Same-day. It’s the Holy Grail of the logistics and delivery world. No one doubts that same-day delivery of products will be the norm someday. But is that “someday” today? And what will it take to make that happen? We asked a panel of industry veterans what they thought about those issues and what they think it will take to make same-day right for today.
Our panel included three members of the Board of Directors from the Customized Logistics and Delivery Association (CLDA), the industry’s largest trade association. They included: Steve Howard, President, Esquire Express, Inc. / Esquire Logistics Company in Hialeah, FL; Charles R. Moyer, CEO, Express Courier in Franklin, TN and Monte O'Hara, CEO/President of Capital Express, Inc. in Omaha, NE.
Question: We all know same-day is the center of a lot of conversations in our industry. What are your thoughts?
Moyer: The topic is certainly getting plenty of press. In evaluating these opportunities with my colleagues we all feel that ultimately same- day will become the “new norm”. When you’ve got giants like Amazon and eBay trying to make it work, you know it’s going to happen. But right now, everyone is looking for the right formula. It’s like when Fred Smith was starting FedEx. Before then, people would say, “There’s no need for that. If people can get things in two days why would they need them the next day?” Well, we all know what happened there. Once FedEx made it do-able and reliable, overnight became expected. From my perspective same-day will do the same in the near future, and in many cases already being done today for various customers by companies like Express.
Howard: Where will this trend play out? I don’t think anyone knows for sure. Look, the big guys like Target and Kmart have already begun the process of looking at same-day deliveries. They know it’s how they will stay alive and compete because consumers are going that way. But, even the big guys haven’t quite mastered same-day. Our largest grocery chain here in South Florida is Publix. I get my meds there and I keep asking them, “When are you going to be able to deliver those to me same-day?” They say, “We’d love to but we haven’t figured it out yet.”
For these guys to do it, they are going to have to partner in some way with those who do the deliveries. They could go out and reinvent the wheel on this, but they’re more likely to look for ways to get together with existing customized and logistics and delivery companies. We already know how to do it. That’s why eBay bought up Shutl.
It’s not just the delivery component. It’s everything that gets you to the delivery, tying together shopping on-line, finding the product in your system, pulling the product and getting it ready for the delivery. Right now, they don’t know how to make that work.
The delivery is the very end. Without it, nothing works. Otherwise the customers could just come and pick it up themselves. And big retailers already have that part figured out. You can place an order on-line. The retailer says, “Give us two hours to pull it and you can come pick it up.” What they still can’t master is putting together the convenience of shopping on-line and offering a same-day delivery component. They know the consumer wants the convenience of shopping without having to get in their cars to pick up the merchandise. That’s certainly the wave of the future. Heck, even Burger King’s getting into the act. If they are rolling out free deliveries in our market. They are testing it here, but how long will it be before they offer it all over the country?
Are the Big Retailers Close to Making Same-Day it Happen?
O’Hara: They have certainly been thinking about it, but they are well aware of the challenges it presents. I’ve been in the conference rooms of several big retailers about this service multiple times. They’ve been trying to make this work. In fact, I know several that have been looking at this for three and four years. The Big Retailers have the advantage of having multiple locations throughout the US that could be used as mini-distribution centers for same-day delivery. It’s all about putting the merchandise as close to the end user as possible. But, it’s the logistics that are holding them up. They have been asking themselves if they want to spend the money to integrate a software system that, when someone’s on-line, locates the store that’s closest to them and has the item they want. Most of them already have this capability. But they still have to create a whole process in the store to pull that product and stage it for delivery to the end user. This would probably drive additional transportation costs from the distribution centers. Then, they will need to integrate with a same-day company that can manage a large network of courier companies across the US to provide the service at a price point that makes sense for them. In my opinion, they still don’t feel the customer need is high enough except in the most populated cities to make it worth their while to adapt their models. That’s why they are talking to members of our industry. It’s in our DNA to deliver whatever, whenever the customer needs it
Let’s talk more about the software issue.
Moyer: My theory is if any retailers had the capacity to link their on-line purchasing software (website) to each phase of the supply chain, it would make same-day a reality. If I went onto Chuck’s Value Mart website and wanted to order an item, I’d just click on that item, the system would cross reference my geographic location with the retailers inventory, provide the buyer the information on the item as well as available delivery options, allowing the purchaser to select their preferred options and communicate the details of the purchase to the buyer, seller, warehouse personnel and delivery company. Once the purchase was confirmed then the product would be tracked each step of the process with confirmation to all parties once delivered. To make it work, they’d need to have arrangements and system integrations with service providers. When the order was placed, the system would have the store or warehouse pull the item, and send an alert to the regional carrier to come pick it up and delivery it. In this enviroment, the software would have a specified radius (or zip codes) around the store and would offer the consumer the options and costs of those options within that specified area. If, for example, the consumer lived three miles from the store, their options would be different than for someone who lived 30 miles away.
We’ve spent a lot of time on large retailers. How will this affect the smaller ones?
