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DTC Shipping Speeds and Carriers Trends 2022

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Online shoppers are becoming increasingly demanding, expecting brands to offer fast and free delivery as a standard, and expecting to see an estimated delivery timeline at checkout itself. The COVID-19 pandemic has not only accelerated demand in ecommerce causing a strain on shipping capacities but has compelled many direct-to-consumer (DTC) brands to scale up to free shipping and quick delivery.

While big businesses like Amazon can fulfill orders from multiple warehouse locations to increase the shipping speed, the high shipping expenses for faster delivery are impacting small DTC businesses that need to keep up with Amazon but do not have the clout to negotiate on shipping prices. So it isn't too surprising to see many small DTC brands ending up as Amazon sellers or medium-sized brands diluting their DTC digital nativity and partly selling on Amazon to leverage its fulfillment capabilities.

Does faster-shipping speed bring more customers?

Between 2020 and 2021, the number of shoppers opting for same-day delivery increased to 26% from 14%. This was a significant increase partly due to the pandemic which led to a surge in online orders.

Our data also suggests that faster shipping speeds bring in relatively more customers, especially in the small and mid-market segments. There is a significant difference in median monthly visitors between brands that offer next-day delivery and ones that don't (58%). The difference narrows as the speed of delivery reduces to three days.

More businesses are offering express delivery than before

More mid-market companies offer same-day delivery compared with enterprise businesses or small businesses. A lot of mid-market DTC brands offer same-day delivery more often and they often align with on-demand shipping platforms like Instacart or DoorDash, for compatible categories.

Now, with the pandemic accelerating ecommerce, businesses are scaling up to match industry leaders in shipping speeds.

At least 41% of small and medium DTC businesses offer next-day delivery.

Only 37% of all DTC businesses offer slower speeds of three days or more. Offering two options in addition to next-day delivery has become a norm to match Amazon's Prime delivery standard. Besides, customers may prefer quick delivery but not overnight delivery..

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DTC and Shipping Carriers

The three major shipping carriers that DTC brands in the US use are FedEx, UPS, and the United States Postal Service (USPS).

eCommerce logistics is the least profitable of all segments that a carrier can operate in, because most parcels are small, and there are a lot of uncertainties—wrong addresses, returns, peaks and troughs, etc. Moreover, most shipping carriers are regional and are constrained by physical space, availability of management staff, and high attrition.

As per PipeCandy's analysis, United States Postal Service (USPS) holds the largest market share in the SMB segment. USPS is the backbone for SMB product logistics. USPS has also been maintaining an on-time performance better than private carriers and will continue to remain so.

For the mid-market and large enterprises segments, UPS holds the largest market share.

Only about 27% of UPS' revenues are generated from its SMB customers and it is firmly ensconced in the enterprise segment with close relationships with big brands. Among them, Amazon remains its biggest customer accounting for 13% of its annual revenues. However, UPS's largest customer is also its biggest threat. Amazon is also fast becoming its competitor having already exceeded FedEx in shipping volume even as it is enticing more SMB brands to join its seller program.

Did you know that we tracked all the DTC IPOs, ad spends, and revenue growth of more than 12,000 DTC brands? We did. Get access to all of our findings. (Download button) ​