Every Friday, we answer a common question about fulfillment, shipping, or business. This week’s question comes from one of the tech wizards who entered our giveaway contest for a smartwatch. Today we will answer the following question: “why does expedited shipping cost so much?”
Expedited shipping means goods go much more directly from their origin to their destination. As we’ve discussed before, it’s usually not cost-efficient for goods to go straight from point A to point B. They often stop at many seemingly unrelated places before reaching their final destination. This is not the case with expedited shipping.
If you’ve ever opted to receive a package the next day or even the same day, you know that expedited shipping costs more. A LOT MORE! So why, then, would a customer ever opt for expedited shipping? A few situations come to mind…
Of course, there are other reasons why you, as a seller, would want to offer expedited shipping. It’s said that as many as 50% of online shoppers have abandoned items in their cart because of slow shipping. Fully 60% of online shoppers based their decisions based on delivery options. Therefore, having rapid delivery options can help you build customer loyalty.
Returning back to the original question, it’s not hard to see the value of extra speedy delivery. What is difficult to see is why exactly it’s so much more expensive to cut a little time off the delivery window.
Packages being sent at a normal pace through the mail system, whether by UPS, FedEx, DHL, or USPS, don’t go in a straight line. They bounce from city to city and hub to hub as best suits the carrier’s needs. They have a delicate system in place to transport packages at the lowest price possible, even if that means doing some unintuitive things.
When speed is a priority, cost-efficiency can go out the window. Packages can take less cost-efficient routes and the people shipping via these routes end up paying a premium to cover the associated costs – fuel, labor, and so on. In the end, the recipient receives their package much faster but at a much higher cost.
Expedited shipping is expensive because it requires using much less cost-efficient delivery routes. This can be okay in some circumstances when goods are needed urgently. Alternatively, it can be a great way to win over customers who would otherwise be too impatient to wait.
If you find yourself expediting a lot of shipments, consider working with a third-party fulfillment company like Fulfillrite. While there is still a premium, companies like our own are able to negotiate much better rates on your behalf 🙂