Achieving same day delivery in E Commerce – A research

Achieving same day delivery in E Commerce – A research

Reading Time: 9 minutes

By Alok Kundnani

Same-day delivery has the potential to fundamentally change the way we shop. It integrates the convenience of online retail with the immediacy of bricks-and-mortar stores. In recent years an increasing number of companies have started piloting and operating new models of same-day delivery, including incumbent logistics providers such as DHL, DPD, FedEx, and UPS. Demand is expected to increase significantly given the compelling value proposition of same-day delivery for consumers.

As the digital commerce grew, the e-commerce industry introduced same-day delivery which unsurprisingly proved popular with online shoppers. The same-day delivery once a concept of fantasy has become a reality. Same day delivery understands the customer behavior and benefits the customer by delivering the product same day. E commerce giant Amazon was the first online retailer which introduced same-day delivery in US.

This article explains the concept behind same-day delivery, its growth and challenges faced. Eventually it will describe the steps on how to achieve same-day delivery. No doubt, this is the future of E commerce industry which emerged and growed drastically since a couple of years. The same-day delivery does not spell the end of high street shopping; but could it be a gateway for online retail behemoths to close-in on their high street counterparts.

INTRODUCTION

The amount of digital sales in the country has risen from about 4% to 8%, and e-commerce now accounts for nearly all growth in the domestic economy. In addition, the ratio of mobile purchases (those completed on devices like cellphones and tablets) to those done on desktop computers is steadily on the rise,and an increase in the effectiveness of social media marketing is showing that today’s consumer is doing more of their shopping on-the-go. Companies that have developed a robust digital presence are seeing impressive returns on investment,even as their offline business declines at an ever-increasing rate. The future of retail is on-line.

Every-day products show the most potential for growth and immediate return in profits through online ordering. Industries like Food and Beverage, Health and personal care, home care are the huge industries which bring a big revenue to our country but only 1% of that enormous haul comes from digital marketplace. So why hasn’t the growth happened yet?

The answer is because these are consumable products that customers want immediately, and so it makes little sense to order them online. If deliveries were faster and offered for a reasonable price, these industries would see a huge boom in sales. Studies have already shown that those who end up using get-it-now options with consumables buy more and are repeat customers, increasing both long-term profits and brand loyalty. 

Sadly, there simply isn’t a cost-effective option available to most small-time retailers, and the giants (like Amazon) corner the market in e-commerce for these products. But it doesn’t have to be that way. New advancements in urban logistics have allowed for the optimization of last-mile delivery systems such that the dream of same-day delivery is slowly but surely becoming a universal reality. Thanks to the innovation of independent delivery systems that cover the last mile of a package’s delivery, the numbers finally add up. 

The business models of the aforementioned companies have proven the effectiveness of dynamic re-routing systems. The ability to have drivers who are ready at a moment’s notice to change routes for a new delivery allows for colossal savings in time and resources. This advancement has propelled innovation in the transportation industry, showing that deliveries within 90 minutes are possible. 

But the technology must be adopted for the shipping industry, as the hiring process these companies use is too distant from their end service to ensure consistent deliveries. Consistency is far and away the most important aspect of customer service for retailers, and so by using contracted drivers who are paid hourly instead of by delivery, last-mile courier companies easily overcome this potential problem while providing the same quality of customer-service that retailers themselves would provide. Most importantly, since these last-mile delivery systems go directly from pick-up point to drop-off point, they don’t require a warehouse. Without this massive overhead, 3rd party couriers can afford higher driver wages and more S.A.V.s. With more cars on the road and happier on-call drivers driving them, shipping times are guaranteed to deflate. Also, skipping the warehouse sorting process saves time, money and labor as routes are shortened and loads are lightened.

WHAT IS E COMMERCE

Electronic commerce or e commerce is a term for any type of business, or commercial transaction,which involves the transfer of information across the Internet. It covers a range of different types of businesses, from consumer based retail sites,through auction or music sites, to business exchanges trading goods and services between corporations. It is currently one of the most important aspects of the Internet to emerge.

E commerce allows consumers to electronically exchange goods and services with no barriers of time or distance. Electronic commerce has expanded rapidly over the past five years and is predicted to continue at this rate, or even accelerate. In the near future the boundaries between “conventional” and”electronic” commerce will become increasingly blurred as more and more businesses move sections of their operations onto the Internet.

