David vs. Goliath: How you can standup to Amazon and offer same day delivery
1. Introduction
We are currently in the eye of the digital storm that has overtaken our society. Consumer behavior has changed, people are no longer willing to wait days for their product, nor wanting to walk down to their local store, they want products delivered to their door and that too immediately.
A Temando study found that businesses are not fully meeting the consumer demand for multiple shipping options including same day delivery. Of the 1000 US Shoppers surveyed they found:
· 80% of shoppers in the US would like to have same day delivery as an option.
· 55% of consumers are willing to pay a premium for the same day delivery option.
· Only 34% of retailers surveyed even offer same day delivery as an option.
The study goes one step further, to associate increasing shipping options to:
· 86% increase in sales.
· 75% less abandoned carts.
· 86% meeting customer expectation.
Amazon and other multi-billion-dollar companies have identified this change in consumer behavior and are taking actions to provide this level of service, but what about everyone else? The bar for consumers has been set high and for them it’s easy to browse another site and look for the product elsewhere.
The good news is that big box retailers aren’t the only ones who can offer quick and inexpensive delivery anymore. Independent brands can now offer the same service and compete on shipping speed and cost to meet customer expectations.
So how can David standup to Goliath? Let’s dive deeper into five things you need to make this possible.
1. Fulfillment Center
2. Process Automation
3. Last Mile Logistics Provider
4. Pricing Strategy
5. Analytics and Adjustment
2. Fulfillment Center
The first step to efficiently offer same day delivery is to house your inventory at a fulfillment center or a network of them, and to enable technology for support. Let’s take a large metropolitan area like Chicago, which has approximately 10 million people and covers over 10,000 square miles. Just to serve this one geography, it is a daunting proposition to house all the required inventory, organize the team of warehouse personnel and take care of the logistical details required. Luckily, some third-party logistics (3PL) providers have already done this, and e-commerce merchants can utilize these 3PLs to grow and scale.
Rather than building the logistics infrastructure in-house, a 3PL provides brands, retailers with the fulfillment and inventory management technology, network, and services to unify systems and ultimately meet customer expectations. In order to provide a seamless user experience, it is important to integrate all sales channels into the fulfillment provider.
Shipping your items from a single fulfillment center in a major city can greatly benefit the
customers who live near there; however, your customers who are on the other side of the
country will still have to wait longer or pay for expedited shipping. What’s better than one urban fulfillment center is having inventory in several major cities throughout the country.
Customers whether they are local or located across the country will now be able to access your product and have it delivered from the closest fulfilment center serving the area. The more fulfillment centers used, the greater your reach and the less money spent on shipping.
3. Process Automation
Through the use of technology and integration the goal is to automatically bring together your
orders, shipments, customers, and inventory levels across fulfillment centers. You can fully customize shipping options and match the 3PL’s carriers and services with what you offer on your shopping cart. So, if you want to extend same day delivery only to certain zip codes you can control to that level of detail.
As soon as an order is placed, the fulfillment software alerts warehouse staff to begin picking, packing, and shipping items in real-time.
Let’s go into the 5 steps of the order fulfillment processes in more detail:
1. Verify order: sales staff can confirm and edit customer’s shipping & billing address. Additional information such as their contact information (phone number) is also important for them to receive periodic delivery status updates.
2. Prepare fulfillment: check if the stock keeping unit (SKU) is available and the order can be processed
3. Pick items: identify location of the SKUs and pick them as per the order
4. Pack items: package the picked SKUs into appropriate packaging with corresponding marketing and promotional material
5. Deliver packages: have last mile logistic service providers pick up packages for delivery either same day if available or through the use of standard shipping methods.
4. Last Mile Logistics Provider
Last mile logistics is among the most misunderstood parts of transportation networks. On the surface, last mile may not seem very important, but it can make up 28% of a shipments total cost. In addition, the change in consumer behavior has put additional pressure on optimizing and providing the best last mile logistics possible.
Last mile logistics refers to the final step of the delivery process from a distribution center or facility to the end user. Although the name implies, it is the final mile delivery, actual last mile delivery can range from a few blocks to 50 or 100 miles. Most often, last mile logistics involves the use of parcel or small package carriers to deliver products to consumers. However, standard carrier costs for same day delivery within a short distance can be extremely cost prohibitive.
Take for example FedEx same day, you can get a real time quote using their tool here: https://www.fedexsameday.com/fdx_quick_quote.aspx. Using pick up and drop off to neighboring zip codes for a small package the cheapest rate I was quoted was $24, and as high as $57. In this day and age of Amazon offering free 2-day delivery for their Prime customers charging even $24 can result in lost sales and customers looking for cheaper options.
