Consumer demand for same-day delivery continues to rise. The emphasis on shipping that was sparked by the success of Amazon Prime is now extended to moves by eBay, Google and Walmart to offer same-day services. These corporate juggernauts are shaping consumer expectations … and smaller companies are soon going to be forced to follow suit in order to remain competitive.
Some may argue that customers don’t need same-day delivery. But just as they came to expect a smartphone to deliver maps, email and picture-taking capabilities, the expectation for same-day delivery continues to grow as existing offerings expand and as more businesses restructure their operations to support similar services.
Rather than being caught off guard by this phenomenon, the vice president of supply chain at a leading home products retailer regards it as a wake-up call that all retailers need to make it part of their overall investment strategy. “It should be like the third shift in retail or being open on holidays. It is almost never profitable, but you need to do it to maintain your presence.”
For those who are still playing catchup on diversifying the shipping options they offer, the question around implementing a same-day delivery initiative shouldn’t be if, but when and how.
Proactive businesses seeking a smooth transition to same-day delivery can use the following three steps as a guideline:
1. Develop an Omni-Channel Approach
Today, most retailers manage their e-commerce businesses entirely separately from their retail stores. Customer bases are treated as distinct, profits and losses (P&Ls) never cross, and prices frequently differ. Same-day delivery requires planning and coordination across these boundaries. Prices must be aligned and centrally maintained, loyalty information shared across channels, goals set and shared across the various arms of the business, and incentives consistent throughout.
A true omni-channel approach also requires real-time inventory knowledge across the enterprise. Many retailers still operate in silos that make it painful to correlate sales of products that are purchased via one channel and shipped via another. In order to realize the opportunities inherent in the omni-channel retail model, companies must upgrade their inventory systems to enable centralized visibility across the enterprise, take very frequent inventory counts, increase safety stock levels, and integrate their point-of-sale (POS), inventory and e-commerce ordering systems so they know exactly which products they have in real time.
2. Create a Network of Local Delivery Companies
Neither UPS nor FedEx are optimized for a same-day store pickup to customer delivery service. The local delivery/courier industry, however, provided time-sensitive service for nearly 100 years to companies such as Grainger. Unfortunately, the industry is also highly fragmented, with more than 7,000 local carriers in North America alone. This leaves retailers responsible for vetting myriad carriers according to reputation, driver hiring and training, technology, and long-term stability. Then, they must juggle those relationships on an ongoing basis to ensure consistency of quality and a positive customer experience.
3. Utilize Technology to Ensure Quality
Customers see the local carrier as an extension of your brand, and therefore, blame your brand for a poor delivery experience. On the upside, however, offering quality same-day delivery can be a real boon for your brand and increase customer satisfaction significantly. The key is to maintain consistent quality across all of the couriers with whom you work, which can prove challenging when the local delivery industry has a historical reputation for poor quality.
Retailers need tools to: identify quality issues before they impact the customer; collaborate across all levels of their enterprise, and with local carriers, on issues that arise; and diagnose the root causes of issues. This is the only way to drive continuous improvement, and ensure standardized service levels and quality across your network. Given these requirements, transportation management systems (TMS) alone simply don’t cut it. Ensuring quality requires your information technology (IT) team to tightly integrate your TMS, customer relationship management (CRM) and business intelligence (BI) applications, and fuel it all with real-time package-level data to closely monitor and manage your carrier network down to the level of each individual delivery.
Offering same-day delivery requires a good deal of investment and a shift in your organization’s mindset. However, with the right technology, partners and processes, it is possible for businesses of all sizes to utilize same-day delivery to improve the customer experience and maintain competitiveness. The key is to begin preparing now before same-day delivery shifts from a competitive differentiator to a widespread customer expectation.
Rob Howard is the founder and CEO of Grand Junction Inc.