'7% discount for slower delivery.'
This is the new option from Amazon, the pioneer of same-day delivery. E-commerce companies that once competed on fast shipping are now pivoting to a 'slower but cheaper' strategy.
According to the Wall Street Journal on the 7th (local time), Amazon has introduced a service offering discounts to customers who accept delayed delivery dates. Clothing brand Gap now provides up to five shipping options, including 'no-rush delivery' that takes up to nine business days. Golf equipment company Birdie Ball Golf operates economy shipping that takes up to two weeks.
The adoption of 'slower but cheaper shipping strategies' in the United States comes as delivery costs have surged. UPS and FedEx have raised base rates by 4.9% to 6.9% annually since 2020. They have also increased ancillary fees including fuel surcharges, address correction fees, and residential delivery surcharges. The carriers tightened package size regulations and applied dimensional rounding to calculate charges. Their lowest-priced service starts at $12 per parcel.
Logistics companies have also announced plans to reduce low-cost e-commerce shipping volumes. Brie Carere, FedEx's Chief Customer Officer, said at an investor briefing last month, "FedEx is not the right fit for shipping T-shirts. We plan to focus on high-value products like smart rings priced at $349 to $499."
Online retailers are turning to the U.S. Postal Service (USPS), which starts at $5.09 per parcel, and emerging delivery companies like Geez.
Consumer preferences have also shifted. According to McKinsey, shipping cost now ranks first among U.S. consumers' online shopping priorities. Delivery speed has fallen to fifth place. Just two years ago, delivery speed ranked first and cost ranked second. More than 95% of respondents preferred free standard shipping taking four to seven days over paid expedited delivery.
Chinese e-commerce companies Shein and Temu have significantly influenced this change. Laura Behrens Wu, CEO of e-commerce logistics platform Shippo, said, "A few years ago, the goal was 'how do we match Amazon's free two-day shipping?' Now, 'the cheapest option' comes first."
Longer delivery times have also reduced return rates. Fur coat retailer Kassiani saw return rates drop 20% to 30% after extending delivery periods. Alex Manciaris, Kassiani's Operations Manager, said, "Slowing down delivery speed brought in customers with stronger purchase intent. They are more valuable than customers accustomed to fast shipping who return items easily."
Logistics experts say younger generations have driven this shift in shipping strategy. Darby Meagan, General Manager at Flexport, said, "Gen Z consumers prefer slower delivery for cost savings and environmental protection."