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While Amazon has certainly been giving retailers a lot of heartburn, there is an antidote. Strong competition forces leaders to reevaluate the status quo. Taking steps toward same-day delivery helps retailers meet consumers’ growing expectations for instant gratification, and making the necessary updates to their systems and processes enables them to operate more cost effectively and enhance customer satisfaction. Here is the checklist of what’s needed to offer same-day delivery:
While Amazon has certainly been giving retailers a lot of heartburn, there is an antidote. Strong competition forces leaders to reevaluate the status quo. Taking steps toward same-day delivery helps retailers meet consumers’ growing expectations for instant gratification, and making the necessary updates to their systems and processes enables them to operate more cost effectively and enhance customer satisfaction. Here is the checklist of what’s needed to offer same-day delivery:
Reevaluate Staff Utilization and Adjust Labor Mix
When you add same-day delivery services to your fulfillment offerings, you also need to think about how your store associates will pick and pull product, pack it, and label it for delivery, all within a very tight timeframe. Retail labor is typically more expensive than distribution labor, so you may need to adjust the balance, and even change your standard training practices. Then there are the refinements: For instance, how exactly will you 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.
Create a Network of Local Delivery Companies
Actually getting the product to the customer is the biggest cost component. Maintaining a dedicated fleet of drivers, which is eBay and Google’s current approach, is extremely expensive. This is mostly why parcel carriers such as UPS and FedEx cannot offer same-day deliveries. But the local delivery industry, also called the courier or local carrier industry, has provided time-sensitive delivery services for nearly 100 years, using everything from box trucks to cars to bicycles. Unfortunately, the industry is highly fragmented, with more than 7,000 local delivery companies (couriers) in North America alone, requiring retailers to work with a different carrier in every market and often more than one carrier if they hope to cover a large market. Offering nationwide delivery typically requires working with more than 80 couriers. Since the couriers range so much in reputation, driver hiring and training, and technology, it’s critical to look beyond price when evaluating which ones to work with. It is also important to evaluate their long-term stability, since the relatively low cost of entry into the field impels some local delivery companies to offer unsustainable rates in the short term in order to win business, but then they quickly disappear when they raise rates and lose clients. It is absolutely necessary for your logistics team take the time to learn what makes a solid courier so you can select the right partners for your network.
Offer Multiple Delivery Service Levels
Although offerings like eBay’s “ASAP” service—with one hour from order to receipt—are important to some, it’s not what most customers expect from e-commerce. Soon, the standard same-day service will be a two-cycle AM/PM approach, where a customer orders something in the morning and receives it in the afternoon, or orders in the afternoon and receives it the next morning. Companies such as Grainger who have long offered same-day service have demonstrated that this method can be efficient and effective from an operations perspective, and the economics work because it is lower cost than UPS or FedEx two-day service. 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 multi-service 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—for selecting delivery time windows, for example—and on the part of your carriers, who are your indispensable partners in confirming and scheduling the deliveries.
Leverage Technology to Ensure Quality
Let’s be honest: Unless your deliveries arrive through UPS or FedEx, customers will blame you for a poor delivery experience. A few same-day brands are currently gaining recognition, but the majority of your customers still think of the courier who delivers their package as an extension of your brand. But you can turn this fact to your advantage, since it can be a real differentiator for consumers to associate your brand with same-day delivery. The upshot: When working with couriers, it’s critical to stay on top of quality. The courier industry has an often-well-deserved reputation for poor quality, largely because they cannot afford the tools to manage quality. This means your logistics team has to closely monitor and manage your carrier network down to the level of each individual delivery.
Consumer expectations are also growing beyond simple tracking. eBay goes so far as to provide exact details regarding where the driver is at any given moment so the customer can plan ahead, and this requires enriched data such as real-time GPS tracking. Make sure your IT team has the integration expertise to set up, monitor, and troubleshoot the integrations, and then enrich the data as customer expectations grow. Monitoring real-time data is critical, and it takes a lot of resources and specialized technology to sift through the noise and focus on what matters. Transportation Management Systems (TMS) by themselves just don’t cut it for same-day. Ensuring quality requires your IT team to tightly integrate your TMS, customer relationship management (CRM), and business intelligence (BI) applications, and fuel it all with real-time package-level data.
