. Target also invested in its store network to facilitate better same-day capabilities. As a result, consumers are getting used to receiving the items they buy online within hours instead of days.

Cost: Cheap is Good, Free is Better

Consumers don’t just want their orders fast—they also expect accurate, fast delivery at no extra cost. This scenario has financial implications for the seller, given that just under half of total delivery costs come from the last mile. Sellers need to find ways to absorb the cost in other areas or subtly bake shipping costs into item pricing if they hope to meet the expectations of their customers.

The Baymard Institute survey above also revealed that almost half of consumers (47%) abandon their online shopping carts when faced with unexpected additional costs at checkout. Additionally, more than 66% of respondents to a Shippo survey of 1,000 consumers said they won’t purchase from a retailer that doesn’t offer free shipping. In another survey by Digital Commerce 360 of 1,116 consumers, 76% ranked free shipping as one of the three most important factors in online shopping.

How to Meet Consumer Demand in the Last Mile

Delivering online orders ultrafast requires locating inventory closer to consumers. Absorbing the cost of that fast delivery means finding ways to streamline fulfillment. Balancing these two factors can prove challenging for many growing e-commerce businesses, especially when they don’t have in-house logistics expertise to rely on.

Partnering with a third-party logistics (3PL) provider with experience in e-commerce can help online sellers move inventory closer to key markets and rein in delivery costs. If your business needs help meeting consumer demands for last-mile delivery in 2024, please don’t hesitate to contact us.

About Phoenix Logistics

Strategic Real Estate. Applied Technology. Tailored Service. Creativity. Flexibility. These fundamentals reflect everything we do at Phoenix Logistics. We provide specialized support in locating and attaining the correct logistics solutions for every client we serve. Most logistic competitors work to win 3PL contracts, and then attempt to secure the real estate to support it. As an affiliate of giant industrial real estate firm Phoenix Investors, we can quickly secure real estate solutions across its portfolio or leverage its market and financial strength to quickly source and acquire real estate to meet our client’s need.