“Time is a valuable resource and the most costly outlay, use it strategically.”
When it comes to business and livelihood, we all know the importance of time and pivotal role played by it in moulding them. Since whole world believes in superiority of time and its influence on business, how is it possible for an eCommerce world to discard such a socially accepted fact! Same day delivery is one such trend which proves that eCommerce world has already jumped in the race of saving their own and more importantly their customer’s time.
Earlier it was said that, “To reap good services, you have to disburse a little money from your pockets” from the consumer’s perspective but the tagline seems to roll out in a reverse direction now. It emphasize more on “what kind of a service a producer can offer to his client”. The pendulum has shifted to producer’s perspective because it gives them a larger spectrum of analysis to hit their desired conversion rates. This is the reason why some of the eCommerce companies have started to invest their brains, time and money behind the latest trend(or call it a service) named “Same day delivery”.
Same Day Delivery : A Trend which Creates a Bonanza of Opportunities for Merchants and Buyers Both
Same day delivery is the latest trend which is expected to grow epidemically, primarily because of its unique modus operandi of time management. It is a trend which is supposed to elevate the bar of service along with the conversion rates which eCommerce dreams of.
But the main question which pops up is “Are you willing to pay extra for assured delivery on the same day of order?”. Psychologically, we all like novelty and new purchases in one way or another. In fact, our brains are wired in such a way that our new purchase makes us excited. The sooner we get to touch our product, the faster we are satisfied with purchasing experience. This psychological fact stands true for the eCommerce-means too.
An Internet Retailer report discloses an important stat on same-day delivery. It states that it is important to 19% of shoppers. Report also clarifies that “buyers are ready to pay an extra of 5 to 10% of the purchase amount to enjoy the serviceability of same day delivery. These are the stats and details of same-day delivery pilot projects in UK and USA.
Amazon in United Kingdom:
Amazon launched a programm called as Amazon Prime. It was an annual membership programme which was a paragon of extensive services. It offered users to access wad of movies, films, music, e-books, and the most prominent feature of same day delivery for a fixed monthly/yearly fee.
Amazon also initiated a project which said “Free Same-day delivery(within 24 hours) for 6 months and half price Prime for students of UK”. This included details as follows:
- Prime Now: One-hour delivery in London and Birmingham for £6.99 or two-hour delivery for no extra cost within windows.
- Prime Same Day: Same-day delivery for no extra cost on orders before noon.
- Prime One Day: unlimited one day delivery for Prime customers.
The best part of this programme was its flexibility. Customers who didn’t subscribe to Prime could still get same-day delivery for £9.99.
Amazon in United States of America:
Amazon’s same-day delivery in USA was as prodigious as it was in United Kingdom. It asked its users to place their order by 12 p.m., and it would deliver the product to the concerned party by 9 p.m. It even delivered seven days a week.
In December 2014, Amazon launched a Prime Now service, which offered same-day delivery in 24 major U.S. cities and was available to Amazon Prime members, who already paid $99 per year for one-day delivery on a massive selection of products. Prime Now deliveries were free within two hours and was billed at $7.99 for one-hour delivery.
This drew a massive attention of users which in turn helped the charts of conversion rate grow. Business Insider reports clarified that around 25% of the estimated 40 million Amazon Prime members in the U.S. have used Prime Now delivery.
As the stats suggest, same day delivery is the latest eCommerce trend which is going to rule the internet commerce in 2017-18. It gives a broader gauge of opportunities to the merchants and the buyers at the same time. It enhances the customer-merchant relationship and gives buyer a greater opportunity to immediate product access.
But another set of questions which keep mounting the conscience of e-Commerce merchants are how convenient are the methods of execution for same day delivery? What are the right methods of its operation? Is it a superfluous luxury or just a normal expected service? Here are the set of steps which explains the simplicity of its procedures.
Execution of Same Day Delivery – Three Simple Logistic Models to Achieve the Expected Rates
Like most other industries, transportation and logistics (T&L) is currently confronting immense change, and like any alteration, this brings both risk and opportunity. T&L has to trample to different kind of model lengths to ease the execution of same day delivery. Three operating models have surfaced to accomplish the logistic issues. They are:
Incumbent Parcel Logistics:
The first model is incumbent parcel logistics. This involves the transportation by existing logistics with an additional delivery charge.
Retailers can use broker platforms that enhances the existing courier capacity which can offer scheduled delivery. This is the second model which gears up the logistic issues for same day delivery.
E-Commerce giants maintain their own logistics. They own their own fleets to handle same day delivery. Additional charge is added to the product’s rate.
In the long run, parcel logistics providers will be able to operate at the lowest cost while offering integrated logistics solutions ranging from orders through fulfillment to delivery and return.
Factors Which Decide Whether Same Day Delivery Makes Sense to your Business or Not:
Majority of the eCommerce merchants are unsure whether they need same day delivery for their businesses or not. This makes their business prone to failure. There are a few deciding factors which blow away the obscure clouds of doubts about same day delivery among the merchants. Prior to execution of this trend, you must make sure that you are on the receiving end of these factors. They are enlisted as follows:
- Category of the product
- Location of the buyer
- Age group of the customer
- Demography of your client
- Product Margin
Category of the Product
Same day delivery service may not attract a lot of merchants. The reason being is its hype of complexity in execution(though it is not). But certain products are meant to be delivered on the same day or within the frame of few hours. If you have an online grocery portal, you are supposed to transport the ordered item within the next few hours. Also, if the products are flowers and instant gift cards, it gets extremely important for you to deliver it on time. Large products like furnishing items are difficult to be transported on the same day. So, categories of the products act as one of the deciding factor for same day delivery service.
