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How a Shopify store can compete with Amazon Prime Delivery? (Part 1)

· 8 min read
Ugurcan

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Can you beat Amazon when it comes to delivery promises?

What kind of delivery promise you want to set for your online store may be confusing. Especially when you open your Shopify store to print a label, you will see a bunch of options such as UPS Ground Three-day and USPS First-Class shipping. And those delivery estimates do not reflect the actual time for delivery.

There are a few methods and strategies to ensure that you are fulfilling orders within the delivery promise, and you can even promise two-day shipping, just like Amazon does!

When Amazon introduced “Prime Shipping” and guaranteed delivery within two days, it revolutionized the retail industry. It established a brand-new benchmark for the expectations of the customer. These days, the time it takes to ship an item is a significant consideration for customers when deciding whether or not to buy from a particular retailer.

Let's pretend that you are in direct competition with Amazon for the sake of argument. You live in Seattle (where the Amazon headquarter is), and you're considering starting a two-day shipping service like Amazon, but you're concerned about how much it will cost.

You go to your Shopify dashboard after receiving an order from a customer in New York. You print a shipping label using USPS Priority shipping because itis the most cost-effective choice. It is marked with the words "2-Day Delivery." You label your package and rush to the post office to drop it off.

You made it! Within two days, the order will be delivered to the customer.

However, this does not happen in real life. The customer does not receive the package on time, and they become angry when they contact you to ask about the status of their order. Since the United States is a big country, the USPS relies primarily on ground transportation to keep costs low. That's why it is not a safe option for you to ship something via ground transportation if the destination requires more than a certain number of hours to arrive by car.

Let's see how we can fix this problem while spending the least money possible on shipping.

Understanding Distance

Amazon achieved two-day shipping by constructing fulfillment centers in every state and city in the United States. Amazon does not use carriers anymore; instead, the company hires delivery drivers and delivers packages directly to customers.

But you can't hire drivers to make deliveries in two days across the country. Or you cannot establish a fulfillment center in every state.

However, you still have the opportunity to compete with Amazon.

The key to selecting the appropriate delivery speed is having a solid understanding of the distance involved. Because you want total satisfaction for every single one of your customers, I would suggest you adhere strictly to the time limit for ground transportation. For example, when we need to ship some items to our customers with ground shipping (which is the cheapest option), we can use a “five hours” rule. We will not use ground shipping if it takes more than five hours to get there by car and the order will still be delivered within two days.

Two-day delivery challange

Let's have a look at another example to understand this situation better. This time you need to ship from Seattle to Portland, OR.

You navigate to the dashboard of your Shopify store and select the USPS Priority shipping option again. On the shipping label, it says "2-Day Delivery." That's it; you can choose it, right?

However, this time, you can go with the cheaper option "First Class Shipping," even though it says "3-Day Delivery." Because the drive from Seattle to Portland takes just three hours.

Let's sum up what we have until this point. The ground shipping will almost always arrive the next business day if the destination city is within a five-hour drive otherwise it will take longer than 2 business days and your customers will be unhappy. You can select First Class Shipping through the USPS to reduce your overall shipping costs when you're shipping in close distance. It costs us only $3.5, and it will be delivered to your customers within the next two days!

Let's continue.

Through the rocky mountains of California​

Now, you have a new order from downtown San Francisco. SF is far away from Seattle. The trip there by car takes more than ten hours.

So what do we do?

This time, you should most certainly fly your order. Since the USPS values ground transportation, you should work with a different carrier. UPS can get to San Francisco via airplane. So, you have the option to ship via UPS 2-Day Shipping. On the other hand, the price of shipping a package via UPS Two-Day air is nearly $20. So expensive!

Let's revisit our "five-hour rule" regarding the delivery speed of USPS. I told you that we are not using ground shipping if it takes more than five hours to get to the destination city by car. However, it's possible that they can cover the distance of ten hours in just two days with Priority Shipping. And they only charge $8 for a small box. Still, even if USPS demonstrates flexibility, I think you should continue to doubt their ability to reach rural areas within two days.

Let's revise our assumption and say that the USPS can reach cities on a 10-hour drive in two days (with Priority Shipping), but not rural areas. Then, you can use USPS to fulfill this order because it originated from downtown San Francisco.

Learning how to fly​

And now, you have just received another order from Chicago, IL.

The driving time from Seattle to Chicago is twenty-five hours. Therefore, you are certainly unable to rely on the USPS at this time. We must take off. We can use UPS Two-day air. But hold on a second. Now, there's a faster shipping option available through the USPS! And, it will arrive in just two days. Isn't that Priority mail also comes in two days? But remember that USPS prefers ground transportation. You cannot use ground delivery if you want to guarantee that your order will arrive in Chicago within two days. That leaves only one option: shipping via USPS Priority Express. USPS Priority Express is less expensive than using *UPS Two-Day Air**, and it is also air delivery.

Because you are concerned about the cost, you do not have any other choice but to ship this order through the USPS.

Covering Entire Country​

At this point, we have a solid comprehension of the opportunities that are open to us.

  • If a city is close to your place of business, you can even use First Class shipping and still meet the delivery promise.
  • If the city is a little further away, USPS priority is a good option, and it will still deliver within two days.
  • You can use USPS Priority Express delivery if the city is far away or in a rural area.

However, Priority Express delivery is costly. Even if you use the USPS, the cost of express delivery does not get bearable. You cannot maintain operations at these shipping costs, which makes it impossible to offer two-day delivery nationwide.

Perhaps we should think about alternatives. What do you say?

You can increase the minimum order amount required to qualify for free shipping within two business days. In this way, you will be able to make a sufficient profit to cover the shipping expense. In addition, if you get an order from the city of your business, you can ship it First-Class and save significant money. The amount of profit you make from geographically close cities is sufficient to cover the expenses associated with shipping to delivery locations on the far away locations.

To a large extent, that was how Amazon got its start.

Beating Amazon​

Oh, hold on just a second. Isn't that Amazon Prime free delivery service? Nope. Amazon offers this service at the cost of nearly $200 per year. It would appear that there is no such thing as free delivery within two days.

Did you know that Amazon can still not fulfill its promise of providing two-day delivery on most of its products? The delivery time for the large percentage of Amazon prime products is one week. Suppose you can deliver your orders consistently within three days. You still have a shot at beating Amazon.

Congrats, you are now competing with a world-class company. Do not be shy and let the world know you are offering fast delivery!

Would I purchase from you? I definitely would. However, I also live in Seattle and still have an active Amazon Prime membership from last year (which I paid $200 for). Amazon also offers 4-hour same-day delivery in Seattle!

Let's do not go that far. We can discuss how you can begin offering 4-hour delivery on another day.