Same-Day Delivery: From Competitive Advantage to Must-Offer Service
Traditionally, consumers have had several options for getting their online purchases delivered, including next-day, second-day and economy, all of which are offered by FedEx, UPS and the U.S. Postal Service. However, the rise of omnichannel retailing has lead to the emergence of new delivery options, including storefront pickup (also called "will call" or "buy online and pick up"), hot shot (delivery within a few hours of ordering), AM/PM (order it in the morning and receive it that same afternoon) and scheduled delivery.
Recent initiatives by eBay, Google, Wal-Mart and the U.S, Postal Service, coupled with the growth of Amazon Fresh, which boasts "same or next-day delivery of almost everything you want to buy — from fresh produce, meat and seafood to diapers, DVDs and toys," have made it clear that same-day delivery is here to stay. In fact, it's increasingly become an option consumers not only turn to and pay a premium for, but now expect to see.
To stay competitive in this new market, here are the seven key steps retailers must take to begin a functional same-day delivery program:
1. Adopt an omnichannel management approach. Same-day delivery requires integrated planning and coordination between e-commerce and retail stores. Prices must be aligned and centrally maintained, loyalty information shared across channels, goals set and shared across the various arms of the business, and incentives must be consistent throughout.
2. Gain real-time inventory knowledge across your enterprise. In order to realize the opportunities inherent in the omnichannel retail model, companies must upgrade their inventory systems to enable centralized visibility across the enterprise; take very frequent inventory counts; increase safety stock levels; and integrate their point of sale, inventory and e-commerce ordering systems so they know exactly which products they have in real time.
3. Expand your fulfillment strategy. The fulfillment strategy determines where you gather the product that's just been sold, which is why local inventory knowledge and integrated systems are so crucial to any same-day delivery process. After analyzing regional sales volume, a company may decide to create "hub stores" or "micro distribution centers" from which all deliveries to certain ZIP codes are fulfilled.
4. Re-evaluate staff utilization and adjust labor mix. Consider how your store associates will pick and pull product, pack it, and label it for delivery — all within a very tight time frame. Retail labor is typically more expensive than distribution labor, so you may need to adjust the balance and even change your standard training practices. Also, think about how you'll notify employees about new incoming orders. The tight turnaround required for same-day delivery doesn't work well if you only check for incoming orders periodically.
5. Create a network of local delivery companies. Maintaining a dedicated fleet of drivers is extremely expensive. Alternatively, the local delivery/courier industry has provided time-sensitive delivery services for nearly 100 years. Unfortunately, it's highly fragmented, with more than 7,000 local carriers in North America alone, meaning retailers are forced to work with myriad local carriers. Furthermore, couriers must be thoroughly vetted for reputation, driver hiring and training, technology, and long-term stability.
6. Offer multiple delivery service levels. Retailers should offer, and charge a premium for, options such as one-hour or two-hour delivery windows, or two-person delivery for larger items. A properly executed and priced multiservice offering may well offset the cost of same-day AM/PM service, allowing you to offer it for a fraction of the actual cost. All of these different delivery types require unique technology both on your website (e.g., selecting delivery time windows) and on the part of your carriers, who are your indispensable partners in confirming and scheduling the deliveries.
7. Leverage technology to ensure quality. Customers see the local carrier as an extension of your brand and will therefore blame your brand for a poor delivery experience. Transportation management systems (TMS) by themselves just don't cut it for same-day delivery. Ensuring quality requires your IT team to tightly integrate your TMS, customer relationship management and business intelligence applications, and fuel it all with real-time, package-level data to closely monitor and manage your carrier network down to the level of each individual delivery.
Consumer demand for same-day delivery has arrived, and will only increase with time. Amazon.com, eBay, Google and Wal-Mart may have jumped into this race to gain a competitive advantage, but soon consumers will expect all retailers to follow suit. Now is the time to begin thinking and preparing so that your company's offering doesn't arrive a day late and a customer short.
Is your organization planning to offer same-day delivery? What challenges are you facing? Let's discuss in the comments section below.
Rob Howard is the founder and CEO of Grand Junction, a provider of same-day delivery technology.