Logistical Counter-Punching: How to Compete with 2 Day Shipping as a Small Company

Amazon’s effect on the ecommerce landscape is undeniable. It created an aura, something of a mystique, around Amazon’s logistical muscle while reshaping the expectations of American consumers, primarily around notions of speed. It has made “2 Day Shipping” something of a gold standard in ecommerce fulfillment, resulting in a sort of industry wide conventional wisdom that suggests that revenue maximization requires matching, or even beating that standard.

As every economist knows, however, maximization is not necessarily optimization, and as any Brett Favre era Green Bay Packer fan knows, reputations based on mystique are increasingly subject to exposure over time. Such is the Amazon 2 Day Delivery mystique. Despite Amazon’s reputation for speedy delivery, customers have recently sued Amazon for failing to deliver within its promised 2 day time frame. Furthermore, Amazon itself admits on its website that “2 Day Shipping” does not always mean an order will be delivered within 2 days of its placement. How is that still 2 Day Shipping, you ask? Amazon has developed a last mile delivery structure that essentially guarantees delivery within 2 days – just as soon as an order is processed.

As explained by Amazon: “If an item is out of stock, you may not get it in two business days. Faster shipping reduces transit time but doesn’t impact the order preparation time.”

Therein lies the rub.

And therein also lies the opportunity for smart logistical counterpunching: Good old fashioned inventory management merged with a smart fulfillment location and a responsive fulfillment service.

Young companies should beware the allure of large 3PLs with multiple locations. While spreading inventory across the country may seem like a good idea at first blush, the costs are likely to outweigh the benefits.

Splitting inventory among multiple locations increases the cost of the initial inventory delivery to fulfillment, increases the complexity and cost of inventory management, and almost always results in carrying increased inventory quantities, which in turn lengthens overall inventory turns. For small brands that are just beginning to scale, the typical result is decreased cash flow, decreased flexibility and lower net profits.

One strategically located fulfillment center, however, can typically compete effectively on cost and shipping times on the whole while also providing a centralized inventory management structure that makes strategic sense for small to mid sized brands.

The final, and perhaps most important, piece of that strategy is a 3PL partner who ships your orders daily.

Coupled with effective tracking communication, fast order processing gives customers the assurance that their order is en route, and that assurance of a met expectation in progress is significant. How important is this action coupled with communication? Without it, more than 60% of customers will consider looking for another retailer. Furthermore, 91% of customers actively track their orders, 39% track them daily, and 19% of customers track their orders multiple times a day!

In terms of bottom line dollars, hundreds of millions, if not billions, of dollars in ecommerce revenue have been estimated to hinge upon retailers’ ability to meet promised delivery dates (not upon retailers’ ability to keep up with the Amazon Mystique – but to simply provide and deliver as promised within an accurately projected delivery time frame).

A small business may not be able to leverage its own delivery business, but fast order processing coupled with strong tracking communication creates powerful bonds of trust with customers. Adding a strategically located fulfillment center ensures strong delivery performance while maintaining a sound cost and inventory management structure. Combining all of these elements together can provide any small company with an effective logistical counter measure against the mystique of Amazon’s vaunted 2 Day delivery “guarantee.”

*Mission Fulfillment Plus is a Midwest based 3PL providing omnichannel fulfillment services primarily for small parcel shipment products in the ecommerce space. Contact us to see how we can help with your 3PL needs.