As the retail landscape continues to evolve, so do customer expectations. Nowhere is that more evident than in the delivery experience, the next frontier in retail.

Today, delivery has an almost unrivalled impact on customer loyalty and, therefore, revenue. As economic pressures persist and competition increases, customer expectations for shipping and delivery grow. 

Shippit’s latest State of Shipping Report for 2024 offers a comprehensive look into current trends and challenges facing retailers, shedding light on how businesses can adapt and thrive in this dynamic environment. These insights reveal important trends and shifts that are shaping the current shipping landscape, offering actionable takeaways for retailers to consider as they prepare for the future.

To understand those trends – and ultimately answer the question, what is the state of shipping – we surveyed thousands of consumers and retailers and analysed more than 200 million orders powered through Shippit from 2018 to 2024. Here’s what we found…

Rising costs vs improved delivery times

One of the most striking revelations from the report is the discrepancy between delivery costs, estimates and actual delivery times. Since 2018, the retailer-advertised cost of standard shipping has increased significantly, rising from an average of $9 to $10.26, while express shipping costs have risen from $12 to $14.24. Alongside these rising costs, delivery time estimates have also extended, with standard shipping estimates increasing from two days to 5.6 days, and express delivery from 1.4 days to 2.3 days. Despite these longer estimates, actual delivery times as seen on the Shippit platform have improved, thanks to both retailers enhancing their operations and carriers improving their delivery performance.

Post-pandemic adjustments saw a temporary increase in delivery times from 2.5 days to 3.7 days, but these have now shortened to an impressive 2.2 days. This trend indicates that while retailers are facing higher costs, the combined efforts of retailers and carriers have led to greater efficiency in their delivery operations.

Free shipping on the out?

Another significant finding – no doubt impacted by ongoing economic pressures and heightened scrutiny on unit economics – is the decline in retailers offering free shipping. In 2018, 81 per cent of retailers provided this benefit, but this figure has dropped to 70 per cent this year. Additionally, the average threshold to qualify for free shipping has increased by 20 per cent, reflecting a strategic shift by retailers to manage rising operational costs while still incentivising larger purchases. This change highlights a critical balancing act between managing profit margins and meeting consumer expectations.

Same-day shipping gap

The report also reveals a considerable gap in the supply and demand of same-day shipping. Only 9 per cent of retailers offer this service, despite over 60 per cent of customers expressing a willingness to pay for it. This stark contrast underscores the logistical challenges involved in providing same-day delivery and the growing consumer demand for faster service, driven in part by the influence of retail giants like Amazon and the increased penetration of on-demand food delivery services like DoorDash and Uber Eats. Given the importance of meeting customer expectations and incentivising loyalty, retailers need to address this gap to remain competitive. Shipping should be treated as an investment rather than a cost centre.

Reliability over speed

While speed remains important, the report underscores that reliability is now the top priority for shoppers. According to a whitepaper we conducted with Jarden, which featured in the report, half of shoppers won’t return to a brand after a poor delivery experience. What’s more, one in three consumers say their expectations are increasing as a direct result of Amazon, which has turned quick, reliable delivery into an art form. These findings highlight that consumers value consistent and reliable service over rapid delivery, making it crucial for retailers to fulfil their delivery promises and maintain transparency throughout the delivery journey.

To navigate the evolving shipping landscape effectively, retailers must implement targeted strategies that align with current trends and consumer expectations. 

Helping you fulfil your delivery promises

In today’s competitive landscape, retailers are adopting a multi-platform approach, integrating a network of best-of-breed partners to achieve optimum flexibility and efficiency. According to the report, over 60 per cent of retailers surveyed are incorporating Shippit into their tech stack, demonstrating the significant value a comprehensive commerce delivery platform can offer. 

Shippit enables retailers to access a wide range of Australia’s top carriers, supported by advanced allocation technology that optimises delivery options and meets diverse customer expectations. Moreover, Shippit’s post-purchase features, such as real-time tracking and data-driven insights, enable retailers to provide precise delivery estimates at checkout and tracking notifications throughout the delivery journey, enhancing the overall customer experience. This strategic integration not only boosts conversion potential by offering shoppers more choices at checkout, but also ensures retailers can consistently meet their delivery promises, ultimately turning shoppers into lifelong customers.  

Looking ahead

As the retail sector navigates these challenges, the insights from Shippit’s 2024 State of Shipping Report provide a valuable roadmap. By focusing on leveraging data, offering diverse delivery options, and investing in reliable fulfilment, retailers can better align with evolving consumer expectations and position themselves for success in the upcoming peak periods.

• For more detailed insights and recommendations, visit Shippit’s State of Shipping Report 2024.

About the author: Rob Hango-Zada is co-founder and joint CEO of Shippit.