Same-day delivery is no longer a way to stand out among market rivals — it’s a must-have if you want your business to survive. Managing the last mile cost-effectively is key to achieving success with same-day delivery, allowing your company to see a valuable financial return on this critical service.
To find out how companies carry out same-day delivery, how they handle implementation and operating costs, and the types of returns they see on their investment, Roadie and Supply Chain Dive’s studioID surveyed 150 industry leaders. Here’s what they had to say.
Same-day delivery improves financial metrics
While there are obvious costs involved with same-day delivery, it has an extremely positive financial impact on the companies that offer it. Industry leaders report improvements on several critical financial metrics, including these five:
- Revenue. Most respondents (80%) report revenue increases as a direct result of same-day delivery. Revenue improved by 6% or more for nearly two-thirds, while roughly 30% saw an increase of more than 10%.
- Revenue per order. A significant majority of industry leaders (roughly 80%) report higher revenue per order after implementing same-day delivery. Among this group, 34% say the increase is between 6% and 10%.
- Net new sales. After deploying same-day delivery, more than three-quarters of industry leaders (77%) confirm an increase in net new sales. For 31%, this is an increase of between 6% and 10%.
- Repeat purchases. Nearly eight in 10 companies have seen more repeat purchases, thanks to the launch of same-day delivery. Within this group, nearly 36% say the increase has been between 6% and 10%.
- Conversion rates. After rolling out same-day delivery, 66% of respondents say their conversion rates have grown — nearly one in four (23%) report improvements between 6% and 10%.
“You have to know what return on investment looks like so you can make a good decision about whether you want to invest more in the service,” said Dennis Moon, chief operating officer at Roadie, a crowdsourced logistics and same-day delivery platform. “If you’re not looking at all the critical metrics, then you’re missing out on quality data that helps drive revenue margin and company longevity.”
Costs to consider along the road to same-day delivery
There’s no doubt about it: Same-day delivery ROI is impressive. But it’s important to be realistic about the costs of the service, too.
While implementation expenses vary based on numerous factors, such as providing services through major parcel carriers vs. a crowdsourced delivery platform, nearly half of the surveyed leaders reported six-figure startup costs.
Operating costs also increased for most companies after implementation. For 39%, operating costs rose between 1% and 20%. For another 20%, operating costs grew by 21% to 40%. The remaining respondents (41%) experienced operating cost increases of more than 40%.
With these expenses out in the open, there’s an important question to answer: Who should pay for same-day?
“Is same-day service a sender cost or a customer cost? For it to be successful long-term, you have to determine who pays for it,” Moon said.
Companies are finding unique ways to offset costs — mostly by passing them on to customers in one of three ways.
1. Raising product prices
More than half of surveyed business leaders say they raised product prices to compensate for same-day delivery costs. For 29%, these were simple price adjustments. For 24%, the price increases came after offering a free trial of the service.
Our take on this tactic: Only certain products can withstand permanent price increases. For example, it may be a good fit for items that are difficult to find or aren’t typically available in brick-and-mortar locations. And, as more competitors find ways to cover costs without raising prices, it’s likely only a short-term solution.
2. Charging delivery fees
Fees are another way leaders cover same-day delivery costs, whether it’s by charging an annual fee (17%), a one-time fee (14%), a monthly fee (13%), or a per-order fee (13%).
Our take on this tactic: In most cases, shoppers don’t seem to mind paying a fee for the speed, convenience and experience of same-day delivery. Consider a per-order fee where it makes sense. For example, on an oversized item, many consumers will enthusiastically pay so they don’t have to find a way to transport it themselves.
3. Integrating with loyalty programs
A small group of industry leaders in our survey (6%) decided to include same-day delivery as a loyalty perk.
Our take on this tactic: As companies look for more ways to secure customer stickiness, encourage membership and boost the value of their loyalty programs, this tactic will likely become a more popular option.
Are you ready to accelerate delivery?
Is same-day delivery a service that your company should offer? To decide, you must consider your target market and the products you offer — as well as how you’ll cover the costs. Different approaches work in different situations.
For more industry insights and ideas on accelerating same-day delivery ROI, download the full research report.
