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It's all in the Delivery

 

Hazel 4D looks at the latest strategies e-retailers are employing to meet the demands of the ‘need it yesterday’ group of customers.

Online customers are demanding. They expect their items to be in stock, an easy ordering and payment process, same-day delivery, a choice of timed slots or “click and collect.” Once they’ve placed the order, there’s the instant text confirmation, security confidence, reliable order tracking, fulfilment of delivery promises and effective customer service in the event of a problem.

With the annual value of goods bought over the internet expected to exceed $3.5 trillion by 2020*, the pressures on internet retailers are increasing. They now face competition not only from high-street brands, who benefit from bricks and mortar shops that play a key role in their online logistics, but from an increasing number of nimble and reactive e-commerce start-ups and apps.

Unsurprisingly, Amazon is working hard to stay ahead of the pack. The online giant has been piloting ‘Prime Now’. Launched in London in June 2015 it has now just been extended to Leeds as well as four other northern cities. You can choose a two-hour window from anytime between 8am and midnight on any day of the week and Amazon will ship it for free. It doesn't offer Amazon's full stock, but 15,000 items. These span everything from food and drink to gadgets and toys. One downside - you'll have to be a member of Amazon Prime – which costs £79 a year. But the additional advantage: if you want delivery within the hour you can pay a £6.99 delivery charge and get your goods straight away.

Meanwhile, Argos’ Fast Track service offers same-day delivery of certain small items, if ordered by 6pm for a cost of £3.95. For certain bigger items, their next day service will deliver for a cost of £8.95.

Huge retailers like those above have built their empires on small networks of massive warehouses in strategic locations and supported by large fleets of delivery trucks, but honouring that same-day delivery promise is not necessarily about the big things. As the Uber taxi app shows, with its networked pool of drivers who can respond and ‘bid’ for a job at the drop of a hat, it’s all about the “last mile”.

Shutl, a same-day online delivery service, bought by Ebay in 2013, has partnerships with retailers including Hotel Chocolat, River Island, Maplin, MedExpress, Jewson and Richer Sounds and helps retailers deliver things such as a posh chocolate fix within 90 minutes, from £5.95. Shutl matches a delivery requirement to the optimum driver in real-time. Shutl calls it “rocket science”, but it’s as simple as calling a taxi for your flowers or your furniture.

Retailers including Next Directory, ASOS, John Lewis, Tesco and Debenhams honour their next-day delivery promises through contracts with Hermes, a German-owned delivery specialist. In the UK, a 10,000-strong network of individual car-owning “lifestyle couriers” receive goods at their homes and deliver to the customer locally.

Despite advances like these, emerging smaller and more nimble outfits are further increasing the pressure on e-retailers. Uber spin-off UberRUSH is edging into the courier market in key US cities like New York, Chicago and San Francisco by capitalising on Uber’s network of drivers and, instead of getting them to bid for the carriage of people, using them for the almost instantaneous delivery of goods, from takeaways and groceries to flowers and clothes.

Emanating from Norway and now operating in the UK, peer-to-peer delivery service Nimber uses algorithms to match shipment requirements with an existing real-time delivery option. What began in the same vein as Airbnb has grown to take a significant slice of the Norwegian market and enables smaller enterprises to plug their logistics gap by making use of a delivery driver already “going their way”.

Widespread application of delivery drones and autonomous vehicles is still some years off.  Until then, it’s not a case of reinventing the wheel, but how we use them.

 

*eMarketer

 

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