It wasn’t so long ago that overnight delivery seemed remarkable. In the past, as a retailer, I’ve also guaranteed overnight delivery on orders placed by 11:00 pm EST. At the time, I thought, “WOW! What an amazing customer experience.”
Times have changed and the bar has been raised with same-day delivery becoming the new battleground for ecommerce, especially during the holiday shopping season as retailers fight for the consumers’ dollars. In an effort to compete with speedy delivery by online retailers, the websites and mobile shopping apps for Macy’s and Bloomingdale’s will soon start offering a same-day delivery option to customers in the major markets: Chicago, Houston, Los Angeles, New Jersey, San Francisco, San Jose, Seattle, and Washington, D.C. Macy’s and Bloomingdale’s are just two examples of retailers jumping on board with this service.
Same-day delivery does have a lot of challenges and certainly is not for everyone. It requires earlier cut-off for receipt of the order, typically by 10:00 am with most organizations doing deliveries as late as 10:00 pm within the particular market. You need to be productive, flexible, and have enough capacity and space to process the orders.
Business Insider, October 8, 2014 forecasts the explosion of same-day delivery growing from $100MM annually today to over $4B in merchandise sales by 2018 and generating over $1B in shipping fees, a five year CAGR (compound annual growth rate) of 154% (and who said anything about drones?). Besides the retailers mentioned above, Amazon, Google, eBay, Nordstrom, 1-800 Flowers, UPS, FedEx, and even Uber have all joined in this space, either selling products or providing services to deliver the merchandise. Imagine calling for Uber to take you uptown to dinner and also taking a package from you to be delivered to someone, all in one trip.
Currently, the retail leader in same-day delivery is Amazon, offering it in most zip codes within a metro market. As Amazon builds more distribution centers, their reach for same-day delivery will only intensify. Same-day delivery rates are different for Prime members (flat $5.99 per order) and non-Prime members ($8.99 per order and $.99 per item); however, they are still very reasonable considering the convenience and the speed which the merchandise is delivered. It’s interesting to see so many retailers overcoming the challenges and offering this service.
Although there are many challenges to same-day delivery, don’t automatically assume it will be too much for your operation. It’s critical to weigh the pros and cons, and FitForCommerce can help you evaluate whether this service will benefit you.
|3 QUICK TIPS|
|When considering same-day delivery, focus on products with high margins to ensure you can afford the extra cost of the delivery service. Choose products which are unique and not available at other retailers to minimize the competition for the product and the same-day delivery option.|
|Experiment same-day delivery yourself and internally first to identify the positives and negatives as a consumer.|
|Try the service with companies which have a proven track record in a certain markets. Do significant testing before you roll-out the offer to ensure all challenges are identified and addressed.|