Overnight shipping costs and benefits in 2023: What to know
Kelli Trapnell
·October 25, 2023
When running an ecommerce business, offering overnight shipping is a key way to differentiate. After all, shoppers have so many options for how and where to get their products—and when they want something, they want it now.
While overnight delivery is more expensive than standard shipping options like economy shipping, it can help you deliver a better customer experience and win over customers who might otherwise shop elsewhere.
In fact, 46% of customers report abandoning carts because their shipping time was too long or not provided. Don’t risk losing customers to competitors due to lengthy shipping times—next-day delivery, or even same-day delivery in eligible areas, will help you stay ahead of the curve.
If you’re thinking about offering next-day shipping, here’s what you should know.
How does overnight delivery service work?
Merchants can offer their customers access to next-day delivery on their merchandise, provided the customer lives within a serviced area and completes the transaction before a predetermined cutoff time. Most couriers’ cutoff times for overnight shipping are no later than 4PM, but it’s also important to build in time for your warehouse team or 3PL to prepare and package the item for shipping and create shipping labels, so make sure to allow a buffer of several hours.
The package will then be picked up by your courier of choice and taken to the overnight delivery hub that’s closest to your end customer’s shipping address, either by ground or air transport. The package will then be delivered the following day—in some cases, as early as 8AM.
How much does overnight shipping cost?
The cost of overnight shipping can vary greatly, based on factors including the package weight, the customer’s location, and the courier service that you decide to use. Next-day shipping is offered by all major courier services in the United States, with pricing typically starting around $25 and going up to $150+. (These prices are applicable for overnight delivery throughout the continental United States only—next-day shipping may not always be available in Alaska, Hawaii, or international locales, and if it is, it may be prohibitively expensive.)
By managing your fulfillment through a 3PL service, you should be able to get the best possible overnight shipping rates. That’s because a 3PL will distribute your merchandise across a network of different warehouse hubs in different regions, ensuring that your customers’ packages won’t have far to go, wherever they may be traveling.
How should you budget for next-day delivery?
Overnight shipping might be a perk for customers, but it still isn’t cheap compared to standard shipping—so how do you work the cost into your business model? You have a few options:
- Eat the cost.
If you’re selling products like handbags or rugs that are worth at least several hundred dollars, you might consider simply offering free next-day shipping on all products, and potentially raising the price of your items slightly to help you absorb the cost. When you’re selling premium products, customers expect a premium experience from start to finish. - Offer free next-day delivery on purchases over a set amount.
If your average product price is lower, it may not be financially sustainable to offer free overnight delivery on all products. That said, by offering overnight delivery on purchases over a set dollar amount—say $150—you can incentivize your shoppers to add more to their order to qualify for the free delivery option, and ensure that the customer’s order cost is high enough to justify free delivery. - Include next-day shipping as a premium option that the shopper can pay extra for.
Many shoppers are willing to pay extra to take advantage of faster shipping options—so even if you aren’t offering free overnight delivery, consider allowing shoppers to upgrade to a flat-fee next-day delivery cost for their items. - Offer a subscription service.
Amazon Prime allows shoppers to pay an annual fee for unlimited next-day delivery on most of their products — so if your ecommerce store is one that customers shop at frequently, offering a membership service can help you both recoup some of your overnight shipping fees and make your customers “stickier”, ensuring that they’ll keep coming back again and again.
Do next-day delivery services guarantee their delivery times?
If you hire a courier to provide overnight delivery and the package has not arrived at the customer’s location by the appointed time, you will be eligible for a refund on your delivery fee. (Or, if the customer has paid the fee directly, they will be able to request a refund.)
Keep in mind that if the package requires signature on receipt, and the customer is not present to accept delivery, the courier has still honored their terms of service. To that end, it’s important that you ensure that your customer has access to real-time tracking, so that they’ll know how close their package is to arriving so that they can be home to receive it.
However, if the next-day delivery doesn’t arrive by the deadline, or a delivery exception takes place, it’s important to give your customer options for remedying the situation. If the delivery is time-sensitive, they may decide they no longer want it if it comes after the delivery cutoff time.
In this case, it’s essential to make it easy for your shopper to request a refund or exchange. If the delivery is delayed, you can ask the shopper to send it back on arrival, but front them store credit to use on an exchange if they’d like to do so. You might even offer them additional store credit to use towards another purchase, which will help you smooth over the delayed order.
Streamline returns with Loop
Whether your customer didn’t receive a time-sensitive next day delivery on time, or they simply decided they didn’t want it once it arrived, returns are a common part of the ecommerce experience.
Offering overnight shipping is an ideal part of a premium sales experience—and it’s important that your post-purchase customer journey is just as on point.
Embracing a returns management solution like Loop can help you make the return and exchange process seamless for your customers.
Using Loop, shoppers can initiate returns or exchanges on a simple self-service portal that gives them a menu of options to meet their preferences. They can choose to print their own return mailing labels for at-home pickup, or they can take the product to a nearby dropoff center where it can be repackaged and sent off on the customer’s behalf. Loop’s logistics tool can help you determine the best courier and route for reverse logistics, whether your priority is cost or speed.
Shoppers won’t need to wait for your brand to receive the product back before getting their refund or store credit—as soon as they initiate the return, they’ll instantly see their available credit, which they can redeem for cash, choose an item variant, or select an entirely different item from your store, with the credit or debit on the purchase being instantly applied to the shopper’s credit card.
By facilitating a smooth shopping experience even in the post-purchase phase, you’ll be able to encourage shoppers to consider products that cost more than their original item, and gain additional retained revenue through upsells.
Pairing overnight shipping with a best-in-class returns experience will help you to deliver a superior customer experience that will help you attract more customers in the first place, and keep them coming back once they’ve made a purchase.
Learn more about how Loop can help you build a premium customer experience in the post-purchase process. Get a demo today.
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