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How can retailers possibly hope to provide same-day delivery?

By Will Gillingham

It was only around ten years ago when ‘same-day delivery’ would appear in the same sentence as phrases such as ‘pull the other one’.

However, after a tentative launch by Amazon in 2009, the service has since become an accessible, albeit premium, delivery option. That is, so long as you live in a large city and you’re shopping with an ecommerce giant supported by a prolific network of distribution centres.

But what of the humble retailer? Can your everyday clothing store or your go-to beauty boutique ever hope to sustain same-day delivery? Is it an option which will ever be feasible to rural residents? And, perhaps more pressingly, do shoppers actually want same-day delivery? We approached industry experts for their insight on the accelerating delivery sphere, to see whether this same-day terminal velocity is set to become a universal offering. Here’s what they had to say.

Not right now

There are two main ways to provide same-day delivery, identified by parcelLab. These are either to have an extensive list of warehouses and distribution centres which are localised to the point where a city can be serviced within hours, or through drones, which would be a better fit for rural shoppers, optimised for speed and able to cover the countryside in a pinch of the time it might take a van.

Unfortunately, the former is a massively expensive commitment, unreachable for many retailers, and the technology for the latter has yet to be refined. And so, for now, same-day delivery is off the agenda.

Tobias Buxhoidt, Founder and CEO, parcelLab, explains further: Speed is currently of the essence when it comes to shipping goods, but the question is whether a same-day service will ever be truly viable for any but the very largest retailers. Current logistics mean that the products purchased would need to be stored relatively close to the customer to achieve this, making it impossible for most retailers. Those without a warehouse network will have to wait for delivery innovations, such as fast drones, to be introduced before they will be able to offer a same-day service.’

In light of this, it’s perhaps no surprise that parcelLab’s recent UK shipping survey highlighted a lack of same-day options currently available to UK shoppers.

Buxhoidt: The UK E-Commerce Shipping Study 2019, conducted by parcelLab, revealed the delivery options offered by the UK’s largest 100 online retailers. Only seven currently provide a same-day service, with only four – Selfridges, Argos, Sainsbury’s and Euro Car Parts – offering this without restrictions.

‘As technology develops, perhaps at some point in the future all retailers will offer a free universal same-day service. But that won’t be any time soon. For now, the customer values up-to-date, proactive information about their purchase far more than quick delivery. Therefore, retailers should focus on providing this to set themselves apart from their competitors.’

Technology

Intriguingly, while Gavin Masters, eCommerce Industry Principal at Maginus, shares Buxhoidt’s views on the necessity for a broad warehouse network, he sees drones as the likely first step towards the wider adoption of same-day delivery.

Masters: ‘Employing the use of a hyper-local warehouse, or smaller warehouses located in close proximity to the consumer, can be one way around the high costs of same-day delivery. Hyper-local warehouses allow goods to be delivered much faster due to the greatly reduced distances they have to travel to reach their destination.

‘Medium-term, I think we’re likely to find that it’s actually more cost-effective and quicker to deliver same-day to out of city locations and not those in the middle of busy urban areas. The increasing pressure on ever-busier city roads, congestion charges, coupled with limitations around the ability to fly drones in highly populated areas (when drone deliveries become more popular) mean that it might be simpler to get a parcel to a remote farmhouse in the middle of Leicestershire than to a flat in the busiest part of London within a tight, same-day delivery window.’

And Mohit Paul, SVP EMEA at BluJay Solutions, reaffirms this line of thinking: Some hope that soon rural delivery routes will be simplified by drones which use a van or truck as aircraft carriers, taking them the long distances while the last mile drop is automated. Traditionally, rural and suburban parts of the country are slow to receive services like same day delivery or super-fast broadband. But the use of drones is actually much more feasible outside of cities, as collision avoidance will be a much less daunting challenge for the devices than in built-up urban areas.’

Perhaps it’s drone delivery, rather than widespread same-day delivery, which is the next word in retail fulfilment. However, while it’s all well and good to look towards this imminent technology with a hint of wonder (or, indeed, scepticism), it’s worth questioning whether shoppers want it in the first place.

Drone

Do shoppers want same-day delivery?

Perhaps at some point in the future. However, as noted by Sam Kellett, Head of Content at Exponea, the retail industry has a few burrs to smooth out before leaping to same-day delivery.

