Does your customer really need that product right now?
We think otherwise.
Retailers are still debating the logistical and financial feasibility of same-day delivery while racing to offer it — in equal measure. Apple provides same-day delivery for some of its products for a flat fee; Neiman Marcus pulled it off with panache just for Father’s Day in 18 markets; and Macy’s is aggressively expanding its same-day delivery service to cover more regions.
In the meantime, others are already dashing ahead to offer one-hour delivery. And no, we are not talking pizzas at your doorstep in 60 minutes.
Amazon now offers one-hour delivery service to its Prime members in selected cities in the USA and London for $7.99 and £6.99 per delivery respectively while 2-hour delivery is free. This service is not limited to prepared food — you can order groceries, books and even a TV.
For the truly impatient, Amazon is working on Prime Air, a future delivery system using drones to send small packages to customers in 30 minutes or less.
The rise of the flex shopper
Do these pursuits to offer instant gratification reflect the market demand? Today’s shoppers are always browsing for products and the best deals. Information and control are paramount. The 2014 UPS Pulse of the Online Shopper™ Study cites speed of delivery as the fourth most important factor when comparing retailers (after selection, product information and reputation).
Retailers still holding onto their brick-and-mortar ideals must wake up to today’s retail reality. One-third of UK adults now regularly shop for food online. Over in China, the online retail market has more than doubled in each of the last three years. Retailers who want to capture their business and thrive, or even survive, must adapt in tandem with the evolving shopper priority.
But is same-day delivery really the holy grail of retail?
The knee-jerk reaction would be to jump onto the bandwagon of what seems like a winning formula. But wait — dig deeper into the data and you will find the caveats.
81% of shoppers choose free shipping as the most preferred option when checking out their shopping cart online. However, that is not the only valued option.
More telling is the fact that 93% of online shoppers have taken these three actions to qualify for free shipping:
The battle is not for delivery speed, but for delivery options
The 2014 UPS Pulse of the Online Shopper study reports what truly affects shopper satisfaction:
This presents new opportunities to retailers who are quick to offer what consumers want. But first, understand the patterns that matter and work around them to provide options:
- Delivery time: Number of days and delivery windows (morning, afternoon, specific time)
- Delivery location: Buyer’s home or office, courier office, delivery locker or retail outlet
- Delivery fee: Prices based on choice of delivery location and chosen delivery window
It is critical that the online purchase journey is transparent to shoppers. Choice in delivery options and clarity of timing are top considerations in the purchase decision. One in every two shoppers abandon their shopping cart because their order value wasn’t high enough to qualify for free shipping. Between fast and free, you can be sure free wins almost every time.
Connect, engage and deliver — with smart logistics
Retailers need to manage delivery expectations. Today’s on-the-go shopper wants to be alerted on the approximate time of delivery. Alternative delivery locations, rerouting and delivery windows are also highly valued.
How can retailers offer all of these complex permutations without hurting their bottom line? Surely the costs of setting up a dynamic supply chain is astronomical? With fickle shoppers on the perpetual quest for the best deals, is the profit margin even worth it?
Opportunities here lie not only in brute speed, but in the ability to offer customers an unparalleled shopping experience with flexibility, convenience and control. The ability to connect, engage and deliver to your customers on the same day — or otherwise — becomes a game-changer only if it is sustainable, scalable and profitable.
And now for the good news…
This delivery puzzle has already been solved. You can connect, engage and deliver to your customers — and have an edge over the competition — while remaining profitable. It’s called delivery demand shaping and it puts the control back in your hands. Here’s how it works.