Everything You Need to Know About Fast Shipping [Webinar Recap]

In Feedvisor’s latest data-backed analysis, The 2019 Amazon Consumer Behavior Report, free two-day shipping was cited as the most prized benefit of Amazon Prime, with 83% of consumers in agreement. In line with the age of convenience and instant gratification, consumers are more motivated to buy when they know they can receive their orders in two days or less.

In our most recent Amazon experts webinar, Feedvisor was joined by Michael Krakaris of Deliverr, an e-commerce fulfillment company, to discuss the importance of fast shipping to your overall online operation, whether you are selling on one or multiple marketplace platforms.

Amazon Prime Sets the Stage

To begin, Amazon pioneered the idea of fast shipping with Amazon Prime in 2005, launching it with first-party (1P) inventory, items they already knew were adequately distributed across their warehouse network. In the next few years, Amazon allocated high marketing spend to building out the loyalty program, enabling more Prime-specific campaigns to draw in a larger audience of subscribers.

Then, the company rolled out Prime for FBA sellers, granting them access to the program. Utilizing FBA as your primary fulfillment method, in conjunction with having excellent performance metrics, greatly increases your chances of getting the Prime badge on your items. Between 2010 and 2012, Prime surged and sellers participating in Prime via an eligible FBA model began to see ROI from participating in the program — sales growth, better placement in search, and so on.

This illustrates that the fulfillment method can greatly impact not only your sales and profits but the driver of those KPIs for competitive sellers — Buy Box share. One of the biggest misconceptions about Amazon’s Buy Box algorithm is that the winner of the Buy Box is dictated solely by price. This is typically the reason why other sellers will continuously drop their price in an attempt to gain a share of the Buy Box. However, Amazon looks at many different variables when deciding who to award the Buy Box to.

Aside from having the opportunity to gain more Buy Box shares, Amazon handles all customer inquiries regarding fulfillment with FBA. However, there are additional fees associated with FBA that may not make sense when you are considering your margins, so be sure to get in touch with Feedvisor for a detailed Amazon catalog analysis, which takes your margins and competition into consideration so you can make a holistic decision before deciding to transition to FBA.

The Benefits of Fast Shipping

In the webinar, Michael spoke about three key benefits to incorporating fast shipping into your operational model.

• Increased search prominence: When activating two-day shipping and advertisements together, there is an initial cost to drive product sales. With the advertising campaigns, you create better visibility, which in turn leads to more sales. This effect, referred to the flywheel effect in the e-commerce industry, compounds over time, generating higher returns for less advertising spend.

On top of this, with more visibility and sales, consumers will be more inclined to leave positive reviews, which will drive more business. As you receive more sales, you have more capital to reinvest, such as by expanding your Prime offering or ramping up your ad spend. Michael provided a case study from one company that saw a 300% lift in sales one week after activating free two-day shipping on Walmart, as none of their key competitors had an effective shipping process.

• Greater Buy Box share on Amazon and Walmart. As mentioned earlier, free two-day shipping has a strong impact on the Buy Box for both of these marketplaces. Michael gave the example of one seller who got the Walmart Buy Box without even being the least expensive option, due largely in part to the addition of fast shipping tags.

Final Thoughts

Each online marketplace is different, in terms of their target consumers, the number of daily consumers they have, and in the selection they offer. For sellers, it is critical to have a clear strategy around each marketplace, from your sourcing model to your price optimization plan, as the marketplaces are not one-size-fits-all.

Whether you are currently focusing on Amazon as the center of your marketplace strategy but also sell a subset of SKUs on eBay and Walmart or are considering expanding to Amazon in the near future, prioritizing fast shipping will be essential to your product visibility, sales, and a positive consumer experience.  

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