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The same-day dilemma

by Milkman

“Today’s consumers are not only savvy in shopping for the best price but are also opting for providers who can deliver goods and services where and when they want them”: says Philip McHugh, CEO of Barclaycard Business Solutions.

“Where and when”, in these days, almost always comes down to: today at my place.

The same-day craze has been all over the news and streets for some time now but still represents a wonderful dilemma:

- those who provide it say that the majority of shoppers want it (Mark Lerner, Vice President of Marketing at Bringg writes that a staggering 61% of consumers are willing to pay more for same-day delivery, but he doesn’t mention his source).

- those who don’t, quote totally different numbers. In the latest Bizrate survey made by Internet Retailer the percentage of buyers who found same-day delivery “important” went down 5 percentage points from 24% in 2013.

"Over the past 18 to 24 months Amazon has been pushing the bar for fast and cheap delivery", stated Daphne Carmeli, CEO of Deliv, to the Associated Press. "If you're in retail, you have to step up to the new bar."

It’s an interesting scenario: the most powerful player on the market is setting the rules of the game. It did so, apparently, because it can: almost nobody thought about same-day before Amazon started offering it. They created the demand and then supplied it.

warehouse-3

Same-day and on-demand deliveries require warehouses to be placed near the demographics its content is going to satisfy. This means expensive spaces in high density population areas. It needs also the implementation of a sub-catalogue because it’s impossible to have everything on hand for immediate shipping.

This kinda goes against the basics of logistics and e-Commerce: you have a small(ish) storage space, full of low-margin convenience goods, and yet you have to deal with the most expensive form of shipping. When sales time comes only giants can avoid tripping on their own feet (as Argos did this year on Black Friday) and maybe, only maybe, earn something.

And yet on demand has become a distinctive feature of primary importance for merchants. You simply have to have it. Be it an hyperlocal operation or a broader, more ambitious strategy.

It’s very important, though, to remember that same-day should just be a part of a wider range of options offered to the shopper.

Options are, in fact, the real need.

We asked 500 north-italian consumers:

“Deliveries for Online Shopping, what’s more important?"

Time-Defined is better than Same-Day

The survey was made using Google Consumer Surveys.

As you can see time options win over velocity by 60%. So we should be prepared for yet another revolution: the next bend on the road is called customization. Not simply “today” but “whenever”. That’s because shoppers, not trend-setters, are the real bosses.

#Our Vision

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