What is Expedited Shipping? Cost and How to Offer it

Complete Guide to Expedited Shipping

Ecommerce growth and the demand for direct-to-consumer shipments has exploded over the last decade and accelerated during the COVID-19 epidemic. US ecommerce sales reached $759.4 billion in 2020 and the industry is expected to see a 12.8% increase to $761.26 billion in 2021.

Direct-to-consumer shipping costs can make up as much as 70% of a company’s total fulfillment costs and can be a material percent of the average order value. Now more than ever sellers are highly incentivized to find ways to optimize their shipping to be faster and more affordable.

The shipping options that are available for ecommerce fulfillment can seem endless and often confusing. From same-day, next-day delivery, two-day, express delivery, expedited, priority, and standard delivery, one thing that has become apparent is that customers expect orders delivered faster and cheaper than ever before. Research has shown that 41% of customers are willing to pay for same-day delivery, while 24% say they will pay a premium to have their orders delivered within two or three hours; however, only 50% of retailers offer same-day delivery.
One of the best options you can use to speed up shipping time frame is expedited delivery. 

What is Expedited Shipping?

At its most basic meaning, expedited shipping is any shipping or delivery method guaranteed to get an order to a customer faster than the standard delivery method would. Expedited services apply to orders placed by customers who need them fulfilled as soon as possible.

Depending on which standard shipping services are available (depending on shipping zone, size and weight, or other factors), the exact turnaround for expedited orders can vary. If five-day shipping is the standard for a seller, and one of their customers selects expedited shipping, the order will be guaranteed to arrive at some point sooner than five days after the order is confirmed.

Expedited Shipping v. Other Fulfillment Options

Shipping costs and delivery methods vary depending on the shippers fulfillment strategy, logistics, customer locations, margins and more. One seller’s standard shipping timeline might be the same as expedited for another. Here is a breakdown of how expedited services look when compared to other shipping and delivery options.

Standard Shipping

Standard shipping is usually the lowest cost shipping option for sellers as well as their customers. On average, standard shipping will get packages to their destination within three and seven business days from the time the order is shipped. 

For some sellers like Amazon Prime, two-day shipping is their standard option. For others the customer will need to wait longer for their order to arrive. Generally, sellers in the latter category will offer to expedite shipping such as two-day or next-day at a cost premium to customers who want their orders sooner.

One factor to note is that most sellers calculate shipping time based on when the order is shipped, not at the time it is placed. This can mean that even if an order is placed with two-day shipping selected, those two days may not include order processing time, weekends or holidays.

Express Shipping

Expedited shipping and express shipping can have a variety of meanings and are often used interchangeably depending on the seller and the carrier. In general, if a seller offers both express and expedited shipping, express shipping is faster. In that case it means next-day or two-day delivery and expedited means faster than the seller’s standard.

Two-day or Next-day shipping

Some sellers ship expedited orders with two- or next-day turnaround, while others use two-day as the delivery standard. Like most shipping options, the way these terms are used can vary from seller to seller.

Because of the Amazon Prime Effect, two-day shipping is becoming almost necessary for ecommerce companies to offer, be it as a standard option, special perk, or somewhere in between. Making these differences clear to customers is imperative to setting their expectations and keeping them happy.

Consolidated Shipping

Consolidated shipping is another type of LTL freight shipping. It means multiple LTL items are combined into a single container shipment.

Instead of moving the shipment from warehouse to warehouse, during the process of consolidation, LTL shipments are moved to a single location, combined, and remain on the same truck until they reach their destination.

Why You Should Offer Expedited Shipping Services

Smooth shipping is directly correlated with customer satisfaction. Here are a few reasons why you might consider offering your customers expedited shipping in order to gain a competitive advantage over sellers who don’t.

Reduce Cart Abandonment

A 2017 study shows that 50% of online shoppers have abandoned items in their cart due to delivery options that they find unsatisfactory. It is important to have a variety of shipping options, including ones that are fast and affordable.

