This year's explosive growth of online purchasing and competition among online retailers has resulted in a race to reach consumers. Whether it’s one-day, same-day or one-hour, how can sellers fulfill delivery promises?
The answer is getting the last mile right.
Twenty years ago, brick-and-mortar was king. Online and catalog sales existed, but shipping could take six to eight weeks. Today, consumers expect at least same-day delivery, if not faster.
E-commerce sales and demand for quick delivery continue to increase every year. In 2019 alone, global e-commerce sales are expected to grow 21.5 percent, according to Statista.
The retail industry is rapidly changing, and retailers are getting smarter about their last-mile solutions to compete with the biggest players. In 2018, Amazon took an impressive 41 percent of the U.S. retail market share, largely due to the attractiveness of Amazon Prime’s same-day and next-day delivery.
As consumers increasingly turn to e-commerce for their shopping needs, faster delivery isn’t just an added plus; it’s the expectation of the online shopping experience. If retailers and their logistics partners want a shot at market share, faster delivery needs to be a priority.
So how can retailers expedite delivery and delight customers? The answer is last-mile delivery.
Modern e-commerce retailers need a solution for delivery as fast as two hours. Last-mile warehouses facilitate the movement of goods in the supply chain to the final destination. Being closer to the consumer decreases supply-chain costs while minimizing the time to complete delivery.
How long it takes to drive from the last-mile facility to the customer’s door is more important than the actual mileage. Some urban locations might have heavy traffic, resulting in delayed or difficult transfer of goods; others might have easy delivery. Selecting a last-mile location means understanding transportation and driving conditions in depth.
The last mile — the distance between a fulfillment center and final point of sale — is not the best indicator for delivery time. Retailers should seek out high-quality logistics facilities to gain access to a wider variety of areas. They should be able to serve the new urban consumer, who is ordering everything from furniture and apparel to food and beverages.
Retailers are struggling to keep up with increasing demand for faster delivery. While consumer expectations around delivery are rapidly increasing, their delivery experiences are declining. Fast delivery is important to 99 percent of U.S. consumers when making online purchases. At the same time, an increasing number of consumers feel frustrated with the lack of professionalism and accuracy when having items delivered. For retailers looking to exceed expectations, there is a large opportunity to capture customer loyalty when delivery is done right.
Same-day delivery has been the fastest-growing expedited delivery option in the past year. Thirty-one percent of consumers took advantage of same-day delivery in 2018, as opposed to 17 percent in 2017. Further, nearly a third of U.S. consumers feel frustrated when a company does not offer same-day delivery.
For retailers that offer same-day delivery, customer loyalty is high, with 74 percent of consumers more likely to purchase again from a company after receiving same-day. A quarter of consumers are willing to pay premiums for that service.
Increased e-commerce and the desire for same-day delivery have created a need for modern last-mile facilities near big cities in order to deliver more easily, frequently and reliably. It’s important they have the key features that will enable the end user to make successful deliveries. These include:
Andrew Chung is CEO of Innovo Property Group.
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