Are same day delivery services the final frontier?
The CEO of eBay, John Donahoe, recently spoke at a technology conference and discussed how ebay plans to continue to build out a delivery network to support same day delivery on a large scale. eBay has been experimenting with this in a couple of cities and thinks it’s worth continuing to build out – but do current consumers really want or need it?
I think the answer is “not yet” given that there is no real traction by any major retailers today offering this service so the bar has not been set. Moosejaw Mountaineering recently tested this theory just before Christmas 2012 to see if they could appeal to some last minute holiday shoppers with 1-day shipping in a couple of metropolitan areas and their results were not that encouraging.
According to a recent article from Internet Retailer, none of Moosejaw’s consumers actually used the service. A number of factors were cited by their CEO including lack of promotion of the service, consumer disbelief that it was a real offer and possible consumer mistrust that their holiday goods would be received on time.
So what is the future of same day delivery services?
Online retail giant, Amazon, currently offers same day delivery in 10 cities, but Amazon’s CFO stated in 2012 he did not foresee Amazon offering same day delivery nationwide.
That said, Amazon has clearly set the bar when it comes to consumer expectation around speed of delivery for online orders. While numbers are not offered by Amazon, in February 2012 Bloomberg estimated that there were anywhere between 3.5 and 5 million Amazon Prime members who pay $79 a year for 2-day delivery and are now used to the convenience of getting items delivered so quickly (I admit I am one of these people).
But the infrastructure required to be able to execute on a 2-day delivery model can be daunting for online only and multichannel retailers alike.
Even retail behemoth Walmart – who is also testing same-day delivery in some markets – has struggled to be able to deliver items in a timely fashion. For example, if I go to walmart.com and look up details on a $10 dress, Walmart is able to tell me there is limited stock in my area but offers to ship it to my house for a mere $0.97. Not a bad offer until I look at the estimated shipping dates for an order I would be placing on Thursday, Feb 21st. (see table).
Why would I want to wait until 11 calendar days to receive a product, or pay more money for “expedited” shipping on a $10 item that still would arrive almost a week later?
For: Las Vegas, NV 89103
Item: Faded Glory Women's Kimono Dress
Standard Arrives by Mon, Mar 04ExpeditedArrives by Wed, Feb 27RushArrives by Mon, Feb 25
If someone as large as Walmart is not able to meet consumer demand for speed of delivery, then how are emerging ecommerce retailers expected to keep pace and compete with offerings like Amazon Prime?
Focus on increasing speed of delivery by leveraging existing expertise and infrastructure
By outsourcing ecommerce fulfillment to experts that have an existing infrastructure and have a proven 2-day delivery network like Webgistix, emerging retailers can utilize a network that increases speed of delivery and improves customer satisfaction for people like me who have little patience to wait for 11 calendar days (or longer) to get a product.
While same day delivery services may be a consideration for the future, ecommerce retailers should focus on defining what “standard” delivery means to their consumers. Consider this statistic from Comscore - 42% of online shoppers have abandoned an online shopping cart because of delivery date (which can lead to a lost customer for life).
Reducing the cycle time for online deliveries from 5-7 business days down to 1-2 business days with a proven solution can increase customer satisfaction, customer loyalty and drive recommendations & repeat business.
In the wise words of Merv Griffin “If you make the customer a promise... make sure you deliver it.”
Rakuten Super Logistics is a leading eCommerce order fulfillment company that provides the scalability, flexibility, and cost savings retailers demand.
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