Amazon One-Day Shipping: What Sellers Need to Know
Amazon recently made waves in the retail market by cutting their standard Prime shipping times from a two-day minimum to a one-day minimum. While they only did this for a few pilot products in the beginning, they are in the process of expanding the program to more sellers in 2019.
Which begs the question: Should you enroll in the Amazon One-Day Shipping program? Is the reward worth the cost, stress and complexity of delivering a product to a consumer on the same day?
Let’s examine the situation and find out.
What is Amazon One-Day Shipping?
One-Day Shipping is Amazon’s latest weapon in the battle for retail convenience. It’s a new default shipping standard that rewards Amazon Prime members with fast, convenient delivery.
By replacing the previous 2-day shipping time with same- or next-day delivery, the Amazon One-Day Shipping program hopes to replace the immediacy of buying at a physical store.
How Does Amazon Same-day Delivery Work?
An Amazon Prime member can use same-day delivery for free if their order meets the following conditions:
- Order a minimum of $35 worth of products. All products have to have the Amazon Same Day Delivery logo.
- Place orders before the Amazone One-Day Shipping cutoff time. This time varies depending on location and the day’s delivery capacity.
- The shipping address is a residence within an eligible ZIP Code.
Amazon then sends the order to one of its 75 fulfillment centers and 25 sortation centers across North America. If the buyer is within range of one of these centers, they will then receive the delivery within the promised same-day period.
Shoppers who don’t qualify can still access Amazon One-Day shipping for a fee.
Why Should I Apply for Amazon One-Day Shipping?
Amazon is already capable of providing one-day delivery to 72% of the total U.S. population. Combine that with Jeff Bezos’ statement that the One-day Shipping roll-out has already produced “accelerating sales growth,” and it looks like brands with the resources to invest in the new program should seriously consider doing so.
Think about it: products that qualify for one-day shipping will get greater visibility and access to the 95 million Americans who have Prime memberships–the same Prime members who spend an average of $1,500 a year on Amazon products.
In our latest survey, “2019 Holiday Shopping Predictions & Behavior” the percentage of shoppers who price-check against sites (other than Amazon) dropped slightly this year (72%) compared to our 2018 survey results (75%).
We know by now that Amazon shoppers are price-conscious, but this slight dip in customers leaving the site to price compare could be due to a variety of benefits within Amazon’s shopper experience including the introduction of 1 hour shipping, same-day pick up, and other accelerated shipping options.
“Many online shoppers already have a deep loyalty to shopping on Amazon and are Amazon Prime members, which makes them much more likely to click on a products being advertised by Amazon. If a shopper knows they can get one day shipping and the unmatched customer service experience they get with Amazon, they will often choose them over lesser-known retailers.”
– Pat Petriello, Head of Marketplace Strategy at Tinuiti
How Do I Qualify for One-Day Shipping?
To enroll in One-Day Shipping as an Amazon vendor, you must meet the following qualifying criteria as per Amazon:
- Be registered to sell on Amazon for at least 90 days
- Have at least a 95% One-Day on-time delivery rate on One-Day Delivery orders.
- Have at least a 99% One-Day on-time shipment rate on One-Day Delivery orders.
- Be able to meet the following performance requirements on a trailing 30-day basis:
- Have at least a 92% On-Time Delivery Score for Premium Shipping orders.
- Have at least a 94% Valid Tracking Rate for Premium Shipping orders by using IDs from UPS, USPS, Fedex, or OnTrac.
- Have no less than a 1.5% Cancellation Rate for Premium Shipping orders.
- Have at least 10 orders matching the minimum order threshold across all shipping options.
Keep in mind that the “trailing 30 days” requirement means that at no point should any of your rates and order numbers go outside of the required threshold. If you, for example, exceed the allowed number of Amazon One-Day Shipping late deliveries within a 30-day period, you risk being removed from the program.
One-Day Shipping Best Practices
The shorter Amazon Prime shipping standard is definitely an operational challenge that requires a lot of investment, but it could prove very lucrative if you approach it in the right way.
1. Monitor your eligibility.
Because Amazon uses a trailing 30-day history of your merchant performance to determine your qualification, you need to keep a constant watch on your status in the Premium Shipping Eligibility tool. One Day Shipping will no longer be a selectable option in the event you fall below the minimum performance threshold.
However, you can always get this status back if you work to improve your performance metrics as the trailing 30 days passes.
2. Stock items nationwide.
Large brands with multiple warehouses across the country are at a distinct advantage in One-Day Delivery. The large coverage will make it easier to ship items to customers within Amazon’s area of operations. Doing your own fulfillment is called Self-Fulfilled Prime. It is relatively cost-efficient, however it is harder to keep your performance metrics up in such a scenario.
3. Use FBA.
If your brand doesn’t have multiple warehouses, then you can always sign up for the Fulfillment By Amazon program. In an FBA arrangement, Amazon will be the ones to stock and fulfill a merchant’s inventory. The biggest advantage is that the items are already close to hand and ready to go whenever a One-Day Delivery order comes in.
FBA does mean more complex inventory tracking and higher costs for you, but would ideally be offset by the improved customer service and increased sales you would get from being eligible for Amazon One-Day Shipping. FBA merchants are also not held liable for shipping issues such as damage or delays–which is critical for keeping that One Day Shipping logo active.
At the end of the day, you have to judge for yourself whether the cost of participating in the Amazon One-Day Shipping program is right for your business. Merchants that already have a wide distribution network or those whose products are already part of the Prime program are good candidates and will be able to enjoy the projected increase in sales and customer service that the program provides.
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