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About a decade ago, same-day delivery was predicted to be the next evolutionary point in parcel logistics. It was a bold yet spot-on prediction, with more than 51% of retailers offering same-day delivery services today.
Brought into vogue by Amazon, the same-day delivery market is forecasted to reach $15.6 billion by 2024 in the United States. What began as an “assured two-day delivery” for Amazon Prime users has morphed into an industry standard. And why not? You have the convenience of online shopping and immediate product access as in brick-and-mortar stores. You can now order party wear in the morning, leave for work and receive the package when you return home.
With rising demand for same-day delivery, retailers and their logistics partners need to develop minimal pricing plans and technology-based solutions to satisfy user needs. Big-name retailers have already joined the race, betting on data analytics and technological investment. In contrast, smaller D2C companies are primarily dependent on the services of third-party logistics provider companies.
Despite being used synonymously, ‘same-day shipping’ and ‘same-day delivery’ are not the same. Same-day shipping refers to when an item is shipped on the same day of the order. Same-day delivery is when the order is placed, shipped, and delivered within a 24-hour timeframe.
Most businesses will implement a cut-off time for placing orders to ensure delivery within a particular time frame. For example, orders placed before 3 pm are eligible for same-day delivery. However, any orders placed after that are scheduled for the next day.
The business necessity is evident since about 49% of customers are more likely to shop online if same-day delivery is available. From a growth-centric viewpoint, having a same-day delivery option is a no-brainer.
The market for same-day delivery is powered by:
One of the defining aspects of same-day delivery is the experience of immediate benefits of retail shopping without leaving the comfort of your house. Such features are likely to help further acceptance of eCommerce, thereby increasing online sales. For instance, a leading online retailer increased conversion during checkout with the same-day delivery option. In addition, for brick-and-mortar retailers, local product availability helps reduce the time and cost, resulting in faster logistical turnaround timing.
Certain components are vital for the successful implementation and continued execution of the same-day delivery system over time. In the following section, we will examine why businesses adopt the same-day delivery model.
The seamless implementation of the same-day delivery system is dependent upon certain factors. Identifying and working on those characteristics ensure efficiency and success for a longer duration. Some of the key pointers are listed below:
Same-day delivery becomes seamless if the customer base is identified and segregated into clusters before operations. For instance, geographically closer customer clusters allow for compact distribution networks and reduced operation costs. Moreover, metros and cities are easier to service owing to better connectivity. On the other hand, rural areas need smart and highly precise route planning for the seamless functioning of same-day deliveries.
Features of order clubbing, dynamic routing, strategic fulfillment center placement etc., become extremely crucial given the complex geographies. Such business offerings, when implemented strategically, can also emerge as brand differentiators.
The cut-off time is the hour of the day shoppers can place orders to avail benefits of same-day delivery. An order placed during the first half of the day allows for a more manageable same-day delivery timeline. A similar order placed around midnight would be delivered the following day.
Establishing a cut-off time enhances transparency as well as optimizing the customer expectations. In addition, it also promotes informed decision-making on the part of the consumer, reducing misunderstandings and customer dissatisfaction.
About 61% of consumers are willing to pay more for same-day delivery.
However, customers increasingly prefer retailers who offer faster deliveries with free shipping options. Therefore, it becomes crucial for businesses to have a third-party logistics partner who can keep the costs as low as possible.
The strategic location of warehouses is convenient to keep the resources in check while completing super-fast deliveries. In addition, dark stores, where inventory is based on predictive insights, allow for easier stock management.
However, an efficient and smart warehouse inventory is only half the job done. With an intelligent delivery management system in place, businesses can:
Many first-world countries have witnessed the birth of highly process-controlled warehouses to facilitate an efficient and smart ‘same-day delivery ecosystem.’ But, in India, the market is still maturing.
Having a reliable last-mile operation setup is essential for the success of the same-day delivery model. Having a comprehensive last mile operations management solution allows for:
Efficiently managing delivery partners, such as third-party logistics providers and delivery executives, helps significantly bring down the additional expenditures.
