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The extreme rise of quick commerce has significantly disrupted the online delivery segment with higher standards and diverse customer expectations. One such amazing result of this disruption is on-demand delivery. Enterprises are implementing innovative business models and state-of-the-art technologies to cater to the instant delivery needs of a digital-native population and maximize their revenue.
10-minute deliveries, same-day deliveries, next-day deliveries, real-time tracking, multiple payment options, returns, and effortless collaboration for query resolution – businesses are looking at a complex set of customer requirements and market demands.
These evolving customer expectations are forcing online businesses to accelerate their delivery mechanisms. According to Statista, the revenue in the platform-to-customer delivery segment is expected to show an annual growth rate (CAGR 2022-2027) of 7.78%, resulting in a projected market volume of US$302.50 BN by 2027.
Here, we will explore the meaning, benefits, and challenges of on-demand delivery and also find out how businesses can leverage automation for operational excellence in the on-demand segment.
In on-demand delivery, the customer gets to decide the place and time of the product delivery. Businesses leverage automation tools and online platforms to deliver products within a span of 24 hours to less than 30 minutes.
When a customer places an order on some online eCommerce portal, they get the option to choose the delivery schedule, type, terms, and place of product delivery. These delivery choices become part of his services-level-agreement (SLA) with the vendor.
The only major difference in the on-demand delivery segment is the shorter delivery windows and the nature of goods, such as medicines, groceries, quick service restaurants (QSRs), etc.
The concept seems easy to grasp, but it comprises several complex processes, such as order capture, asset optimization, route planning and optimization, inventory management, vehicle capacity utilization, and much more. These constraints vary across the different on-demand delivery models.
Before we move on to discuss them in detail, let us explore how on-demand delivery works.
Let’s understand the concept with this example.
Arthur is on a business trip to Boston, whereas his daughter Emma is in Chicago and has topped her university exams. She informs Arthur that she has planned an evening party with her friends. Arthur, too, wants to make this day extra special for his daughter and places a huge order for food for the entire group. The order is captured by an on-demand food delivery app and is delivered to his daughter back in Chicago within 30 minutes.
Now, let’s explore what happened in the background.
As soon as the system captures Arthur’s order, it automatically allocates the order to the nearest rider and sends an alert to the restaurant as well. While the food is being prepared, the delivery executive arrives for pick-up (and this journey is also optimized for cost and time efficiency).
Once the food is ready, the driver will be provided with the best-optimized route via dynamic routing. Even if there are multiple orders to complete for the rider, the order will be seamlessly integrated considering location, availability, traffic surge, etc.
Throughout the journey, automated system alerts will be sent to all the stakeholders – Aurthur, store manager, rider, restaurant, etc. Once the rider arrives at the destination, Emma receives the order and confirms the delivery with an electronic Proof of Delivery.
Now that we have an understanding of the overall working of on-demand delivery, let us explore the various benefits of on-demand delivery platforms in detail.
The on-demand delivery model brings multiple advantages for both enterprises and consumers. We have listed some of them below:
An HBR article states that 49% of millennial customers expect on-demand delivery for their products. In another survey, 46 % of online customers have shown interest in same or next-day delivery. With an on-demand delivery framework, businesses can attend to the instant demands of customers, deliver a positive experience and expand their consumer base.
In addition, businesses can also eliminate manual interventions, reduce errors and cut unwanted costs.
On-demand delivery solutions leverage advanced technologies like deep learning and business intelligence(BI) to help businesses understand customers’ buying patterns and behavior. This further creates upselling and cross-selling opportunities for online vendors, which can increase the e-Commerce revenue by 10-30%.
Advanced logistics tools enable brands to streamline their operations via automated order allocation, dynamic routing, and real-time tracking options. In addition, historical data is analyzed to understand consumer preferences for delightful shopping experiences.
Businesses are able to sell products online and deliver them within a 24-hour timeframe. On-demand delivery eases the investment burden by curbing the need for physical stores and their related operational cost. This means that businesses don’t actually have to manufacture or necessarily stock things in bulk if they wish to ‘sell’ something.
On-demand delivery ensures quick delivery turnaround time. Last-mile logistics management solutions overcome the challenges of manual delivery with automated scheduling, task allocation, route planning, roster management, and dispatching. As a result, an enterprise is able to eliminate manual intervention by a large margin and reduce any possibilities for error.
The self-service delivery model is a customer-centric model that boosts customer engagement and experience. Buyers can change the order location and delivery time according to their preferences, resulting in a positive customer experience.
Delivering orders within minutes is good but not enough to satisfy the modern-day consumer. You need to keep them informed throughout every step of the journey and modify the delivery experience at their convenience.
A report states that 86% of customers are ready to pay more for improved customer experiences. Listed below are some other customer expectations (apart from speed), when it comes to on-demand deliveries.
Customers like to receive deliveries at their convenient locations and desired timeframes. For instance, the buyer may be an employee who has to work overtime and therefore might not reach the delivery location, i.e., their home, on time. On-demand delivery solutions enable customers to alter the delivery location and time as per their preferences.
Customers want to seamlessly track the order in real time with a centralized dashboard. They must be notified of every important milestone, such as order allocation, dispatching, shipping, etc. Some other perks they wish for include the ETA status and details of the delivery person for direct contact.