If you’re looking to offer same-day, scheduled, two-person, or AM/PM delivery programs, local delivery is the only game in town and using these tools, you’re sure to roll out these programs quickly and with confidence.
When you add same-day delivery services to your fulfillment offerings, you also need to think about how your store associates will pick and pull product, pack it, and label it for delivery, all within a very tight timeframe. Retail labor is typically more expensive than distribution labor, so you may need to adjust the balance, and even change your standard training practices. Then there are the refinements: For instance, how exactly will you 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.
Create a Network of Local Delivery Companies
Actually getting the product to the customer is the biggest cost component. Maintaining a dedicated fleet of drivers, which is eBay and Google’s current approach, is extremely expensive. This is mostly why parcel carriers such as UPS and FedEx cannot offer same-day deliveries. But the local delivery industry, also called the courier or local carrier industry, has provided time-sensitive delivery services for nearly 100 years, using everything from box trucks to cars to bicycles. Unfortunately, the industry is highly fragmented, with more than 7,000 local delivery companies (couriers) in North America alone, requiring retailers to work with a different carrier in every market and often more than one carrier if they hope to cover a large market. Offering nationwide delivery typically requires working with more than 80 couriers. Since the couriers range so much in reputation, driver hiring and training, and technology, it’s critical to look beyond price when evaluating which ones to work with. It is also important to evaluate their long-term stability, since the relatively low cost of entry into the field impels some local delivery companies to offer unsustainable rates in the short term in order to win business, but then they quickly disappear when they raise rates and lose clients. It is absolutely necessary for your logistics team take the time to learn what makes a solid courier so you can select the right partners for your network.
Offer Multiple Delivery Service Levels
Although offerings like eBay’s “ASAP” service—with one hour from order to receipt—are important to some, it’s not what most customers expect from e-commerce. Soon, the standard same-day service will be a two-cycle AM/PM approach, where a customer orders something in the morning and receives it in the afternoon, or orders in the afternoon and receives it the next morning. Companies such as Grainger who have long offered same-day service have demonstrated that this method can be efficient and effective from an operations perspective, and the economics work because it is lower cost than UPS or FedEx two-day service. 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 multi-service 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—for selecting delivery time windows, for example—and on the part of your carriers, who are your indispensable partners in confirming and scheduling the deliveries.
Leverage Technology to Ensure Quality
Let’s be honest: Unless your deliveries arrive through UPS or FedEx, customers will blame you for a poor delivery experience. A few same-day brands are currently gaining recognition, but the majority of your customers still think of the courier who delivers their package as an extension of your brand. But you can turn this fact to your advantage, since it can be a real differentiator for consumers to associate your brand with same-day delivery. The upshot: When working with couriers, it’s critical to stay on top of quality. The courier industry has an often-well-deserved reputation for poor quality, largely because they cannot afford the tools to manage quality. This means your logistics team has to closely monitor and manage your carrier network down to the level of each individual delivery.
Consumer expectations are also growing beyond simple tracking. eBay goes so far as to provide exact details regarding where the driver is at any given moment so the customer can plan ahead, and this requires enriched data such as real-time GPS tracking. Make sure your IT team has the integration expertise to set up, monitor, and troubleshoot the integrations, and then enrich the data as customer expectations grow. Monitoring real-time data is critical, and it takes a lot of resources and specialized technology to sift through the noise and focus on what matters. Transportation Management Systems (TMS) by themselves just don’t cut it for same-day. Ensuring quality requires your IT team to tightly integrate your TMS, customer relationship management (CRM), and business intelligence (BI) applications, and fuel it all with real-time package-level data.
If you’re looking to offer same-day, scheduled, two-person, or AM/PM delivery programs, local delivery is the only game in town and using these tools, you’re sure to roll out these programs quickly and with confidence.