In order to opt for this service, gather information about your customers, make sure whether they actually want this service or not. Conduct surveys to gauge demand, or get input from your support staff using real time analytics to see if same-day delivery is something that many shoppers are craving for. Also, trace the physical location of these customers and identify them and their demands on microscopic level.
Once you’ve confirmed the demand, it’s time to implement your program of same day delivery.
Location of the Buyer
Location of the buyer plays a crucial role in successful execution of same day delivery. Once you have gathered the location of the buyers(real-time analytics would help you to unearth a lot of data about customer’s location and interest) and their demand for the service, measure out the probable distance between your warehouse and the customer’s address and analyse whether you could deliver it within the time frame.
It would be foolish to launch a same day delivery programme when the proximity of your warehouse is very huge to the address of customer.
For Example, Even a giant like Amazon launched its pilot project service in 24 areas of London, UK. Once it saw the positives of same day delivery in a demo project, it stretched it service to other towns of UK and globally now.
Age Group of the Customer
“The Millenials” love the immediate access of products. Making them wait for the arrival of products kill their excitement and that might put a crater to your business.
A survey from Bizrate Insight reports that nearly 30 percent of millennials view such product delivery capability as important compared to just 5 percent of senior shoppers. Same-day delivery is viewed as significant feature by 13 percent of Baby Boomers and 19 percent of Gen X shoppers.
Real time analytics helps in determining such age groups and millennials of particular location. It is advised to launch same day service where young generation have a greater access to the internet and eCommerce stores. The psychological urge of instant access to the product can be utilized as a boon for your store.
Of all the same-day delivery services offered, the most widely used by far is Amazon, followed by Google Express and Postmates:
- 70% have used Amazon’s same-day delivery service, out of which more than 50% of population was below 30 years and 4% didn’t know if they have used it.
- 11% have used Google Express, out of which more than 80% of population was below 30 years and 9% didn’t know if they have used it.
- 10% have used Postmates, out of which more than 600% of population was below 30 years and 8% didn’t know if they have used it.
Demography of your Client:
Demography is one of the deciding factor which reverberates the right answer on the issue of same day delivery. Customers of different demographics have varying expectations on delivery time. Read out the demographics properly using real time analytics and try to suffice their need.
E-commerce merchants are unable to recover the complete delivery cost by delivery charges. A part of it is also recovered from product margin or by offering multiple buying options by showing them related items. This factor may hamper this trend remarkably. Same day delivery on low margin products will have an adverse impact on the profitability of the company. If your product’s costing is less than the delivery charge, it’s of no use to implement this trend.
Challenges Faced by Same Day Delivery and Appropriate Methods to Overcome the Challenges:
Same day delivery is a challenging service which can be commandeered by certain integration and scalability methods. Here are some of the challenges faced by e-tailers and procedures to overcome them:
If you have an eCommerce portal only to promote and sell your own product, same day delivery won’t be an issue for you. But if a vendor accesses public platforms like Amazon and eBay, they have to pre-ship their products to e-retailer warehouses so that they don’t end up in messing this trend. Vendors can be managed by eCommerce by being in constant touch with them and by assigning a personal executive which could react to any of the queries of vendor instantly.
Sprawl Web of Same Day Delivery Service in Small Towns
Extending this service beyond major cities is a big challenge. Same day delivery services are more feasible in highly populated areas as these shipments cannot go through regular hub and spoke delivery model. Delivering beyond major cities need warehouses in small towns and districts. Building a warehouse at outskirt of the major city(somewhere between the city and small town) may help in reaching beyond large cities.
Freight and Logistic Provider
Opting for the right logistic provider is the biggest challenge in eCommerce. Conquering this challenge is a key to success. A lot of logistics are unavailable in different parts of the area. Their operation is restricted to certain areas. Cluster with the right logistics partner. Various attributes like cost, customer experience(with the particular logistic), reliability, operational strength, scalability should also be considered while selecting the right logistics partner.
Report on Inventory
Real-time inventory updation by the vendor gets really crucial. Infact stocks are supposed to be delivered to the e-tailers beforehand. This might increase cost of building and maintaining the warehousing of e-tailers.
E-retailers are developing various methods to neutralize the above challenges.
- Amazon is integrating merchants, vendors and logistic partners to reduce delivery time. It keeps all the entities linked.
- Google uses remote handheld devices and androids at their warehouse and inventories to improve fulfilment time.
- Tradus has partnered with large number of brick and mortar retailers and uses only their available stock to offer same day delivery.
- Amazon is also developing self-pickup locations from where customers can pick up their orders.
The eCommerce giants are evolving with their day to day experience. Drone delivery is the latest technique on which companies are working out to improve the efficiency of same day delivery and add depth to the pronunciation of it.
The Final Inference
Instant Gratification is the main source of change in logistic policies of eCommerce. The same day delivery fulfills the urge of instant gratification and propel companies to act smart and quick. Same Day Delivery may sound complex and face several challenges, companies have almost got the perfect blueprint to conquer this trend. 2017 might bring this trend in light and shower its importance in public domain.
Now, you can understand the importance and emergence of latest trends. Why to accept it late? For More deatils please talk to our eCommerce Consultant and grow your online store.