In today’s competitive environment, on-time delivery (OTD) is a leading indicator of success. Many retail and ecommerce firms struggle with accurate shipping estimates, directly impacting their customer’s feelings towards them as merchants. Improving on-time delivery directly improves revenue, overall customer satisfaction, and ultimately competitive advantage. 

In this article, I explain the significance of on-time delivery, its correlation with customer satisfaction, and how improved OTD drives revenue growth for your business.

Why improve on-time delivery?

On-time delivery improvement is integral to your business reputation and is well worth investing in. Consumers are holding retailers accountable at every stage of the delivery process, according to a study by Chain Store Age:

  • 32% of consumers are more likely to blame the retailer for a failed delivery
  • 95% expect the business to contact them if an estimated delivery date changes in transit
  • 90% expect some form of action or compensation for missed promise-by dates, and 41% want to be notified immediately when a delivery exception occurs

While you can’t control weather-related delays and other unforeseen carrier problems that affect when your products will arrive, there are many things you can control. For example, customer address cleansing, real-time inventory publishing across channels, and the ability to make last-minute changes to the sourcing and delivery methods of orders – all features available within advanced order management systems (OMS). 

Learn more about shipping efficiencies and OMS.

What is a good on-time delivery rate?

OTD is a critical metric that measures the demonstrated performance of delivering products to customers within the promised timeframe. High OTD indicates that your business consistently meets or exceeds customer expectations. A good on-time delivery rate to shoot for starts at 95%. As reported by consultancy ShipMatrix, both UPS and FedEx posted around a 98% delivery rate last holiday season.

On-time delivery directly correlates with customer satisfaction levels and significantly impacts your business’s reputation and revenue. A recent study shows that 69% of consumers are much less likely to shop with a retailer in the future if an item they purchased was not delivered within two days of the promised date. Note: That is ‘2 days within promised’, not ‘2-day shipping’; customers are okay with longer shipping times that set and meet expectations.

Customers who receive their orders as promised are likelier to become repeat customers and post positive reviews. Loyal customers become a stable source of income and tend to buy more over time as the consumer relationship strengthens. They tell others, too. 

Word-of-mouth (WOM) and customer reviews

These have become table stakes as assortments grow and more vendors provide competing or value-added products, particularly with the rising impact of WOM marketing and consumer reviews. 

Semrush offers some word-of-mouth statistics that prove why you should get on-time deliveries right in the eyes of consumers:

  • WOM drives $6 trillion in annual global spending and is responsible for 13% of all sales
  • WOM is even more effective than paid ads, resulting in 5X more sales

Furthermore, customer reviews heavily impact revenue, with 94% of consumers having said a negative review convinced them to avoid a business. Finally, businesses with a 4.0 to 4.5-star rating earn an additional 28% annual revenue, according to ReviewTrackers.

Strategies to improve OTD

On-time delivery improvements drive positive WOM, customer-generated marketing, and measurable business results, especially in ecommerce purchase decisions. Consider implementing the following strategies:

  • Streamline your supply chain processes – Evaluate your supply chain processes and identify areas for improvement. Streamline your processes, starting with those that impose the highest cost, like picking and shipping. Reduce bottlenecks by examining where product flow slows in the process. Optimizing inventory management ensures that this flow consistently improves from an order fulfillment perspective.
  • Enhance customer communication and visibility – Effective, timely communication with customers and supply chain partners is crucial. Define processes to provide accurate and real-time updates on order status, shipment tracking, and potential delays. COVID-19 highlighted the supply chain, and now, customers require full visibility of the process. Transparency builds trust and keeps customers aware that their product is in transit, becoming more important than the 2-day delivery window. Related: The need for speed (or not): how ecommerce trends are evolving
  • Collaborate with partners – Partner with reliable suppliers, carriers, and logistics providers who prioritize on-time delivery. You must conduct thorough research and due diligence to ensure their track record aligns with your delivery expectations. One common practice is to define supplier scorecards that rate based on quality, responsiveness, and compliance with delivery expectations. Use your historical data to make your operations more predictable in the future. And, like customers, effective, proactive communication must be baked into the partnership. Related: Build your composable supply chain tech network: results, not risk through partners
  • Invest in the right technology – Leverage technology solutions such as advanced WMS (warehouse management systems), OMS, and SCP (planning and fulfillment) to automate and optimize your supply chain processes. These tools provide real-time visibility, improve efficiency, and proactive decision-making to lower your overall logistics costs.
  • Commit to continuous improvement – Regularly analyze delivery performance metrics to identify bottlenecks or resource needs. Examine your customer feedback from a third-party viewpoint. Make sure you serve them how they desire and identify areas for improvement. Continuous improvement initiatives enhance your delivery process and enforce it culturally every day. Related: Predict; don’t correct; learn how our Bright Performance analytics and reporting solutions drive predictable decisions and business outcomes.

The best place to start with improved delivery times is to consider evaluating order management software. Solutions like Deposco’s Bright Order OMS provide a rapid boost to revenue and profitability by fostering long-term trust, loyalty, and consistently positive shopping experiences.