Last mile logistics allow shippers to get more products to consumers faster and cost-effectively, critical concerns in the e-commerce and omnichannel supply chain. In fact, consumers are willing to pay premiums for better last mile delivery services, such as same-day or instant delivery. While established e-commerce giants, like Amazon, have perfected last mile logistics, small and midsized shippers can still take advantage of this growing market, provided they meet the challenges in last mile delivery.
LeafyQuick is a unique last mile logistics service provider that has taken on the growing and expanding CBD business. They are the first and only same day CBD Delivery service. Having started in Chicago, they have quickly expanded their footprint to New York and Florida as well. Their mission is to quickly, safely and conveniently deliver on-demand the highest quality CBD products to a growing customer base.
Since, they are paving the way for CBD Delivery there is little in terms of regulations. However, LeafyQuick is setting the bar very high requiring all their drivers and customers to be over 21, performing background checks, requiring test results and only working with reputable CBD brands and products.
A flow of how LeafyQuick works as a last mile logistics provider:
5. Pricing Strategy
As a retailer or brand, you have the choice on how to structure the pricing associated with delivery and fulfillment.
1. Pass the cost on to the customer
Choosing to pass the full cost onto your customer as a separate line item, is a very common approach. While there are potential repercussions for this in the form of abandoned shopping carts, at least you can be sure to cover your costs.
With efficiencies throughout the logistics process and last mile logistics providers like LeafyQuick the costs do not have to be prohibitive any longer.
2. Subsidize the cost for customer
CBD for example is a product that typically has quite healthy margins and as such gives the CBD Brand and retailer more options in terms of being able to subsidize the delivery cost to the customer. In a market that is getting over-run with brands and product, it is important to stand apart from competitors, and one way to do that is to offer a service that lowers the barrier to purchase.
3. Bake the cost into the product price
Offering free same day delivery often means the perceived savings are hidden or inflated somewhere else. However, studies have shown that offering free same day delivery leads to increased order volume, higher conversion rates and basket volume increases (https://www.cbinsights.com/research/free-same-day-delivery-benefits-for-retailers/)
For more expensive items however raising the price may be less noticeable. If you don’t increase the product price, you may still find the increase in orders from a lower shipping fee makes waiving the shipping fee worth it.
6. Analytics and Adjustment
The key to successfully defeating the Goliaths out there is to ensure that measurements are taken along the entire process from order intake to delivery to customer. These measures are critical to being able to analyze and adjust the process along the way as your business grows.
For example, if you find frequent out of stock situations occurring on a certain SKU it is important to send that signal early to the manufacturing process. Capturing customer feedback also is critical to being able to get repeat and loyal consumers. Last mile logistics companies like LeafyQuick act like your brand ambassadors capturing feedback and ensuring your customers are happy.
There are field of studies dedicated to optimizing and ensuring that the entire supply chain process runs as efficiently as possible. Whether it be 3PL or last mile services their goal is to bring that efficiency to you as seamlessly and efficiently as possible.
7. Conclusion
Goliaths such as Amazon and other big retailers have resources such as money, employees, facilities and technology at their disposal to be able to tackle changing consumer and market demands easily. Retailers and brands are getting priced out or are forced to join larger organizations to stay relevant in this day and age. Same day delivery is no longer a nice to have, it is an essential part of doing business now.
People shop online for convenience, a huge piece of which entails convenient delivery
options. Making your customers wait can be costly. To be competitive, e-commerce merchants must find the right balance of affordability and speed for their shipments. A good fulfillment and last mile delivery partner and strategy can help you improve efficiency by reducing distance and time in transit, and also help you meet customer expectations around quick and affordable deliveries.
David can indeed beat Goliath once again!
About LeafyQuick
LeafyQuick is the only same day CBD Delivery company founded in Chicago. As a CBD brand or retailer, when you’re looking for a last mile logistics solution that complements your existing supply chain, know that our mix of modes helps us optimize and execute on your final mile transportation.
You can:
· Expect fast, accurate deliveries and e-commerce connectivity for better shipment visibility and tracking.
· Trust our vetted, high quality last mile contract carriers to deliver superior service — for both the forward and reverse flows of your inventory.
· Go beyond the dock with integrated solutions across the first, middle, and final miles of your shipments.
· Manage your transportation spend with the help of our last mile experts and transparent pricing.
