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The pandemic changed aspects of modern life, some for a time and some permanently. What changed permanently was customers buying online, with the accelerated shift to online procurement for a range of products such as groceries, medicines, and food- purchases that were earlier on a much smaller scale.
Whether to replenish a couple of essentials that ran out, buy missing ingredients for dinner, or get instant gratification by indulging in a spontaneous treat, buyers increasingly use quick commerce in a trend that complements, rather than replaces, grocery shopping.
In fact, as per a Statista survey, 36% of global e-shoppers availed of quick commerce in 2021. This quick commerce or on-demand commerce explosion is not restricted to the Western markets alone. Diverse Markets like the Middle East and North Africa are projected to double in four years by 2024, and India is set for five-fold growth in 2020 – 2025.
This blog will examine the one-hour delivery trend, factors leading to its increased acceptance, how companies can facilitate optimized instant deliveries, and more.
Also known as instant delivery or on-demand delivery, one-hour delivery places speed at the forefront, offering to deliver small orders in the shortest possible time, usually within an hour, even as fast as 10-20 minutes.
One-hour delivery taps into a hitherto unexplored market, catering to unplanned and urgent customer needs like replenishing essential groceries and other small yet urgent needs.
We will now understand why one-hour delivery is trending today.
With the hectic pace of modern life, you can only plan your purchases to an extent- for the week or a fortnight. But what happens when you discover that you have missed out on an essential purchase at the last hour?
You can forego your requirement or step out for your purchase, a stressful experience navigating congested street queues at malls.
One-hour delivery, with its model of small-size deliveries, delivers from a limited basket of essentials, using bikes for easy traffic navigation. Of course, customers are delighted and cannot have enough of it. Who would want a one-day delivery when you can get delivery in an hour?
A host of newcomers are bursting onto the market, exemplified by GoPuff, Getir, Gorillas, Weezy, Zapp, Dunzo, and many others.
The trend is too strong to ignore, and even traditional superstores have jumped onto the bandwagon, strengthening their one-hour delivery service. Sainsbury, UK’s second-largest supermarket chain, expanded its rapid e-bike delivery service to 20 cities with 50 stores with a target of 6,00,000 weekly deliveries. According to the Office for National Statistics, online grocery sales in the UK have doubled after such fast grocery deliveries were launched.
Marketplace giants Amazon, small retailers, QSRs, and D2C brands are optimizing their offerings. To keep up with the evolving customer preference for quick commerce, brands are increasingly putting speed at the center of their delivery strategy.
Many marketplaces, including Amazon, are now moving beyond just offering same-day. It is conceivable that in a couple of years, same-day delivery will no longer be a differentiator.
Businesses are using micro-fulfillment centers in all pockets they want to serve. With smart warehousing, these centers use small spaces optimally. The inventory is also restricted to fast-moving grocery and everyday usage items for easy management. This makes order fulfillment all the easier and more efficient.
Let us now understand the prerequisites for one-hour delivery.
One-hour delivery is built on reducing the delivery process time to the absolute minimum. One-hour delivery is possible when businesses make strategic decisions on what to do and what not to do in a time-sensitive and logistically optimized manner.
Let us take a look at the conditions that make one-hour delivery possible and profitable for brands:
With increasing competitiveness to gain market share and with customers discovering the joys of instant gratification, businesses are changing their service model. From an assurance of 2-day or same-day delivery to quick delivery with SLAs below one hour and even as low as 10 minutes, the critical changes required to make this possible.
Businesses tweak their business model to cope with the demands of one-hour delivery. Some characteristics of the business model are:
The estimated delivery time after placing an order is the main distinction between q-commerce and e-commerce. Q-commerce businesses have speed as their unique differentiator and complete deliveries within 2 hours to 10 minutes. Intelligent logistics management allows for order processing and delivery components to be automated. This ensures quicker and more efficient fulfillment of orders.