Advance market research and planning enable enterprises to grasp the consumer demographic and understand the existing scope of competition. Every decision would be based on well-defined stats, paving the way for accurate analysis and, if necessary, timely corrections.
With this brief overview of this space, now is the time to explore and understand the various challenges.
The increasing popularity of same-day delivery among consumers has necessitated greater adoption among all retailers. However, the rapid introduction has widened the demand and supply gaps of such services. The key hurdles in same-day delivery are as follows:
Despite the massive growth in the eCommerce sector, the expansion rate of fulfillment centers has been low. In urban areas where traffic and real-time road conditions are unpredictable, the absence of smart routing solutions creates disturbances in the delivery schedule.
Furthermore, the inability to monitor and manage the real-time movement of the riders often leads to long and delayed deliveries. The failure to ensure an efficient and cost-optimized delivery route for riders also results in increased fuel costs.
Shoppers expect to be informed about the real-time movement of the delivery process. However, manual tracking of the deliveries is an uphill task.
Finding access to a smart and reliable technology solution with built-in scalability can be challenging. It becomes an issue, especially when third-party platforms get involved. Even the slightest link-up mismatch reduces visibility in order location and transport performance. This might lead to concerns with regard to operational cost and overall customer experience.
As orders and subsequent delivery requests increase, manual dispatching can be a tedious process for same-day delivery. Monitoring and allocating the available assets can be dreary without automation tools. Moreover, legacy software fails to ensure dynamic fleet routing, leading to additional transportation costs.
It becomes a hassle to manage dispatching and fleet management in a time-sensitive and cost-effective manner without proper automation.
Fleet optimization is crucial for the seamless functioning of same-day delivery. Having fewer assets takes a toll on the daily order completion. On the flip side, having too many assets eats away the vital resources.
This is of particular concern, especially in rural areas, where last-mile carriers and providers are difficult to source. Similarly, delivery of certain products requires specific carriers, leading to scheduling issues and an increase in operational costs.
Inability to allocate the necessary assets as per changing demands leads to resource wastage and poor customer experience. Therefore, identifying the cost-efficient vehicles and maximizing their capacity utilization is vital to keep the operational expenditure under check.
On the same note, more than 25% of shoppers will abandon a cart if same-day delivery is not available. The mid-sized and small enterprises find it tough to rapidly scale up operations to match increased demands, especially during festive or holiday seasons, leading to missed opportunities.
With the growing popularity of ‘free shipping’, last-mile delivery has become a daunting task. The fact that last-mile delivery accounts for 53% of the total shipping expenditure constitute a significant concern for retailers. With eCommerce arriving in rural areas, the time and distance per average order drastically increase, impacting the profit margins.
Listed below are some of the challenging aspects when optimizing last-mile delivery costs:
Recent years have witnessed unprecedented digital penetration and e-commerce growth. This has led to the rise of multiple technology products catering to various operations and processes. For instance, SaaS-based solutions offer route management, 3PL management, order management systems (OMS), Warehouse Management Systems (WMS) and more.
However, the real challenge remains in selecting the most suitable and future-relevant automation service for industry-specific use cases. Additionally, opting for software that scales and evolves as per your business needs along with managing everything from a single window is an essential feature.
Achieving success in the same-day delivery model stems from the three R’s:
The right logistics automation partner allows early discovery of latent flaws in business operations, adding value to the existing revenue generation system. A smart technology partner can help you choose the most relevant platform and tools for your business. After all, unlocking business growth includes addressing the operational concerns along with managing, monitoring, and tracking the entire process from a single platform.
Shipsy is an AI-powered smart logistics platform that offers custom SaaS offerings for optimized orchestration of same-day deliveries and end-to-end logistics management.
It enables delightful customer experiences without compromising operational costs and efficiencies. Some of the core offerings include driver slot management, dynamic en route order clubbing, live order tracking, automated driver allocation, KPI benchmarking, rider gamification, and much more.
With Shipsy’s smart same-day delivery management solution, businesses can:
For more information on our same-day delivery solution, signup for a quick demo here.
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