Business to Business or B2B refers to electronic commerce between businesses rather than between a business and a consumer. B2B businesses often deal with hundreds or even thousands of other businesses, either as customers or suppliers. Carrying out these transactions electronically provides vast competitive advantages over traditional methods. When implemented properly, e commerce is often faster,cheaper and more convenient than the traditional methods of bartering goods and services.

Electronic transactions have been around for quite some time in the form of Electronic Data Interchange or EDI. EDI requires each supplier and customer to set up a dedicated data link (between them), where e commerce provides a cost-effective method for companies to set up multiple, ad-hoc links. Electronic commerce has also led to the development of electronic marketplaces where suppliers and potential customers are brought together to conduct mutually beneficial trade.The road to creating a successful online store can be a difficult if unaware of e commerce principles and what e commerce is supposed to do for your online business. Researching and understanding the guidelines required to properly implement an e-business plan is a crucial part to becoming successful with online store building.

WHY SMART COMMERCE

E-commerce is no longer simply about selling online. It’s about delivering a consistent shopping experience across channels, including mobile, social and in-store.There are several e-commerce tools available in market which allows you to deliver a seamless, omni-channel shopping experience through contextually relevant content, marketing and promotions, while extending your brand across digital and physical channels. If your solution offers innovative insights or analytics that would help a merchandiser do their job more effectively, there may be a future opportunity to integrate into Commerce Insights.

From procurement to supply management, marketing, sales, and service leaders drive innovation and intuitive interactions to deliver delightful experiences every time. By infusing intelligence and context into all commerce processes, one can become essential to your customers, partners, and suppliers — every moment.Create value, gain speed, grow revenue, and improve profitability — that’s the power of Smarter Commerce.

Value to clients:

  • Recognize that the sale is just one aspect of the customer experience and to turn customer insight into action
  • Enable new business processes to help companies buy, market,sell and service their products and services

Value to Business Partners:

  • Easier and more cost effective for Business Partners to offer Smarter Commerce solutions
  • Increased success based on IBM delivering the right set of skills, technical support, development resources and industry expertise.

GROWTH OF SAME DAY DELIVERY

Strong fundamental drivers support the growth of same-day delivery. The market for same-day delivery is fueled by underlying macro-trends, including increasing GDP per capita, rapid e-commerce adoption, urbanization, and changing consumer expectations.

Same-day delivery requires a critical mass of consumers with sufficient financial resources to pay for such a premium service. Rising GDP per capita becomes even more critical when it applies to large metropolitan areas. Accordingly, the relevant economic units are metropolitan areas rather than nations. Yet the existence of densely populated areas with extensive buying power is not enough.A high level of e-commerce adoption is a prerequisite for same-day delivery to actually take off. The availability of same-day delivery is actually expected to further support e-commerce adoption and drive the online sale of product categories not yet bought online on a large scale (such as groceries).

Forester Research predicts that by 2017, e-commerce retail will comprise roughly 10% of all retail sales. Their report cites two principle reasons for the growth in e-commerce:

  • The increasing use of mobile devices resulting in consumers spending more time online.
  • Traditional retailers making greater investments in systems capable of handling the demands of e-commerce and omni-channel operations.

3 STEPS TO ACHIEVING SAME DAY DELIVERY

Today’s norm: order an item today and get it tomorrow. If it’s urgent, fork out a premium to have the item delivered through an Express service and get it today.

In traditional delivery logistics, this makes perfect sense. After orders have been placed, parcels are collected and taken to a central location. They are then sorted and made ready for re-routing to their final destinations. It’s circuitous, time-consuming, and involves many people in the process.Problem is, the more stages you have in any process, the more likely you are to encounter complications along the way. For example, collaboration between suppliers and couriers may be affected by tedious paperwork and poor communication, resulting in increased costs that are passed on to the consumer.

Step 1 : Simplify Delivery logistics with Technology

At the heart of any simplification is the ability to bring processes and people together. If done properly, a seamless network not only helps everyone involved save time and money, but also minimizes errors along the way. Finding the right technology to achieve all that is essential. It needs to be user-friendly,feature-rich, and secure enough to handle critical information quickly.

Each feature plays an important role in helping everyone in the cycle communicate effectively with each other. At the same time, it also tracks every moving parcel in real-time to ensure the right parcels get delivered within the same day. With the right technology to connect the right people, it becomes possible to deliver parcels within the same day.

