Retail’s need for speed: Unlocking value in omnichannel delivery
etail has experienced more change over the past five years than in the prior 50. Indeed, the pace of change accelerated throughout the COVID-19 pandemic as retailers adapted to changes in consumption, channel shifts,1 and rising customer expectations around speed and convenience. In fact, the race to shorten click-to-customer cycle time is arguably the single greatest influence on the shape of future omnichannel supply chains. Needless to say, the bar continues to rise for retail and direct-to-consumer brands.
How much does speed matter? Our research shows that when delivery times are too long, almost half of omnichannel consumers will shop elsewhere. As for how long is too long, we’ve found that more than 90 percent of US online shoppers expect free two- to three-day shipping. As retail supply chains accelerate, US consumers largely remain unwilling to pay for speed. McKinsey research shows approximately one in five US consumers will accept a marginal increase in shipping fees for faster shipping than standard free-delivery options. Given the high and rising costs of omnichannel order fulfillment, roughly 10 to 20 percent of sales in omnichannel retail, retailers are faced with tough decisions as they work toward improving delivery speeds profitably. Should they continue to build, should they partner, or can technology help unlock value in the speed equation where infrastructure and operations fall short?
