There are many people who would argue that the pandemic has forever altered the way we shop. Even if that statement is a bit premature, we can safely say that consumers’ purchase behaviors and expectations have changed dramatically over the past 18 months. This change, driven by the rise in online and omnichannel retailing, is perhaps most obvious in the area of order fulfillment.
Consumers now want to receive goods in myriad locations, including curbside, home, designated parking spots, lockers, kiosks and even stores that belong to a different retailer than the one they transacted with.
Not only are shoppers more demanding about where they receive their goods, but consumers (myself included) are extremely demanding as to when. As the competitive battleground intensifies in e-commerce, a heightened level of pressure and hyper-awareness swirls around speed of deliveries. No matter what you sell, or where you sell it, nearly all retailers are being measured against rapid shipping trailblazers like Amazon.com Inc., Asos Plc and Wayfair Inc.
While the “delivery wars” are not new, the “same-day” delivery wars are starting to heat up. And traditional brick-and-mortar retailers — not their pure play online competitors — are in the best position to win — that is, if brick-and-mortar retailers can effectively tap their store networks to achieve same-day delivery success.
Not surprisingly, the global same-day delivery market is surging. One study found the market was valued at $5.78 billion in 2019 and is predicted to hit $20.36 billion by 2027.
Consumers clearly want speed and convenience, and many are even willing to pay a premium for it. McKinsey & Company found that 30% of consumers now expect same-day delivery options, and PwC reported 41% of consumers are willing to pay a charge for same-day delivery.
As a result, retailers are pulling out all the stops to invest in same-day delivery capabilities. In fact, 42% of specialty retail supply chain leaders are hoping to offer same-day delivery by 2022.
While the intent is there, challenges remain. Same-day delivery requires a high degree of operational and technological sophistication. From having real-time inventory visibility to managing very short fulfillment windows to achieving agility in the last mile, retailers must have the processes, systems and people in place to make this complex service level a reality.
A Stored Advantage
It’s been well documented that online-only retailers struggle to get orders delivered to shoppers outside big cities the same day orders are placed. Without a local presence, getting items delivered — particularly to suburbs or rural areas — is both challenging and expensive. Even the 800-pound gorilla that is Amazon offers same-day delivery for only a fraction of their assortment to a fraction of the places they serve.
For omnichannel retailers — those that have both a physical and an online presence — the store network is necessary to solve the same-day delivery conundrum. Stores have a proximity to customers that offers a distinct fulfillment advantage.
If you are ready to turn your stores into same-day delivery differentiators and get a leg up on the pure play e-commerce retailers that can only ship from warehouses, here are five things to keep in mind.
Understand your inventory. It’s imperative that you have a crystal clear view of your inventory before offering same-day delivery. Further, you’ll need to understand your products and the best way to efficiently and safely deliver them to your customers before you know what delivery speed you can realistically promise. Don’t just mimic other companies — your products may be different from theirs, so they may have different delivery requirements.
Manage expectations and stay in communication with your customers. Set the right expectations from the beginning, and create a plan for what you will do if you miss a deadline. Your customers expect proactive and consistent updates about when they will receive their orders. If you can’t deliver that for a same-day order, then don’t risk the damage to your brand. But if you can, then use this as an opportunity to keep your customers satisfied.
Vet your partners. If you work with a delivery partner, you’ll want to make sure they prioritize your customers the same way you do. You essentially want them to be an extension of your brand. If you don’t think they offer the same care and attention as you, then find another company to work with that does. Your customers will judge the quality of their experience based on all touchpoints, including delivery.
Design a strategy that works for your business model. If you’re going to achieve sustained competitive advantage, you’ll need a clear strategy when it comes to fulfillment. Will you be picking and packing from a few dedicated stores? Or are you equipped to consider a micro-fulfillment system — in which parts of your stores are used to fulfill orders using automation? Will you be able to arm your store associates with mobile technologies to help them pick and pack, and also be able to check real-time inventory status? What support will be required from a corporate perspective? These are all questions you should consider.
Invest in order management technology. Objectively evaluate your stores’ order management capabilities before embarking on a fulfillment service that will put new time pressures on every phase of the order lifecycle. An advanced order management system is essential to source, route, delegate, track and inform the status of every order — and to ensure the promises you are making can be kept.
For retailers today, there are real opportunities to earn lasting advantage through same-day delivery from their stores, but only if they formulate a plan, effectively execute the process, invest in the right technologies and seize the day.
Dave Bruno is director of retail industry insights at Aptos, a retail technology provider.