Step 2 : Empower People with the Tools they need

Great service is more than putting on a bright smile, or even delivering parcels within the same day. It’s about empowering people at every stage of the delivery cycle to contribute more value to the customer. By providing couriers access to information they need whenever they need it, they’re empowered to make quick decisions on-the-go, so that they can swiftly deliver parcels to their destinations within the same day. Paperwork such as writing delivery orders, filing delivery chits, and reconciling multiple invoices can take slowdown the delivery process to a crawl. When companies have the right tools that simplifies the process, the administrative red tape can be shortened significantly for a more efficient execution.

Step 3 : Pass on Cost Savings to the Customers

In traditional delivery logistics, it’s often more costly and labor intensive to provide Same-Day deliveries and such costs are typically passed on to the customers in the form of premium prices. When you use technology to manage the workflow, and streamline your processes by eliminating or consolidating some steps you’ll find that you gain cost efficiencies that can benefit your customers. Features like our inter-party comment box allow sender-courier-recipient stay abreast of status changes in real-time, such as delays due to traffic congestion or bad weather. This features manages the expectations of the sender and recipient,providing them with information to make decisions regarding their delivery. It’s a win-win situation for everyone – couriers, suppliers, and customers.

FUTURE OF SAME DAY DELIVERY

Same-day delivery is a big opportunity for all retailers to improve their service level,but requires a high degree of sophistication. Major challenges, such as real-time product visibility across warehouses, very short fulfillment lead-times and flexible last-mile delivery, have to be overcome while bringing cost down to a level that consumers are willing to pay for. Large retailers generating most of the B2C shipments could then institutionalize same-day delivery as a fast, capillary distribution mode in densely populated areas with a critical mass of online shoppers—but would then also need to have an extensive, accessible, and standardized distribution network that operates at an acceptable cost.

Retailers are expected to reap additional benefits from offering same-day delivery.Experience at Amazon shows that the option of same-day delivery alone actually increases purchase conversion during the checkout process by 20 to 30 percent,although only a few customers actually opt for same-day delivery. The survey results support this claim: more than half of respondents would buy online more frequently if they were offered a same-day delivery option. “A good delivery experience is a key part of keeping our customers happy and encouraging repeat purchases as well as helping to build brand warmth.” The availability of enhanced delivery options has positive effects on customer loyalty and reduces the goods return rate, according to Shutl and Amazon. A reduction in the return rate is very appealing to online retailers since the current share and attributed cost of returns is a significant burden on their operations and financial results.

Same-day delivery is likely to become available at most retailers with an online channel on a broad scale in urbanized areas in countries with dense metropolitan areas.It is fully subsidized once a certain basket value has been reached. Economies of scale drive down the cost of same-day deliveries significantly, reaching a level still higher than regular domestic shipments but much lower than today.Multi-user same-day delivery networks run by parcel logistics providers reach enough scale to increase the consolidation factor to about 10 to 12 drops per hour and operate multiple pickup and delivery waves per day. Standard next-day delivery is partially cannibalized, but the broad availability of same-day delivery further propels the adoption of e-commerce as new use cases like spontaneous online purchases emerge, and thus increases total market size.

In countries with fewer metropolitan areas and slower e-commerce adoption,same-day delivery will likely remain an expensive option only offered by a few select retailers in major metropolitan areas. Consumers generally choose the option on special occasions (last-minutes gifts, or if they cannot make it to the supermarket), but do not adjust their general expectations towards convenience in delivery. Parcel logistics providers cannot maintain specialized networks for same-day delivery due to lack of volume, so they cooperate with flexible courier networks by feeding in some domestic shipments that are supposed to be delivered faster or within a specific time window. Next-day delivery remains the industry standard.

In the main markets, same-day delivery will continually outgrow the parcel market and gain importance in urban areas. The UK remains the most important market in Europe, closely followed by Germany and France. The demand for local same-day delivery will predominantly be driven by fashion and consumer electronics retailers, followed by household/furniture, grocery, and DIY retailers. Companies such as Amazon and Zalando shaped the e-commerce market by educating customers that they don’t have to pay for shipping at all.Finally, same-day delivery is both an immense opportunity and an operational challenge for logistics providers who are the natural partner for same-day delivery on a broad scale due to their existing network and scale advantages. The underlying trends of increasing e-commerce adoption and urbanization will create a strong urge for evolution from the current next-day standard in B2C parcel to same-day.Logistics providers need to position themselves for the upcoming transformation, adapting their networks from overnight sorting and next-day delivery to same-day capability. In addition there is an opportunity to expand into fulfillment services given the need for minimal pick and pack lead times to enable same-day delivery.

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