How the Top Ten Retailers are Differentiating Themselves Through Shipping

Posted on Jun 12, 2019 By tpawelka Share:

Convenient and timely shipping are two of the largest factors that drive consumers to choose a retailer

A new generation that is accustomed to instant-gratification are quickly taking over as the largest consumer group, and retailers are being forced to pull out all the stops to keep them not only satisfied but coming back for more. What does this mean? It means that logistics are an important factor in where consumers shop.

Now fast shipping isn’t a perk, it’s an expectation. Online shopping and shipping preferences such as speed, convenience, tracking requirements and personalized delivery have all been shaped by some of the most successful retailers, and each year the top 100 of them are ranked by the National Retail Federation. Here is an inside look into what each of the top ten retailers do to set themselves apart – and above in the shipping category.

1. Walmart

Shipping Differentiator: Starting in 2017, Walmart began offering free two-day shipping to both stores and homes on more than two million items – without any sort of membership or fees. Walmart felt that charging customers for the fast shipping that they’ve come to expect would hinder performance, and that it no longer made sense to charge for it.

Next Walmart rolled out their Grocery Pickup and Delivery. They currently offer grocery pickup from 3,100 stores (providing coverage to almost 80% of the population) and plan to offer same-day grocery delivery from 1,600 stores by year-end (50% of the population). This May, Walmart stepped it up another notch – they went from offering customers great items at low prices with two-day shipping, to offering the same great items with free “NextDay” shipping. First beta testing in Phoenix and Las Vegas, NextDay has expanded to Southern California and is gradually rolling out to 75% of the US population by the end of this year. NextDay service offers a standalone online shopping experience that can browse up to 220,000 of the items that are most frequently sold and is available on any purchase of $35 and more.

Top Carrier Compliance Concerns2. The Kroger Co.

Shipping Differentiator: In 2018, Kroger unveiled their own online grocery delivery service in four “test markets”. Kroger Ship is a direct-to-consumer e-commerce platform that allows customers to order from a selection of groceries on their website and have them delivered to their home. This delivery system is free for all orders over $35 and carries a $4.99 fee for smaller orders. Kroger also offers customers who use Kroger Ship exclusive money-saving opportunities like promotional codes, digital coupons and pricing deals. Kroger has put a “set and save” subscription model into effect that will provide 5% off all daily essentials, and users can also earn fuel points and save money on gasoline just for ordering online.

3. Amazon

Shipping Differentiator: Amazon has built up a massive shipping network in the United States that includes more than 100 fulfillment centers, 100 delivery stations and a fleet of Amazon Air cargo planes. In 2014 starting first with just a few markets in New York City, Amazon quietly released a service called Amazon Prime Now. This service would allow Prime Members to get products delivered to them within one hour of ordering for a fee of $7.99, or within two hours for no additional fee.

In April 2019, Amazon announced they were investing $800 million to improve their delivery speed, expand its one-day eligible product selection and increase the number of ZIP codes eligible for one-day shipping. Since then, Amazon has expanded free next-day delivery for more than 10 million items for their Prime members – plus the service does not carry any additional fees outside of your membership cost (although membership fees are trending upwards) and is available coast to coast.

4. Costco

Shipping Differentiator: Previously committed to providing stellar customer service in-store, Costco has finally got onboard with e-commerce and begun to up their shipping ante. Costco recognized that 57% of their members are also Amazon Prime members, so they had to catch up and reclaim the market. Recently, they partnered with same-day grocery delivery conglomerate Instacart - a popular new service that allows customers to get Costco’s bulk prices without having to step foot in the warehouse for either same-day or two-day shipping. The bonus? Shipping is free if you spend more than $75. However, it’s important to note that Costco still remains exclusive to members. Here’s their FAQ about the service.

5. The Home Depot

Shipping Differentiator: Home Depot plans to spend $5.4 billion over the next three years on strategic investments related to their omnichannel presence and shipping solutions. Currently, Home Depot offers free two-day delivery on over 1 million items online for most orders over $45 and have same-day and next-day express delivery (subject to availability) if items are ordered before noon. They also offer free in-store pick up in two hours. Mark Holifield, Home Depot’s EVP of Supply Chain said that next-day parcel delivery will be available to 50% of the US by the end of the quarter. The company's new fulfillment centers in Dallas and Seattle, as well as renovations to their Hagerstown, Maryland fulfillment center will also assist the retailer in its quest to offer faster shipping to more customers.