Howard: It’s going to be tough on them. As soon as an Amazon gets into same-day it’s going to put a strain on them to compete. If Amazon offers same-day and they continue to be the low price leader how are regional and larger retailers going to compete? It will be a challenge.
For example I was talking a local furniture store. They wanted me to do same-day and next-day deliveries for them. They know they have to compete with on-line shopping. But they don’t have the people and money to do things like updating their website every time something comes in. It’s tough for them to compete with those who do.
It’s different with high-end retailers. We’re working with a number of them. They have customers who buy a lot of merchandise. They’ll contact us to deliver it to their customers’ homes. But that’s different than offering it to the masses. They want ways to shop on-line and then have ways to make it easy and cheap for them to ask for a same-day, home delivery. Those two elements have to fit together and it’s tough on smaller establishments.
Then there’s the return issue. Say someone orders a piece of furniture on-line and doesn’t like it. The cost of getting it back to the retailer who shipped it is prohibitive. This is a big issue for smaller retailers. They are struggling with that. If customers are shopping on-line, they demand the option to return it. They get it from most on-line retailers. But for a small establishment, that’s a big cost.
What’s the bottom line on same-day for retailers, big and small?
O’Hara: I believe that retailers want to do it, but they don’t think the demand is high enough for them to invest in the resources to make it happen in most of the US yet. There’s been a lot of talk about same-day, but we aren’t seeing a big enough demand to make retailers want to invest in the resources needed to make it happen. Some retailers are making it happen on a small level in the most populated cities now. But I don’t believe that they are ready to make the investment to make it available across the country. I just don’t believe they feel the density is there yet.
As everyone knows, Amazon has offered same-day for some time from their 11 main distribution centers. They’ve started to build forward stocking locations to get merchandise closer to the end user so that they can expand on this service. But, for the most part, Amazon’s only offering same-day delivery near these existing distribution centers and those are in the densest part of the country.
For example, when I did a test about 18 months ago in Chicago, Amazon offered same-day delivery by 8:00 PM through their warehouse outside Indianapolis. If, for example, you order a DeWalt drill, you can select FedEx overnight delivery. You can also get it next day for a delivery charge of approximately $30.00. If you chose same-day delivery that they were offering in selected areas including Chicago, the delivery charge was less than half the delivery cost of the FedEx Over-night. The cut off time to order the same-day service was early morning at that time. They were using members of the CLDA to handle the same day services.
As far as the small retailers, strategic stocking locations to provide same-day delivery in select areas, seems to be their best option.
I believe that same-day delivery from the Big Retailers will eventually become the norm. Consumer demand will make it happen. But in my opinion, today “same- day” is a number of days away for many parts of the US.
Andrea Obston is Director of Public Relations, Customized Logistics and Delivery Association
Our panel included three members of the Board of Directors from the Customized Logistics and Delivery Association (CLDA), the industry’s largest trade association. They included: Steve Howard, President, Esquire Express, Inc. / Esquire Logistics Company in Hialeah, FL; Charles R. Moyer, CEO, Express Courier in Franklin, TN and Monte O'Hara, CEO/President of Capital Express, Inc. in Omaha, NE.
Question: We all know same-day is the center of a lot of conversations in our industry. What are your thoughts?
Moyer: The topic is certainly getting plenty of press. In evaluating these opportunities with my colleagues we all feel that ultimately same- day will become the “new norm”. When you’ve got giants like Amazon and eBay trying to make it work, you know it’s going to happen. But right now, everyone is looking for the right formula. It’s like when Fred Smith was starting FedEx. Before then, people would say, “There’s no need for that. If people can get things in two days why would they need them the next day?” Well, we all know what happened there. Once FedEx made it do-able and reliable, overnight became expected. From my perspective same-day will do the same in the near future, and in many cases already being done today for various customers by companies like Express.
Howard: Where will this trend play out? I don’t think anyone knows for sure. Look, the big guys like Target and Kmart have already begun the process of looking at same-day deliveries. They know it’s how they will stay alive and compete because consumers are going that way. But, even the big guys haven’t quite mastered same-day. Our largest grocery chain here in South Florida is Publix. I get my meds there and I keep asking them, “When are you going to be able to deliver those to me same-day?” They say, “We’d love to but we haven’t figured it out yet.”
For these guys to do it, they are going to have to partner in some way with those who do the deliveries. They could go out and reinvent the wheel on this, but they’re more likely to look for ways to get together with existing customized and logistics and delivery companies. We already know how to do it. That’s why eBay bought up Shutl.
It’s not just the delivery component. It’s everything that gets you to the delivery, tying together shopping on-line, finding the product in your system, pulling the product and getting it ready for the delivery. Right now, they don’t know how to make that work.
The delivery is the very end. Without it, nothing works. Otherwise the customers could just come and pick it up themselves. And big retailers already have that part figured out. You can place an order on-line. The retailer says, “Give us two hours to pull it and you can come pick it up.” What they still can’t master is putting together the convenience of shopping on-line and offering a same-day delivery component. They know the consumer wants the convenience of shopping without having to get in their cars to pick up the merchandise. That’s certainly the wave of the future. Heck, even Burger King’s getting into the act. If they are rolling out free deliveries in our market. They are testing it here, but how long will it be before they offer it all over the country?
