No Fast Shipping? No Problem. How SMBs Can Navigate the Amazon Effect

COVID-19 may have started the fire, but the online shopping boom is showing no signs of burning out. As consumer expectations grow alongside this blazing industry, many are placing a stronger focus on the shipping experience itself. This is why retail giants like Amazon.com are making fast and free shipping incentives table stakes, with recent data revealing that 40 percent of surveyed consumers sought retailers offering one- to two-day shipping this past holiday season — an 18 percent increase since 2022. Termed the "Amazon effect," this consumer demand poses a unique challenge for online retailers, particularly small and medium-sized businesses (SMBs).

While companies like Amazon may be able to absorb the cost of fast shipping, SMBs face the dilemma of meeting customer expectations while maintaining financial viability. In today’s market where every transaction matters and consumer loyalty can change on a dime, keeping up with the Joneses of retail can seem like a necessity. While the pressure of swift delivery can seem like a monumental undertaking, there are alternate strategies for SMBs to cultivate brand loyalty and control costs to remain competitive.

Sweetening the Shipping Deal

Fast shipping may be all the rage, but consumers are still open to other custom shipping options. With an alarming 47 percent of surveyed consumers having experienced or heard about a surge in package theft over the past year, shoppers don’t just need fast shipping, they also need safe and reliable delivery as well.

For SMBs looking to better the shipping experience in other ways, heightened visibility and choice throughout the entire shipping process are great options. This can include offerings like real-time package tracking, personalized shipping updates, and even the opportunity for customers to select preferred delivery time slots or alternate delivery locations.

These options allow consumers to feel like they have more control and security over their experience, while empowering SMBs to provide cost-effective shipping options that set realistic expectations for their customers. By recognizing that they may not compete head-on with the speed of industry giants, smaller retailers can strategically offer these incentives to customers who are open to other satisfying perks.

Cultivating Customer Loyalty

Customer loyalty is crucial for smaller businesses looking to build their brand. While fast shipping may be an easy way to gain consumer interest, there are other ways to build brand loyalty and lifelong customers.

According to UPS Capital research, almost half of surveyed consumers ranked loyalty program perks as one of the top benefits retailers offer, showcasing that there's an appetite for these types of programs. By offering incentives such as discounts, exclusive deals or loyalty points, merchants can create a value proposition that extends beyond one-time delivery. Customer loyalty initiatives not only engage consumers on a more personal level, but also encourage repeat business — building a close repertoire that goes beyond the immediate gratification of rapid shipping to ensure they’re coming back to purchase again and again.

Fast Times for Fast Shipping

With e-commerce ever-changing, SMBs need to be agile and creative to navigate a landscape that can seem dominated by the big names. Despite the fast-shipping craze, a unique and top-tier customer experience can still build brand loyalty. From consumer rewards programs to enhanced visibility and choice in the shipping process, SMBs can implement strategies that may make consumers forget about the Amazon effect.

As chief executive officer for strategy at UPS Capital, Archita Prasad develops and implements corporate strategy, leads growth initiatives, and leads the ongoing digital transformation journey.