He says: ‘Same-day delivery is not a necessity. Amazon has the leg-up here, and smaller retailers are always going to find it hard to compete. Fortunately, same-day delivery is just one piece of a much larger picture: creating the customer experience. Same-day is great to have, but there are simpler and far cheaper things to focus on that can produce even better results.

‘Have you performed a funnel analysis to find where your site bottlenecks are? Tested different ways to fix those bottlenecks? Have you personalised your recommendations and offers for each visitor? Are you providing your customers with a truly consistent omni-channel experience regardless of the channel they use? If the answer to any of these questions is no, then focussing on same-day delivery is putting the cart before the horse. Instead, invest your resources into the lowest hanging fruit you can find.’

ASOS put this perspective into practice back in 2009. While they have since reintegrated same-day delivery, their first attempt resulted in them replacing the service with more feasible delivery options.

Kris Taylor, Head of Customer Success, EMEA at Magento, an Adobe company, explains: ‘Retailers must be sure that investing money and resources in perfecting same-day delivery is really worth their while, that is to say, whether it’s what their customer base truly wants. Interestingly, back in 2009, apparel giant ASOS launched same-day delivery for shoppers based within a 50-mile radius of its Hertfordshire warehouse. However, the retailer then went on to replace this with more convenient options such as one-hour delivery slots and evening deliveries, proving that speed isn’t always the customer’s main concern.

‘And many stores are now offering a buy-online-pickup-in-store service which is proving to be very successful. With different consumer types demanding different delivery features – fast, free, convenient – retail businesses should investigate their shoppers’ needs in order to offer the most satisfactory options.’

Mall

Scott Lindsay, Head of Marketing, EMEA, eShopWorld, concurs, referencing the need for retailers to be realistic with the scale of their business: same-day delivery which stretches a retailer too thin could actually have debilitating effects rather than exceeding shopper expectations.

Lindsay: ‘There’s no doubt that same-day delivery is a strong driver of conversion and sales figures, but it’s difficult and it’s costly for retailers of any size. Before setting it as a goal, retailers need to ask themselves a few questions.

‘Firstly, can their scale justify the investment required? The likes of eBay and Amazon have the capacity to meet this demand, so it makes sense for them to do so, but even for organisations of their scale, it is a substantial investment in logistics and resources to deliver same-day outside of large urban areas. Smaller retailers run the risk of overstretching their resources and diluting what they already do very well in the process, not to mention reputational damage should they fall short.

‘Therefore secondly, retailers should ask themselves is there another way of delivering for customers in a timely way without investing in same-day? From a cross-border perspective, delivery could potentially be optimised for example by creating omnichannel experiences that leverage local, in-country inventory pools. If a company has an existing bricks and mortar retail network, either nationally, or across borders, they can really work this asset hard to deliver the same-day ideal in a more efficient way.’

Another way to boost customer satisfaction prior to implementing same-day delivery is through localising your business; that is, understanding the geography in which you’re situated to ensure the delivery segment is fully optimised.

Matthew Furneaux, Global Commercial Director, Loqate, a GBG solution, highlights the need for localised information: Same-day delivery, or any kind of delivery for that matter, would not be possible without the basics in place. Ensuring the quality of your customer's location data is up to date and accurate is the only way you can successfully operate as a retail business. If we look at Loqate's Fixing Failed Deliveries report, 62% of online shoppers have experienced a late or failed delivery in the last year, and according to the 300+ eCommerce retailers surveyed, 19% of all failed deliveries is down to inaccurate delivery details.

‘It might seem obvious, but it's also really important not to fall into the trap of a trend that might not be right for your customer or business. According to a recent study we commissioned with Forrester Consulting, recognising your customer's unique set of circumstances is crucial to running a successful retail business. Over half of the 1500 global consumers surveyed in the study were happy for brands to use their personal location data if it meant the customer journey could be personalised or used to improve customer service and the checkout experience.’

Warehousing costs, lack of innovation, disparate customer wants: the stars have yet to align for same-day delivery to truly take off. However, for those companies determined to make a success of it in the here and now, there are a number of ways to mitigate the colossal investment needed for same-day delivery.

Warehouse

How same-day delivery can work

It’s a get-out clause which echoes through the centuries: if you can’t beat them, join them. In this case, it refers to the fact that Amazon has a rather large number of distribution centres which are available for retailers to use.

