The Future Of The Same-Day Delivery Market

In today’s hyper-competitive market, consumer expectations have never been higher. The adoption of digital technology has led to the rise of ‘empowered’ customers, who are more demanding than ever before. Access to social media have provided them with a new voice that can be used to cause reputational damage to an enterprise. In tandem, the rise of online shopping has led to an experience typified by instant gratification. It goes without saying that this customer-centricity can put strain on businesses to deliver exceptional results in an increasingly challenging operational environment.

Further, with the rapid uptake in internet adoption, eCommerce alone is soon to be worth US$4 trillion by 2020 in Europe, Latin America, North America and Asia Pacific combined. Speed of delivery has therefore never been more important and is reported to be a key-differentiator in FMCG markets such as food, medicines and groceries. Online retailers are competing against brick-and-mortar stores by exploring innovative methods of same-day delivery with logistics platforms, and have leapt from a delivery issue of ‘how’ to ‘when’ to ‘same-day’ in a little over a decade. Already, retailers are going a step further, dreaming up services such as Amazon Prime, to deliver packages via drones within 30 minutes. eCommerce businesses can therefore no longer afford to neglect the importance of speed and must adopt and refine a same-day delivery model.

The first major challenge, however, is cost-efficiency. Whilst 10% of all online consumers expect their products to arrive on the same-day, only 41% would pay for the privilege[1]. In an additional survey, conducted by McKinsey in Germany, France, Sweden, and the UK, 50% of respondents indicated that they would be willing to pay same-day delivery costs of EUR 6 to 7 for a EUR 59 purchase[2]. With this relatively low mark up, as well as last-mile expenses accounting for 50% of the total cost of delivery, it is critical for eCommerce firms to optimise their supply chains with digital offerings to deliver customer satisfaction without escalating operational costs.

There are a handful of companies who have been innovative in reducing their operational costs. Amazon, for instance launched Amazon Locker in 2011 in Seattle, New York and London. The customer simply selects any locker location as their delivery address at the checkout stage and retrieves their package by entering a unique pickup code on the locker’s touch screen at a time convenient for them. Following the success of the scheme, the network has been expanded nationally throughout the U.S and the UK. This technology ensures that the last-mile delivery costs are low, whilst maintains consumer trust through no missed deliveries.

Yet deploying bulky lockers in busy parts of major cities still has an operational cost. Often, these lockers need to undergo maintenance work, run in partnership with local councils and businesses or even rent space in retail units. Lastly, whilst the lockers reap benefits the businesses, they often work on the assumption that customers will be pleased with their purchase and not want to make returns.

In order to more effectively reduce last-mile expenditure, integrating data-driven software solutions into logistics enterprises can streamline last-mile delivery whilst providing a greater experience for the consumer. The requirements must be scalable and integrate into existing systems to give the company seamless control of the entire workforce. Delivery order management, capacity utilisation, route optimisation and electronic proof of delivery are a few of the necessary features that businesses need in this hyper competitive market to cope with the challenge of ever-thinning margins. Software solutions utilise the full potential of real-time data analytics to drastically increase efficiency and bolster customer satisfaction.

At the heart of digital logistics software lies automation. To enable same-day delivery, automation can digitise and streamline steps in the operations workflow that were previously done manually, such as delivery scheduling and path-routing. Automation is enabled by the usage of specialised algorithms which can also incorporate machine learning features for further improvement. Automated digital documentation in each step eliminates human error and empowers firms to provide better customer experience. Real-time omni-channel auto-updates to the customer enrich the overall customer journey and help deliver brand promise.

Working alongside automation at the heart of the service is proactive personalisation. Leveraging the power of emerging technologies like machine learning and big data analytics, digital logistics helps firms provide personalised delivery options like time-slot based delivery and in-store delivery at minimal cost, which in turn increases customer engagement with the brand. Proactive personalisation can be implemented owing to the widespread adoption of APIs, which enable communication between disparate applications. APIs can be harnessed to provide customers with value-added services, for example different payment options, such mobile wallets or the alteration of delivery location and timing.

Same-day delivery has the potential to add immense growth in the eCommerce segment. Given consumers’ reluctance to pay for the privilege, coupled with an increasing expectation and lack of customer loyalty, the time has never been greater for businesses to demonstrate their competency in the field. Early adopters of software solutions will have the edge over their competition and, perhaps, eventually brick-and-mortar retailers.

[1] PwC, Global Consumer Insights Survey, 2018

[2] Parcel Delivery: The Future of the Last Mile, 2016

 

Source: Kushal Nahata, CEO, FarEye