Same-day delivery represents the pinnacle of the modern customer’s expectations. In the customer-driven supply chain landscape we are now operating in, finding a way to meet that expectation is paramount. However, what consequences and effects is same-day delivery having on logistics management? Is this a headache or a solution?
The Data on Same-Day Deliveries
As those with a responsibility for logistics, you may hope that the push for same-day deliveries is fad – a flash in the pan – that isn’t sustainable. However, the data and research doesn’t back this up. According to the 2017 Digital Commerce Benchmark Survey that’s far from the case. In fact, according to the study 65% of retailers are going to be offering same-day delivery within the next two years.
Also, according to the study, 51% of retailers already offer same-day delivery – up from just 16% one year ago. When online retailers are competing against Amazon, they haven’t a choice but to meet the same-day delivery targets.
This data is also in line with another recent survey which has revealed that retailers are still stumbling and falling when it comes to the ‘final mile’. This study reports that a majority of 58.6% of consumers state that retailers are ‘mediocre’. This of course is exacerbated at this time of year when sales are up and consumer expectations are particularly high and time-based. In fact, delivery is the single most important factor in the shopping experiences for 40% of consumers.
Why Does This Matter?
It matters because it costs the retailer in a number of different ways. Yes, there is the financial cost of meeting fast delivery times. However, it goes considerably further than that.
Same-day deliveries have the potential to uncover and highlight problems in your supply chain that have knock-on effects. Failure to meet commitments damage reputations and hits the bottom line in the long-term. Poor systems create wastage that tight margins can’t absorb. You need to be able to meet your customer expectations reliably so that the cost – both long and short term, is minimal to you.
The Customer and Their Expectations
What’s behind this is a customer who expects to receive their ordered item within a very short window of time. This has been fuelled by the Amazon model of deliveries – notably that of the ‘last mile’. Amazon has created an online retail environment whereby customer’s increasingly tough expectations have been met, and reliably so. They have, in effect, proven that it can be done. Therefore, the tolerance for other retailers who fail to meet these high standards is considerably lower than it was even just a few years ago.
This is where we’re now seeing the biggest driver of success for online retailers – succeed in same-day deliveries and you’ll survive, fail and your business will fail with you. You can’t ignore it. You therefore need to look at your logistics management to see how and where changes and improvements can be made.
Where to Put Your Energies
In recent years, we’ve seen online retailers plough their energies in to the customer experience. You want them to feel valued and individual whilst also delivering a retail service to the masses. It’s taken a lot of investment and changes to succeed in this way. The shopping experience for many retailers is now sleek and efficient.
However, logistics has been trailing a little and is now the area that could be letting you down – right at the last minute. Logistics is where you now need to be ploughing in all your energy. Typically, this is because retailers outsource the delivery to third parties such as Uber and Lyft. In fact, these third party app-based delivery services have risen from taking 20% of the same-day delivery market to 32% in just the last 12 months.
How to meet demand in this area is going to require a number of different approaches. Firstly, there is the next step in autonomous delivery and distribution through the use of robotics and smart technology such as self-driving robots and vehicles. It’s not enough to just outsource logistics and hope that the third-party does the job reliably for you. You need to make sure you have complete control and visibility over this end stage. According the study by BRP, 49% of retailers will be offering end-to-end shopping journeys for consumers within the next five years, and 54% are creating a ‘singular brand experience’ as a priority. You can’t be left behind.
It’s not easy. Carrier networks are becoming increasingly complex. The variety of goods being ordered with short delivery windows is enormous. The same expectations apply whether it’s a pair of socks, a sofa, or a washing machine. That creates a significant challenge that requires some well-planned logistical solutions. Yet you the retailer need to be in control of that from the smallest and tiniest of goods up to the largest.
This matters. The consumer has power as they’ve never had before. If their expectations aren’t met then they will shout it from the rooftops and your reputations will suffer.
However, it doesn’t need to be looked on as a headache or bad news. In fact, meeting the same day delivery expectations can be an opportunity for online retailers. It’s a chance to increase your service-level and to streamline your warehousing. It’s the catalyst to reduce wastage and improve visibility at the end of the product journey. Some retailers are choosing to bring logistics in-house therefore, rather than relying on third party providers. This gives them a standardised and reliable network fully within their control.
This is further underlined by realising the power that same-day delivery has over your sales conversions. Online retailers aren’t strangers to losing custom right at the checkout moment. However, Amazon’s experience has been that the option for same-day delivery has actually increased the purchase conversion at the checkout stage by 20-30%, even though the customer may not actually opt for same-day delivery in the end.
So if you have one supply chain goal for the New Year, make it to welcome same-day deliveries in your business.