Andrew Norman, General Manager UK, ShipStation: Amazon has become so ubiquitous in this space, that they, of course, are a great reference point. Amazon supports same-day delivery in Britain’s cities with a metropolitan population of around 400,000+. Amazon Prime is the best way to begin offering this service. By housing some inventory with FBA, you can more evenly distribute your inventory around the country to fulfil Prime and Prime Now orders.

‘The drawbacks to this are that it offers a very narrow profit margin and Amazon’s relationship with sellers is more restriction-heavy than ever for its Prime sellers. Because cities smaller than, say, Cardiff are not covered by Amazon Prime’s Same Day delivery services, it is not likely, or at least not financially feasible to offer this option to smaller townships or rural areas. However, if you use an established warehousing solution such as FBA to fulfil your orders, and then venture into Seller-fulfilled Prime, you can more easily gauge for yourself where the threshold is for profitability when shipping items for same-day delivery.’

Another option which is currently being tested in Asia is the idea of couriers and customers meeting halfway in order to fulfil the same-day promise.

Alecxa Julia Cristobal of AsiaPay explains: ‘Nowadays, online shoppers tend to know the estimated time for the delivery to meet their purchase. Known names in the ecommerce delivery business like GrabExpress, Honestbee and Lalamove and many others now offer same-day delivery, where it only takes hours for shoppers to get what’s on their cart.

‘Same-day delivery can be costly for starting businesses as it requires a trusted courier and the vehicle used for operational delivery. Although this is financially challenging to beginners in retail, there are alternative ways to bring purchased products to your buyers within the day. One tested alternative is doing meet-ups. This way, sellers and buyers can meet halfway on their preferred time and date. By meeting up with your buyers, it adds credibility to your store and a good impression as a hands-on product seller.’

Map

There is also another technology which is passively improving delivery speeds day-by-day: mobile. As mobile technology becomes ever-faster and more proficient, so those hard-to-reach rural customers are suddenly pinpointed on the map.

Mohit Paul of BluJay explains: ‘As it turns out, the solution to leveraging the last mile as the supply chain grows more global and complex is right within reach – literally. Almost every industry and aspect of society is becoming increasingly mobilised, and the supply chain is no different. Mobile platforms have the potential to enhance user efficiencies and the customer experience, all while helping to streamline daily processes and manage shipping spikes across multiple sectors.

‘Even in rural or remote locations often known for being ‘problem deliveries’, platforms available on mobile can adjust and adapt personalised workflows to optimise the supply chain, preventing many bottlenecks and delays before they occur. The greater coverage of networks, and the upcoming 5G rollout increase the visibility of these parts of supply chains to central control.’

And finally, a pop-up distribution centre could be a potential workaround to provide localised, rapid fulfilment to an area for a temporary amount of time.

Joe Farrell, Vice President of International Operations, PFS: Due to their flexible nature, non-traditional fulfilment methods such as pop-up distribution centres and space-on-demand warehousing could provide a flexible and cost-effective solution. Pop-up distribution centres can be deployed anywhere across the globe and help online retailers get their products closer to the customer. The effective positioning of a distribution centre is crucial for enabling not only faster but cheaper delivery and providing a seamless customer experience. Current ambiguity over the effect Brexit will have on cross-border trading, means that it is more important than ever for brands to be agile and able to respond quickly to the growing needs of today’s consumer.’

In Summary

Same-day delivery is a concept which seems destined to remain as a niche, premium, delivery service, at least for the time being. While drone technology could enable the practice in rural areas, retailers need to overhaul their strategic thinking on distribution centres if they ever hope to offer same-day services to an entire country.

Fortunately, it seems that same-day isn’t on the lips of shoppers – at least not yet. A seamless, clear customer experience takes precedence in the retail sphere at the moment, and so before seeking to accelerate the fulfilment section of their offerings, retailers should first ensure that their entire customer journey is clearly communicated and convenient to the shopper.

However, if you’re set on same-day, there are options available: selling through Amazon, meeting the buyer halfway and experimenting with pop-up distribution centres being but a handful. In this accelerating arena, there’s a chance that same-day delivery will eventually become the norm – but we haven’t reached that point just yet.

Will Gillingham, Content Manager, IMRG

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