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More and more online retailers are offering same-day delivery as part of their strategy. They have noticed that competing on price and quality is no longer enough, and therefore have to keep up with the competition in terms of delivery speed. Consumers have become accustomed to fast delivery due to retail giants such as Amazon and are becoming increasingly demanding in this area. Retailers with an online channel can’t ignore the consumers’ demand for fast delivery services. In addition to a competitive edge, same-day delivery can ensure higher conversion and increase the service level of the online store.
Although same-day delivery has many advantages and these are obvious to everyone, it is not always easy to implement this fast delivery option. The delivery challenges of this model are often underestimated. In this blog, we discuss the challenges associated with same-day delivery and their solution.
One of the biggest challenges for online retailers looking to offer same-day delivery is the speed at which orders need to be delivered. Offering this delivery option is always subject to high time pressure. There is usually a very limited time between placing the order, picking and packing the order, collecting the order from the warehouse and delivering the order to the end customer. This leaves very little time for correcting errors and decoupling processes via buffers and buffer time. In addition, the distance from the warehouse to the consumer plays a major role. The greater this distance, the longer it takes for the order to arrive at the consumer`s home. Because many online retailers have central warehouses, parcels have to travel a great distance to reach most consumers. This makes it difficult to deliver the order the same day.
Implementing same-day delivery can come with high (delivery) costs. When items are shipped from a central warehouse, same-day delivery can incur higher costs than next-day or multi-day delivery. To limit these costs, efficiency is key. This means that orders must be brought from the warehouse to the end consumer as quickly as possible. The entire process from order to delivery plays a role in this. To make this process more efficient, both automation and route optimization are important. This includes automated warehouses, tools to increase efficiency of picking and packing and batch orders. The high costs can (partly) be passed on to the consumer, but retailers should check with themselves whether this is sensible. There is a real chance that some of the potential customers will no longer want to shop at their online store. Research shows that delivery costs are an important decision factor for consumers when shopping online.
Sustainability is an increasingly important theme within e-commerce and e-commerce logistics. The delivery of e-commerce orders is seen as a major environmental polluter. In particular, several studies point to the impact of same-day delivery on the environment. To be able to implement same-day delivery in a sustainable way, a high volume is often required. Due to the great time pressure between the moment of ordering and the moment of delivery, delivery vans are not optimally loaded and extra journeys are needed to deliver products to the end customer that same day. In this way, delivery vehicles cover unnecessary extra kilometres. In addition to more transport costs, this also results in additional carbon emissions.
The above challenges can be overcome with a ship-from-store fulfilment strategy or by opening a dark store. As explained above, same-day delivery with traditional forms of ecommerce logistics is difficult to realise due to speed, high costs and pressure on the environment. It is therefore necessary to change the supply chain as a whole, to structurally reduce costs and carbon emissions per package and to guarantee fast delivery. Two elements are important here:
It is important that products are sourced locally. Retailers who have implemented a ship-from-store fulfilment strategy, or have opened a dark store, have the opportunity to ship locally from a store in close geographic proximity to the consumer. This ensures fast delivery and makes it possible to ship items at relatively low costs. Moreover, it helps to reduce carbon emissions, as drivers won’t have to travel as far in order to deliver orders the same day.
To reduce costs and pressure on the environment, it is important that the number of transport movements with polluting vehicles is kept as low as possible. Again, this can be achieved through the use of a dark store or with a ship-from-store strategy. In this way, products can travel in bulk to the store before they are packed for delivery to the final consumer, while parcels travel thousands or at least hundreds of miles when shipped from a central distribution centre.