Stand and deliver: taking stock of same-day delivery
After years of incremental progress, the race towards universal same-day delivery is now well and truly on. Amazon has recently pledged to spend $800m cutting delivery times to one-day windows across a wider range of locations, while Target now offers same-day delivery for a flat fee of $9.99.
Meanwhile, Walmart has announced plans to expand same-day grocery delivery to 1,600 stores and grocery pickup to 3,100 stores by the end of 2019, extending its same-day delivery coverage to approximately 50% of the U.S. population.
But how important is same-day delivery to customers, really? And is this drive towards logistical efficiency likely to deliver ROI in terms of increased consumer spending? We explore the current state and predicted future of same-day delivery.
Old problems, new solutions
Dependable same-day delivery poses acute logistical problems for the ecommerce industry, demanding efficient, accurate order management at phenomenal speed and scale. The industry has been grappling with these problems for years – so what has changed to enable the recent surge in brands rolling out a same-day service?
While improved logistical infrastructure – including increased warehouse supply and transport links – has been a huge boon to same-day delivery initiatives, the advent of advanced digital solutions has also played its part.
For example, AI-enabled order management systems offer a way for ecommerce businesses to control product visibility and online delivery options according to stock and sales velocity – thus guaranteeing, in real time, their ability to fulfill on same-day promises.
Furthermore, the race towards ever-more-efficient delivery infrastructure has given rise to a new wave of technologically-minded start-ups geared to meet rising consumer demand. Target’s 2017 acquisition of Shipt has been directly responsible for its current $9.99 same-day delivery service. And other, more widely available services are upcoming: Seattle-based business Flexe, which operates an ecommerce-aimed marketplace for warehouse usage and order fulfillment, recently received a fresh investment injection of $43m, while peer-to-peer on-demand moving and delivery service Dolly has raised $7.5m.
What do retailers stand to gain from same-day delivery?
Same-day delivery is a huge driver of sales. Research from on-demand courier service firm Stuart shows that 72% of shoppers would purchase more online from their favourite brand if it offered delivery on the day, while 3 in 5 (62%) would pay a premium for the privilege. In fact, consumers would spend £168 more money yearly with their favourite high street retailers if they could be assured of same-day delivery – adding a potential £4.9bn in annual revenue to the UK ecommerce industry.
Does this mean that a same-day delivery option is now a necessity for all brands? Possibly not – yet. However, same-day delivery is already well on the way to becoming not just a luxury, but a mainstream customer preference.
A 2018 study from Stuart found that 2 in 5 consumers (38%) assume that high street retailers will offer same-day delivery. This effect is magnified in urban areas, with a 2018 survey by Metapack of over 3,500 consumers in the UK, US, France, Germany, Spain, the Netherlands and Canada revealing that 55% expect one-hour delivery in metropolitan areas, while 54% assume they can choose which carrier should deliver their online purchases.
Furthermore, research shows that consumers place huge importance on delivery options when deciding which sites to buy from. The Metapack survey found that over a third (36%) of UK shoppers would abandon an online shopping basket if faced with unsatisfactory delivery options, while 35% claim to have done so in the past. In fact, consumers directly compare delivery options between brands, with three in five (58%) saying that they would opt for a retailer with more delivery options over an alternative with fewer.
Into the future
As the once-daunting question of same-day delivery is finally answered, what new challenges and trends can we expect to affect online delivery? One trend already gathering pace is delivery-by-drone. Dr Ludvig Hausmann, a partner at McKinsey, has predicted that autonomous vehicle usage will be significant by 2030, thanks mainly to a 40% cost advantage.
This development will seemingly be welcomed by consumers, who are growing increasingly open to the idea of autonomous (e.g. drone-operated) delivery services. According to Metapack’s numbers, a quarter (24%) of customers would consider ordering products by drone – a growth of 5% over the previous two years. Research from mobile and device management provider SOTI supports these findings, showing that 60% of consumers would be comfortable with new shipping methods offered by retailers, including drones (29%), autonomous vehicles (28%) and in-home delivery methods (33%).
Another crucial consumer concern that is likely to affect delivery services in the coming years is environmental awareness. According to Metapack, over half (52%) of UK shoppers are already conscious of environmental impact when arranging product delivery, with a quarter saying that they were ‘very’ conscious. As this number increases, we can expect eco-friendly delivery options to become essential in maintaining the patronage of many consumers.
Finally, what does all this mean for content? Three-quarters of consumers expect all their delivery options to be displayed on product pages – and not just at checkout. So, whatever your brand’s delivery capabilities, make sure that your product page content reflects this in detail to optimise conversion rates.
More posts from the blog