Although on-demand delivery holds a plethora of benefits for customer-centric and agile organizations, the journey comes with its fair share of challenges.
Next, we explore some of the major challenges in the on-demand delivery segment.
In the digital age, next-day and same-day deliveries have become the new norm. Keeping a tab on the huge influx of orders and delivering them within narrow timeframes can be challenging. Further, there is this constant need to reduce operational costs and optimize asset use.
This emphasizes the need to design practical, resilient strategies by investing in robust on-demand delivery solutions.
The job specialization for scaling the enterprise’s delivery mechanism often results in the creation of separate functional teams. Each team is chasing its objectives, priorities, KPIs, performance incentives, and technologies. This creates a challenge for real-time coordination across teams and platforms, which is necessary to make on-demand fulfillment a success.
However, smart on-demand delivery solutions that offer integrated management can synchronize units to ensure that orders are prepared, staged, dispatched, and delivered quickly. Poor Visibility Across Operations and Stakeholders
According to the World Economic Forum report, disruption in the supply chain affects share price by 7%. In fact, 80% of companies worldwide are placing improvements in supply chain systems as their top priority.
Each stakeholder in the delivery process has its own set of requirements. There is a need for an instant, reliable integration of systems so that all the stakeholders can get a granular level of visibility at all times. Many eCommerce and fulfillment companies are leveraging innovative on-demand delivery platforms to achieve 360-degree visibility for all parties involved.
Research indicates that 97% of customers like to track their orders in real-time. It is crucial to note that online tracking helps businesses increase revenue by 43%. Online businesses often deal with third-party service providers. These third parties can be retailers, warehouses, or supply-chain partners.
In the absence of real-time tracking, businesses do not know where precisely the orders are in transit. If there is a delay in operations, there is no way they will be alerted of the same. Intelligent on-demand delivery platforms can integrate and present data through an integrated dashboard interface that allows real-time tracking for all stakeholders involved.
Mismanagement of items, theft, and vandalism are some of the common challenges that haunt the efficiency of on-demand logistics. When high-value assets are not monitored closely, misplacing the items or losing them in the process severely impacts productivity and results in lost revenue.
Smart logistics management tools automatically send real-time monitoring links to stakeholders and notify them about delivery progress, potential delays, and exceptions.
A product goes through various channels till the time it reaches the end destination, i.e., delivery at the customer’s location. Slight inefficiencies or a disconnect between the preparation department, dispatch, and delivery flows will hamper operational efficiency. These glitches lead to poor adherence to SLA and leave negative customer experiences.
For example, if an order is not sent to prep on time, or if the driver is notified to pick it up too early, the driver will end up waiting for the order and probably miss another delivery window. In case of an inefficient allocation and order management process, drivers who are coming to pick up an order won’t receive it on time – and the entire delivery gets delayed.
However, today’s smart on-demand delivery platforms streamline the delivery processes and avoid operational glitches by creating key milestones and event management updates.
Tracking the number of times a fleet failed to meet them and the reason for delays—all these data are crucial to forming realistic KPI management. Any possible mismatch between SLA and KPIs can result in a below-par customer experience. Real-time analytics provided by on-demand delivery platforms helps businesses develop a realistic KPI management system.
Manual dependencies pose a challenge for on-demand delivery providers in streamlining fulfillment processes. An intelligent platform such as Shipsy’s AI-enabled on-demand delivery solution enables brands to respond to on-demand delivery requests quickly. Intelligent logistics management solutions also drive intelligent processes based on predefined constraints like weight, volume, proximity between customer and store, and driver workload.
There is no denying that on-demand delivery is an expensive process in supply chain management. In the absence of digitalization, automation, and data visibility, operational costs are bound to pile up when executing super-fast deliveries.
In the next section, we will explore how operational costs associated with on-demand operations can be kept in check.
Businesses need to analyze the process flow of the on-demand delivery processes closely to address the rising operational costs. From order allocation to asset engagement, smart routing to area mapping, and multi-stop delivery assignment – all processes can add operational costs only if they are not planned carefully. Organizations need to adopt on-demand delivery management solutions if they wish to save unnecessary cost burdens.
However, standalone on-demand delivery management solutions can also come with multiple shortcomings, such as lack of a unified and standardized management and lack of analytics or reporting. Hence, it is better to invest in a smart end-to-end delivery management solution that offers integrated functionalities for delivery orchestration and management.
Shipsy’s smart on-demand delivery platform overcomes the limitations of manual allocation and unlocks greater operational efficiency by taking into account order volumes, delivery type, order location, and asset type while allocating an order to a fulfillment provider.
Shipsy provides cost-efficient and scalable on-Demand Delivery solutions. The platform ensures SLA adherence by meeting delivery timelines and provides seamless integrations with third-party systems. The solution brings you a host of innovative features like Intelligent Order Allocation, Driver Management, and Real-Time Customer Communication are carefully designed to generate unified customer experiences.
The driver management feature ensures the driver’s availability during peak hours and comes with in-built features for COD remittance and digitized delivery proofs.
With its advanced technological offerings, Shipsy helps businesses to unlock:
Take your online business and customer experiences to the next level by adopting Shipsy’s next-generation on-demand delivery solution. Request a Demo to learn more or to get in touch with our experts for getting started.
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