"Our delivery keeps getting faster," Holifield said in response to a question from Robert C. Baird and Co. managing director Peter Benedict. "That's very important because our data shows that every time we take time out of the delivery lead time, we increase conversion."

6. Walgreens Boots Alliance

Shipping Differentiator: At the end of 2018 Walgreens announced the nationwide launch of next-day prescription delivery service, making them the fastest choice for next-day prescription delivery across the US. A $4.99 fee is charged nationwide for those wishing to utilize the service. Also in 2018, same-day carrier announced a partnership with Walgreens. [ProShip x Deliv]

“Walgreens is driven by a desire to make healthcare accessible to all across the thousands of communities we serve. Next-day prescription home delivery is another convenience-driver, alongside our industry-leading number of extended-hours pharmacies and one of the most downloaded digital apps in the category, designed to put care in the hands of our patients,” said Richard Ashworth, Walgreens president of operations. “This expansion of our alliance with FedEx illustrates our commitment to making filling prescriptions as fast and easy as possible.”

7. CVS Health Corporation

Shipping Differentiator: CVS offers free 1-4 day shipping on any online orders over $35 (or $4.99 if you don’t hit the threshold). Recently CVS partnered with Shipt to deliver prescriptions the same day they’re filled for just $7.99 in an effort to combat Amazon’s recent purchase of online prescription delivery company PillPack. They also began a program called “Ship & Save”, which encourages users to sign up for monthly recurring deliveries of necessary household and personal products – including prescriptions. Enrolling in this service nets you about 20% off your purchases, free shipping and an automatic delivery time, every time.

8. Target

Shipping Differentiator: Target offers free two-day shipping for thousands of items when you spend $35 or use the Target REDcard. In 2017 it was announced that Target was acquiring Shipt, a delivery company of groceries, home products and electronics. This service allows consumers to choose from thousands of items to be shipped same-day. Customers are allowed a 4-week free trial to “get groceries and more delivered to your door”, then would be charged $99 annually for same-day shipping on orders of $35 or more.

Other Target delivery services include:

  • Subscriptions: Daily essentials delivered on the schedule the customer sets. Participants get 5% off and free shipping on every order when a cred or debit REDcard is used.
  • Restock: Get next-day delivery on the things you use every day for $2.99.
  • Delivery from Store: In select cities, customers are allowed to “shop the aisles” and Target will delivery to their homes for just $7.

9. Lowe's Companies

Amazon's Lesson to E-CommerceShipping Differentiator: Currently Lowe’s offers free standard shipping (1-3 days) on qualifying parcel purchases for All MyLowe’s customers, and offers the same for Non-MyLowe’s customers for qualifying orders $49 or more. Same-day delivery services are available, but they are priced depending on the item ordered – starting at $21.

However, Marvin Ellison, who took over as CEO in July after spending 12 years in senior-level operations roles at Home Depot, has started to overhaul its supply chain. With this, Lowe’s plans to build a network of regional distribution centers and spend $500 million per year through 2021 on technology to improve its e-commerce site and app, as well as bolster its supply chain operations.

“Our customers are already resonating with our omnichannel philosophy and being able to connect digital and physical. WE just need to make it more seamless,” Ellison notes. Needless to say, we think we will be seeing a stronger shipping strategy from Lowe’s in the next coming months.

10. Albertsons Companies

Shipping Differentiator: Similar to Kroger, Albertsons has focused on convenience for the consumer when navigating their shipping options. They have also chosen to partner with Instacart for their home deliveries, with one-hour delivery for $9.95 (if the order is less than $150), two-hour delivery for $6.95 (if the order is less than $150), and four-hour delivery for $3.95 (if the order is less than $150).

It’s all about the customer

In the June 2019 Internet Retailer issue, Marc Gorlin, founder and CEO at Roadie says, “If anyone thinks the Amazon one-day story is about urgency, they’re missing the real headline. It’s more than urgency, it’s about ‘optionality’ where retailers need to give consumers a menu of delivery options that range from two-day to a specific day to right now.” [See ProShip’s article titled “Multi-Carrier Shipping Software Helps Retailers Exceed Shoppers’ Expectations” on pages 60-61]

In times where every penny matters to shippers, and expectations hold high with shoppers, a multi-carrier rate shopping software could be the answer to boosting your ROI, capturing the cart and expanding your marketplace. ProShip can empower you to keep your shipping promises by using our own carrier engines to push for millisecond transaction times, and our time-tested technology and advanced functionality continues to remain unmatched. That’s why customers who choose ProShip, choose the number one in speed, compliance, reliability and experience.

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