Are the Big Retailers Close to Making Same-Day it Happen?
O’Hara: They have certainly been thinking about it, but they are well aware of the challenges it presents. I’ve been in the conference rooms of several big retailers about this service multiple times. They’ve been trying to make this work. In fact, I know several that have been looking at this for three and four years. The Big Retailers have the advantage of having multiple locations throughout the US that could be used as mini-distribution centers for same-day delivery. It’s all about putting the merchandise as close to the end user as possible. But, it’s the logistics that are holding them up. They have been asking themselves if they want to spend the money to integrate a software system that, when someone’s on-line, locates the store that’s closest to them and has the item they want. Most of them already have this capability. But they still have to create a whole process in the store to pull that product and stage it for delivery to the end user. This would probably drive additional transportation costs from the distribution centers. Then, they will need to integrate with a same-day company that can manage a large network of courier companies across the US to provide the service at a price point that makes sense for them. In my opinion, they still don’t feel the customer need is high enough except in the most populated cities to make it worth their while to adapt their models. That’s why they are talking to members of our industry. It’s in our DNA to deliver whatever, whenever the customer needs it
Let’s talk more about the software issue.
Moyer: My theory is if any retailers had the capacity to link their on-line purchasing software (website) to each phase of the supply chain, it would make same-day a reality. If I went onto Chuck’s Value Mart website and wanted to order an item, I’d just click on that item, the system would cross reference my geographic location with the retailers inventory, provide the buyer the information on the item as well as available delivery options, allowing the purchaser to select their preferred options and communicate the details of the purchase to the buyer, seller, warehouse personnel and delivery company. Once the purchase was confirmed then the product would be tracked each step of the process with confirmation to all parties once delivered. To make it work, they’d need to have arrangements and system integrations with service providers. When the order was placed, the system would have the store or warehouse pull the item, and send an alert to the regional carrier to come pick it up and delivery it. In this enviroment, the software would have a specified radius (or zip codes) around the store and would offer the consumer the options and costs of those options within that specified area. If, for example, the consumer lived three miles from the store, their options would be different than for someone who lived 30 miles away.
We’ve spent a lot of time on large retailers. How will this affect the smaller ones?
Howard: It’s going to be tough on them. As soon as an Amazon gets into same-day it’s going to put a strain on them to compete. If Amazon offers same-day and they continue to be the low price leader how are regional and larger retailers going to compete? It will be a challenge.
For example I was talking a local furniture store. They wanted me to do same-day and next-day deliveries for them. They know they have to compete with on-line shopping. But they don’t have the people and money to do things like updating their website every time something comes in. It’s tough for them to compete with those who do.
It’s different with high-end retailers. We’re working with a number of them. They have customers who buy a lot of merchandise. They’ll contact us to deliver it to their customers’ homes. But that’s different than offering it to the masses. They want ways to shop on-line and then have ways to make it easy and cheap for them to ask for a same-day, home delivery. Those two elements have to fit together and it’s tough on smaller establishments.
Then there’s the return issue. Say someone orders a piece of furniture on-line and doesn’t like it. The cost of getting it back to the retailer who shipped it is prohibitive. This is a big issue for smaller retailers. They are struggling with that. If customers are shopping on-line, they demand the option to return it. They get it from most on-line retailers. But for a small establishment, that’s a big cost.
What’s the bottom line on same-day for retailers, big and small?
O’Hara: I believe that retailers want to do it, but they don’t think the demand is high enough for them to invest in the resources to make it happen in most of the US yet. There’s been a lot of talk about same-day, but we aren’t seeing a big enough demand to make retailers want to invest in the resources needed to make it happen. Some retailers are making it happen on a small level in the most populated cities now. But I don’t believe that they are ready to make the investment to make it available across the country. I just don’t believe they feel the density is there yet.
As everyone knows, Amazon has offered same-day for some time from their 11 main distribution centers. They’ve started to build forward stocking locations to get merchandise closer to the end user so that they can expand on this service. But, for the most part, Amazon’s only offering same-day delivery near these existing distribution centers and those are in the densest part of the country.
For example, when I did a test about 18 months ago in Chicago, Amazon offered same-day delivery by 8:00 PM through their warehouse outside Indianapolis. If, for example, you order a DeWalt drill, you can select FedEx overnight delivery. You can also get it next day for a delivery charge of approximately $30.00. If you chose same-day delivery that they were offering in selected areas including Chicago, the delivery charge was less than half the delivery cost of the FedEx Over-night. The cut off time to order the same-day service was early morning at that time. They were using members of the CLDA to handle the same day services.
As far as the small retailers, strategic stocking locations to provide same-day delivery in select areas, seems to be their best option.
I believe that same-day delivery from the Big Retailers will eventually become the norm. Consumer demand will make it happen. But in my opinion, today “same- day” is a number of days away for many parts of the US.
Andrea Obston is Director of Public Relations, Customized Logistics and Delivery Association
