Revolutionary changes like same-day delivery can transform our shopping behavior. It combines the convenience of online shopping with the immediacy of physical stores. In recent years, a growing number of organizations, including incumbent logistics providers, have been experimenting and looking at new same-day delivery models. Demand is expected to soar due to the attractive value proposition of same-day delivery for consumers. Logistics providers must prepare for the future shift and adjust their current networks accordingly. E-commerce players, on the other hand, must overcome these challenges.
Same-day Delivery: For The Ease of Online Shopping
Due to the increasing percentage of online retail, the “last mile”—the final delivery step to the customer—is of increasing importance. The latter has become a major driving force in B2C parcel logistics, prompting a rapid evolution of the service offering in the direction of better convenience. Speed is the key driver in this evolution, alongside alternate pickup and delivery possibilities (e.g., locker-boxes and parcel stores). In many industrialized countries, next-day or two-day delivery is already the industry standard, but economical same-day delivery is the next evolutionary step.
B2C same-day delivery is rapidly narrowing the service-providing gap for local and domestic delivery, and it is on track to overtake the B2B category in terms of shipment volume. Three categories of players are driving supply-side development: Ecommerce logistics providers, courier capacity brokers, and retailers themselves.
The market for same-day delivery is currently progressing to the next level. Following through on its promise to be a truly customer-centric company, Amazon, the world’s largest online retailer, is actively advertising same-day delivery and has already implemented it in numerous cities. Furthermore, other major multichannel and online retailers, such as Walmart and Alibaba, are planning to offer same-day delivery.
Similar to past evolutionary industrial advancements (such as mobile phones or online banking), it appears plausible to expect same-day delivery to leapfrog day-definite last-mile delivery and become the immediate standard for last-mile delivery.
Trends That Make Same Day Delivery A Hit
- Underlying macro-trends such as rising GDP per capita, increased e-commerce penetration, urbanization, and changing customer expectations are driving the market for same-day delivery. Same-day delivery necessitates a critical mass of customers who have the financial means to pay for such a high-end service. For same-day delivery to take off, a high level of e-commerce penetration is required.
- The continued replacement of stationary retail sales by online sales will result in a considerable increase in B2C shipments, with same-day delivery expected to account for a portion of them.
- Consumer behavior is a rising trend in tandem with these developments. When it comes to online purchases, customers are increasingly seeking more ease, particularly in terms of delivery. They want to be able to choose from a variety of delivery alternatives and receive their things as quickly as possible. Consumers are frequently hesitant to return to a lower quality of service once they have had a better experience.
Consumer Perspective: To Pay For Same-day Delivery For The Right Price
Same-day delivery appears to be appealing to customers if it costs less than 7 to 8% of the whole basket value. Once the delivery cost falls below 7% of the basket value or the total purchase price, an actual conversion rate of more than 30% is achieved. All product categories appear to have the same conversion rate. Consumer electronics, for example, are easier to penetrate because shipping expenses as a percentage of the basket value are not as substantial as they are for a supermarket order.
Retailer Perspective: For Same-day Delivery To Drive Online Sales
“The first retailer to perfect same-day delivery may entice customers who have eschewed online purchases because they needed items right now, as well as persuade current shoppers to add products from supermarkets or drugstores to their shopping carts.” (According to The New York Times)
Same-day delivery represents an opportunity for multichannel merchants to join in the e-commerce boom while also providing greater convenience to their customers. Many multichannel retailers saw Amazon’s foray into same-day delivery in 2009 as a threat, prompting a slew of new initiatives and the development of new players. Retailers are seeking ways to make use of their existing network of stores in order to provide same-day delivery. Their advantage over internet shops is local product availability, which cuts the time and cost of same-day delivery in half.
Major obstacles, including real-time product visibility across warehouses, very short fulfillment lead times, and flexible last-mile delivery, must be accomplished while keeping costs low enough for consumers to pay. Same-day delivery might potentially be institutionalized as a quick, capillary distribution mode in densely populated areas with a critical mass of online buyers by large retailers who generate the majority of B2C shipments.
Logistic Provider Perspective: To Develop Same-day Delivery Options
Parcel logistics businesses are increasingly focused on convenience features such as alternate pickup and delivery choices (e.g., parcel locker-boxes), variable delivery time (i.e., scheduled delivery), and delivery speed to meet the needs of the rising B2C segment (i.e., same-day delivery). These businesses are the natural providers of business-to-consumer parcel delivery services. Last-mile delivery via a hub-and-spoke system with overnight sorting and defined delivery routes gives them a competitive advantage. Their infrastructure and processes are geared for next-day delivery, so enhancing existing assets and capabilities will be a major task. Same-day delivery is difficult to achieve since it necessitates flexible intraday collection and delivery with only one transition point.
Distributors of Courier Capacity: Gaining traction in the industry by creating platforms to coordinate current logistical resources
Traditional B2B city couriers can deliver same-day, but there are thousands of them, and they’re too small to be a good partner for merchants. A new type of player is entering the market with the goal of making existing courier capacity scalable for merchants.
Technology Adapters like SmartKargo employ door-to-door delivery services to create customizable courier networks. Retailers who use this platform can provide same-day delivery as an extra option during the checkout process of their online stores. Orders are assigned to them dynamically, and they pick up from the vendor’s door and deliver the order to the customer’s door within a few hours.
At lesser volumes, a courier network that operates throughout the day starts with much reduced variable costs. Because these courier partners can only accomplish consolidation at an air shipment level, increasing shipment numbers has a significantly smaller influence on variable costs.
The underlying trends of increased e-commerce usage and urbanization will create a significant push for B2C parcel delivery to move from the present next-day standard to the same-day. Providers of logistics services must prepare for the imminent revolution by shifting their networks from overnight sorting and next-day delivery to same-day delivery. In addition, given the necessity for short pick and pack lead times to enable same-day delivery, there is an opportunity to grow into fulfillment services.