Offering an affordable expedited delivery option can help prevent shopping cart abandonment and increase sales.

Meet Increased Customer Expectations

The same study also shows that 60% of online shoppers base their shopping choices on the convenience of delivery options available.

In this new competitive environment customers expect fast and affordable shipping options from all online sellers. By not offering two-day shipping or a free shipping option sales might go to the next competitor who does offer those.

Help Build Customer Loyalty

If a seller is able to offer delivery in a fast and timely option, the customer may be more likely to have a good shopping experience and become a repeat customer.

On the flip side, if a customer has a negative delivery experience due to shipping costs or unexpected carrier transit times it could cause them to look for different sellers when they are considering future purchases.

“Selling overseas was always kind of a problem, because we were using UPS and it was pretty expensive to go overseas considering the product. Our DCL account manager gave me a comparison of different shipping rates, between DHL and UPS mostly. She presented me with a cost analysis about the two and the savings that we could have if we used specifically a UPS worldwide expedited. It was just a godsend and I can’t give you enough praise about it all.”

Expedited Shipping Options from Major Carriers

Each shipping carrier has its own variation of faster shipping and delivery options. To help choose which one would be the best fit for your company, enlisting a third-party logistics (3PL) provider can be tremendously helpful. Below are the most common methods offered by the major United States domestic shipping companies as well as links to determine their shipping rates.

UPS

UPS offers a variety of expedited services and shipping options for domestic deliveries including same-day, next-day service, two-day service, and three-day shipping guarantees. All of these options are faster than the UPS Ground standard option, which can take as long as five business days to deliver.

USPS

For USPS their expedited shipping option is referred to as Priority Mail Express. It is described as their “fastest domestic service.” Packages under 70 pounds ship overnight delivery through Priority Mail Express starting at $24.70. There are also Priority Mail Express options available that will guarantee delivery by 10:30 am the next day. You should know that first class and priority mail (not priority mail express) typically deliver in two to three days and are very popular shipment options.

FedEx

FedEx has a number of options to ship expedited orders that vary in cost depending on the package’s size, destination, and speed required. These include FedEx Express Same Day, FedEx Express Saver, and FedEx Expedited Freight Services among others.

How to Offer Expedited Shipping Without Cutting Profits

A common misconception is that offering expedited shipping options can be expensive, but it doesn’t necessarily have to be. Here are three shipping methods proven to be fast and cost effective without hurting your bottom line.

1. Distributed Inventory

Shipping zones are calculated so that the shorter the distance a package has to travel to a customer, the quicker and cheaper it will be. By having your inventory distributed across multiple fulfillment centers, closer to customers, it can reach your customers faster via ground shipping, which is often the cheapest option. By providing expedited ground shipping to a larger number of customers, you’ve already reduced your cost and expedited delivery times compared to air shipping.

2. Require a Minimum Spend

This technique has become very common in online marketplaces and it puts more of the decision into the customers hands, whether they want to add more products in order to get cheaper, faster delivery. In order for this option to work for the seller, the amount of money a customer spends has to be greater than the average order value (AOV). By increasing the AOV it can help to offset any extra cost associated with shipping products.

3. Outsource Order Fulfillment to a 3PL

Utilizing a third-party logistics partner to outsource order shipping and fulfillment can help sellers leverage their size to offer discounts, shipping options and increased technology that aren’t available if they fulfill their orders in house. A 3PL can help sellers meet customer demands around expedited shipping and costs and help grow their sales.

Bottom Line

Customers have come to expect the products they order to arrive at their door in a fast and affordable option. In order for sellers to compete with this new normal they have to figure out what the best processes to accomplish this are. This can be a daunting task, but choosing the right 3PL to partner with can help make it easier and in the end provide a cost effective solution for both the seller and their customers.

If you are looking for a 3PL to help with your expedited shipping needs or require logistics support we’d love to hear from you. You can read DCL’s list of services to learn more, or check out the many companies we work with to ensure great logistics support. Send us a note to connect about how we can help your company grow.

Tags: freight