5 Ways Retailers Can Compete With Amazon’s Same-Day Delivery Model
When catalog industry veteran Don Libey told attendees of the annual Catalog Conference in 1991 that the country is heading towards same-day delivery models, many seasoned catalog executives in the audience laughed. Now, more than 20 years later, retail giants like Amazon.com, Google, eBay and Wal-Mart are making same-day delivery a reality.
Amazon has even gone so far as experimenting with the idea of using drones to deliver packages under five pounds within 30 minutes. While this is a futuristic idea, Amazon's potential plans represent an underlying shift in consumer expectations around delivery times.
Aside from drone delivery, Amazon is investing billions of dollars in new distribution centers and storage locker pilot programs to reach metro areas, as well as big data and predictive analytics capabilities to understand which items are purchased together. But most retailers don't have the resources to make similar investments in same-day delivery capabilities.
So, how are small to midsized retailers supposed to compete with Amazon's same-day delivery model?
Does the Same-Day Shipping Model Work for Everyone?
Leveraging greater access to big data and more accurate forecasting capabilities, larger retailers will begin to offer same-day shipping to increase basket size, order frequency and convenience for customers. By shipping from local stores, retailers with multiple brick-and-mortar locations can immediately add new distribution points for same-day shipping instead of having to invest in costly warehouse infrastructure in every market.
Wal-Mart, for example, can reach two-thirds of the U.S. population by leveraging its 4,200 stores as distribution centers. Currently, 10 percent of all online orders from Walmart.com are shipped directly to consumers from a retail location.
Most small retailers lack the resources and store footprint to handle same-day shipping on their own. However, it's still possible for small retail brands to offer same-day shipping with the support of a third-party fulfillment and logistics provider.
Maria is CEO and co-founder of Dotcom Distribution, where she has played an integral role in developing and defining all aspects of the operation, including sales and marketing, operations, finance and IT. Her strategic leadership helps the Board and senior management to establish long-range goals, strategies, plans, and policies. Maria has developed the systemic and procedural infrastructure necessary to provide timely and accurate analysis of budgets, financial reports and financial trends in order to assist the Board, senior executives and clients in performing their responsibilities. Maria holds a CPA. Prior to founding Dotcom, she began her career as an Auditor at Arthur Andersen and was the CFO of GoodTimes Home Video.