Overnight delivery is fast becoming the new delivery standard, with free next-day deliveries provided by best in industry marketplaces such as Walmart and Amazon. Customer expectations are quickly aligning – nearly half of shoppers now choose next-day delivery when buying online.
To compete, you must keep up, and this demands overnight shipping.
But what is overnight shipping, how much is it, and which carrier provides the cheapest and fastest overnight shipping service?
Let’s find out.
What is overnight shipping?
Overnight shipping is an eCommerce delivery service where customers receive their orders the next business day. It’s also known as next-day delivery and 1-day delivery.
The exact date of delivery depends on the seller’s cut-off time, which differs depending on a customer’s location and the carrier’s pickup time. Many sellers provide cutoff times by using a live countdown timer that tells shoppers exactly how long they have left to order and qualify for next-day delivery.
For example, lets say comfort and wellness retailer Huggaroo provides NextDay Delivery to customers near their warehouses if they order by 11 a.m. A customer ordering on Monday at 10 a.m. receives their order on Tuesday; a customer ordering on Monday at 12 p.m. receives their order on Wednesday.
Overnight shipping: behind the scenes
Overnight shipping may feel like magic to customers, but there’s a lot of work behind the scenes making overnight delivery possible.
1. A customer places an order before the cut-off time
Your next-day delivery cut-off time gives you enough time to download, pick, and pack orders to meet your courier’s cut-off time for overnight shipping.
2. The carrier company receives and processes the package
Once you deliver the package to the post office, or your courier collects it, it’s identified and sorted for overnight shipping and routed accordingly.
3. The package is delivered to the nearest hub overnight
Your package travels overnight to the delivery hub nearest the end customer, using ground shipping or air shipping depending on the distance.
4. The package is delivered to the customer
The next day, the package is delivered from the hub to the customer, meeting your 1-day shipping promise.
Why offer overnight delivery on your eCommerce store
Experts predict global eCommerce sales to reach $4.2 trillion by the end of 2020. However, online sale growth is accompanied by online store growth, with 2020 accelerating the shift from physical to online stores by five years.
Competition online is steep, but fast shipping can help you stay competitive by helping you stand out, increase conversions, boost CLV, and increase average order volume.
Making you stand out
Overnight delivery matches the service levels provided by the best in industry, such as Walmart and Amazon. It also beats the service levels offered by others in the industry, such as your competitors.
This makes next-day delivery a distinguishing feature, setting your store apart and giving you something compelling to advertise and highlight.
Fun fact: 1 in 4 shoppers will choose one retailer over another because they provide better delivery options.
Increasing customer conversions
Nearly one in five shoppers abandon their shopping cart because of slow delivery speeds.
Next-day deliveries eliminate purchase blockers and accommodate all shoppers, regardless of how quick they need their purchase. This increases conversions, with some sellers experiencing double-digit growth after offering overnight delivery to nearby customers.
Boosting customer lifetime value
Overnight delivery is a premium shipping service, and when you provide customers with a premium service, they keep coming back for more.
Not only that, but when you achieve 1-day shipping, you show customers you’re reliable and make them confident shopping with you again.
Increasing average basket size
Next-day shipping triggers a psychological reaction that encourages customers to spend more money.
Customers know overnight shipping is expensive and so they subconsciously feel compelled to spend more to take advantage, especially if it’s linked to a minimum spend requirement. This increases the average basket size, which increases your profits.
How much is overnight shipping?
You can calculator shipping costs using an online calculator such as:
- USPS shipping calculator
- UPS shipping calculator
- FedEx shipping calculator
- Deliverr fulfillment calculator
The following factors influence the cost of overnight shipping:
The package’s size determines its dimensional weight – a figure most carriers use to calculate shipping costs. Packages with a small dimensional weight incur the cheapest overnight shipping costs, while packages with a large dimensional weight incur the most expensive shipping costs.
To calculate your package’s size and dimensional weight, multiple the package’s length, width, and height.
If a package exceeds a certain weight, many carriers use this figure to calculate shipping costs, rather than dimensional weight: the heavier the package, the more expensive the overnight delivery cost.
Use digital scales to calculate the package weight.
The origin and destination also influence price, with short distances incurring the cheapest overnight shipping costs and long distances the most expensive.
Most carriers use shipping zones to calculate distance, with higher zones being further away and more expensive.
Some carriers provide discounted shipping rates based on volume, which is why third-party fulfillment services obtain the cheapest overnight delivery rates because they have economies of scale.
Some 2-day fulfillment services, such as Deliverr, automatically offer next day delivery at no additional charge when customers live within a certain radius of its fulfillment centers. Customers see a next-day delivery option next to the listing, based on their zip code.
How to keep overnight shipping costs low
Online shoppers won’t pay extortionate shipping costs; it’s one of the top cart abandonment reasons. But overnight delivery can be expensive; therefore, it’s important to keep your overnight shipping costs as low as possible to make them attractive to your customers while protecting your bottom line.
1. Find the cheapest overnight shipping service
Many sellers assume USPS Flat Rate shipping is the cheapest overnight shipping service, but that isn’t always true.
The general rule of thumb is that USPS is good for small, lightweight items, while UPS and FedEx are best for large, heavy items. However, costs fluctuate with distance, making it essential to compare services and prices before choosing a carrier.
2. Set minimum order values for overnight delivery
Minimum order values for overnight delivery ensure customers spend enough money to make next-day delivery profitable for your business. The more money someone spends, the bigger your profit margin becomes, and the less of a dent shipping fees make.
However, remember that larger baskets equal bigger and heavier packages, inflating the cost of overnight shipping.
3. Disburse stock to warehouses closer to your customers
If you distribute stock to warehouses closer to your customers, you reduce the distance orders must travel and can use cheaper, ground shipping methods.
4. Partner with an eCommerce fulfillment service
Next-day delivery fulfillment services have warehouse locations, shipping carrier contracts, and expertise to achieve next-day deliveries without excessive costs.
Plus, as mentioned, some fulfillment partners provide next-day shipping at no extra charge for customers living close to its fulfillment centers – often making this the cheapest overnight shipping service.
Tip: Don’t forget to adopt good shipping label practices to avoid unnecessary return fees.
How to offer overnight deliveries
There’s a lot more to next-day deliveries than finding the cheapest and fastest overnight shipping carrier. You must download, pick, and pack orders in time for overnight delivery, and store stock in locations that make overnight delivery possible.
There are three main options for achieving this:
1. In-house fulfillment
If you can optimize your in-house fulfillment efficiency to download, pick, and pack orders in time for overnight shipping, you can work with an overnight delivery carrier to provide 1-day deliveries. However, be cautious of your ability to maintain 1-day speeds during peak retail periods.
2. Qualifying marketplace services
Marketplace services like Amazon FBA provide overnight shipping services alongside the storage and fulfillment of your inventory. However, these marketplace fulfillment services usually only apply to orders on their own marketplace. If you’re diversifying your revenue by selling multi-channel, this will be tough on your inventory efficiency.
3. Outsourced fulfillment services
Outsourced fulfillment services like Deliverr use a network of warehouses to disburse stock across the US, allowing you to offer 2-day delivery to all of your customers and 1-day delivery to close-by customers at no additional cost.
Wrapping it all up
Overnight shipping can be magical for customers, but it can be expensive and stressful for sellers. If you have the capacity and budget to provide next-day deliveries in-house, USPS, UPS, and FedEx all provide overnight delivery services to suit.
Alternatively, you can use a fulfillment service to balance cost and speed by offering 2-day shipping to all customers, and next-day shipping to customers that live close, at no additional cost.