Small Businesses Stop Chasing Amazon on Delivery Speed

The old adage holds: Shoppers “want what they want, when they want it.” In retail, that “when” has always meant now.

Conventional wisdom long ago hardwired “now beats later” into eCommerce strategy, pushing logistics in a single, seemingly irreversible direction: faster. Two-day shipping gave way to next-day, which gave way to same-day, and now, in select markets, to delivery windows measured in hours.

Amazon is doing it. Walmart is doing it. Sub-hour order fulfillment, once a novelty, has become a competitive signal, one that the world’s retail giants remain set on battling over.

But the story that’s playing out for small and mid-sized businesses (SMBs) is a different one. These Main Street firms and eCommerce merchants have operations that are far less insulated against macro headwinds and rising costs than Amazon and Walmart, both boasting market caps of over $1 trillion.

And as the cost of the “last mile” continues to rise, the question confronting Main Street is no longer how fast they can deliver, but whether that speed is still worth the price.

Read more: How 31 Years of eCommerce Changed What, How and When Shoppers Buy

The Logistics Cost Curve No Retailer Escapes

Consumer expectations around delivery have shifted dramatically, but not necessarily rationally. The psychological anchoring created by big-box retailers has conditioned buyers to equate faster with better, even when the marginal utility of speed is limited.

But while a package arriving in two hours instead of next day may delight in the moment, it rarely commands a meaningful price premium. That disconnect between what customers expect and what they are willing to pay has created a structural imbalance in the economics of delivery between larger and smaller firms.

The last mile, representing the final leg of a product’s journey from warehouse to doorstep, has always been the most complex and expensive segment of the supply chain. Fragmented delivery routes, failed drop-offs, labor intensity, and urban congestion all contribute to costs that can account for more than half of total shipping expenses.

For large retailers with dense distribution networks and deep capital reserves, these inefficiencies can be partially absorbed or offset by scale. For SMBs, they can be existential.

As covered here, small business optimism dipped below its 52-year average for the first time in a year last month, driven by the Iran war and the subsequent surge in oil prices.

Without the volume to negotiate favorable carrier rates or the infrastructure to build proprietary delivery networks, smaller merchants often face a lose-lose trade-off: match speed and erode margins, or preserve margins and risk losing customers.

Matching the speed of large platforms often requires outsourcing to third-party logistics providers, using gig-based courier networks, or maintaining excess inventory closer to end consumers. Each of these strategies introduces cost layers that can serve as structural constraints for SMBs unable to absorb these new costs, as their larger competitors do, through sheer scale and ecosystem lock-in.

See also: Retailers Focus on Data and Payments as Shoppers Pull Back

The Economics of Renegotiating Expectations

The fact facing Main Street business owners is that, beyond a certain point, incremental gains in speed can require disproportionate increases in cost and operational complexity. For SMBs, this raises a critical strategic question: Should they continue to chase the speed benchmark set by industry leaders, or redefine the terms of competition altogether? The answer may lie in recognizing that not all products, customers, or contexts require the same level of immediacy.

Dinesh Gauri, a professor of marketing at the University at Buffalo School of Management, told PYMNTS in an earlier interview that delivery speed isn’t everything. While quick fulfillment is important, Amazon and Walmart are “killing their margins” by prioritizing it too much.

Shoppers, he added, also want competitive pricing and accurate inventory information (which isn’t always easy to find, per previous PYMNTS Intelligence research).

The battle lines being drawn around SMB delivery are not tied to whether speed or cost discipline will “win,” but how the balance between the two could be renegotiated. The current equilibrium, shaped largely by the strategies of large retailers, is unlikely to be sustainable for smaller players. Yet it is also not immutable.

A pragmatic approach for SMBs may be selective adoption, or investing in tools that enhance visibility and coordination, rather than those that promise radical acceleration. Real-time tracking, for example, can improve customer satisfaction without significantly increasing costs, while advanced analytics can inform more efficient inventory placement.

Customer expectations, while powerful, are not fixed. They are influenced by communication, experience, and context. SMBs that articulate a clear value proposition and integrate delivery into a broader narrative of quality, reliability and community could very well have an opportunity to reset the terms of engagement.