Q-commerce businesses frequently utilize two-wheelers like bicycles or scooters for on-demand order fulfillment. With smaller deliveries, two-wheelers negotiate traffic faster. Coupled with dynamic routing, this helps optimize routes taken to complete deliveries. In contrast, the e-commerce fleet has big and small deliveries and uses a mix of two-wheelers and larger vehicles for last-mile deliveries.
Q-commerce businesses service small catchment areas with high customer density to meet the requirements of speed and viability. E-commerce businesses may, on the other hand, service orders from a centralized warehouse to a much larger area.
Q-commerce uses physical storefronts or micro-fulfillment centers, also called dark stores, for a wider reach around the area. Centralized warehouses for inventory and managing returned products are typically used by e-commerce businesses.
The product catalog in q-Commerce depends upon various factors such as location, time, and availability and mainly comprises essential and daily-use items. In comparison, e-Commerce has a much more diverse product catalog, and the inventory size is many times as compared to a hyperlocal scenario. However, the limited options are advantageous as it allows companies always to optimize available stocks.
Dynamic order clubbing is done considering constraints like radius amount, delivery location, and the number of maximum orders that can be assigned to a driver in one run. Similarly, intelligent on-demand delivery solutions allow optimized routes to be selected for the best possible delivery windows.
The system is highly configurable to collect all incoming orders, intelligent order allocation, and track their status. There is mobile support for field operations with a driver app. Also, driver allocation and slot management are automated. Incentive disbursal is through gamified performance monitoring across delivery personnel.
Live order tracking uses animations or simulations to take care of internet or GPS gaps during the delivery. Communication with customers is real-time using WhatsApp/SMS. The system enables highlighting addresses on maps, rescheduling deliveries, delivery to a neighbor, and communication with the driver in real-time. Driver-marked non-delivery reasons can be validated directly with the customer through a message/call for driver accountability.
Let us now see the three major aspects of one-hour delivery.
The increase in online order volumes has made brands bring inventory closer to densely populated areas to guarantee a swift delivery turnaround. While collaboration with brick-and-mortar stores allows faster deliveries, it fails to provide transparent inventory information. Here, dark stores become all the more crucial.
Instant delivery platforms operate their own dark stores, which are placed with deliberate and strategic calculation, typically one per neighborhood they operate in. Since these are not meant for consumers, space can be used more efficiently, and typically the cost to operate these as a percent of revenue is lower than rent space for grocery stores.
As consumers place their orders, they are fulfilled at the corresponding fulfillment center by pickers and delivered by designated riders.
From cumbersome manual processes and increased delivery turnaround times, Q commerce businesses are shifting to fully automated processes for timely dispatch and faster deliveries.
Smart logistics management software employs auto allocation to remove human dependencies and automatically accord delivery tasks to drivers based on various parameters like delivery type, rider current order volume, and proximity from store and customer. Companies can positively impact the net auto allocation rate by leveraging new-age AI and ML-powered logistics management tools.
Optimized timing is the key to delivering within slim delivery windows. Coupled with an agile response team, it allows for resolving unforeseen situations and delivering on stringent SLAs. In many cases, the lack of appropriate technology can be challenging to manage drivers and their respective KPIs.
Smart logistics management tools address this challenge using a host of advanced parameters. These could be the time taken to start the bike after the order was received, arrival at destination status, time taken to deliver the order and return to the store, etc. Moreover, this also enables store managers to manage driver shifts and evaluate the various routes taken to deliver the order. The solution analyzes deviations between the system-recommended route and the actual route taken by the driver to investigate delivery delays.
Shipsy’s AI-enabled logistics management platform enables efficient on-demand and hyperlocal delivery experiences with driver slot management, dynamic en route order clubbing, live order tracking, and more that help businesses manage SLAs efficiently.
With low code integration and a consultative approach to software adoption, Shipsy ensures cost-effective, scalable, and customer-centric operations with the following:
Clients have benefited from positive business outcomes, including the following:
Connect with our experts to book a customised demo today to see how Shipsy works to optimize one-hour delivery operations.