Competing in the Age of Instant Delivery
Much of the instant delivery attention is on startups spending heavily to acquire new customers, while grocery chains and big box retailers also compete for visibility in the space. The one thing they all have in common? Knowing that consumers desire convenience and want their online orders delivered within hours, if not minutes.
Serious challenges, however, stand between the click of a mouse and delivery to a door in 30 minutes. For companies to scale their operations for instant delivery—and turn a profit—success boils down to three key factors: efficient software, decentralized locations, and reliable labor for delivery.
1. Software Is the Solution. Efficient software allows organizations to have the level of control and oversight to handle the massive influx of order data.
The software must process that data precisely so that every item is picked and every order is delivered exactly as the customer has requested—crucial elements for traditional retailers competing in the rapid delivery space.
Today, most picking and order fulfillment in dark stores is done manually, so it is up to the software to process orders and provide pickers with correct order information as fast as possible. Prioritizing next day, same day, and urgent deliveries efficiently, without creating a backlog, is crucial to guaranteeing an instant delivery option.
2. Valuable Geography and Strategic Proximity. Next, consider physical location. We all know it’s easier to deliver products more quickly and efficiently if your location is closer to consumers. But micro-fulfillment centers are also becoming a popular option. These compact, automated facilities can enable a retailer to pick and process orders approximately 10 times faster than traditional manual, in-store methods.
Regardless of facility type, creating a network of decentralized locations is critical to competing in instant delivery. Still, trade-offs will be necessary to maximize speed. For example, consumers may not be able to choose from 30 brands of chips—instead, only the top 10 might be in stock at any one time, as they make up the majority of sales anyway.
Another necessary tradeoff comes when factoring in consumer goals. Brick-and-mortar retailers may be so focused on minimizing the time customers spend picking up or shopping for groceries, they drop the ball on customer service, and end up shorting some products from an order. If a retailer is unable to include several products in an order to meet a promised pickup time, they didn’t truly save the consumer time. Software is critical to manage these situations.
3. A Clean Last Mile. Last-mile delivery is key to profitability, and a clean last mile relies heavily on readily available labor—couriers must be ready to pick up completed orders. However, retailers are still working through the best way to staff couriers, whether with their own employees or by contracting a third party.
Retailers also must monitor supply and demand in the labor market to ensure instant delivery at peak times if this is the promise to the consumer—something that is only possible by coordinating with automation software.
Consequences of poor labor management in peak times include over-promising and under-performing on delivery, and over-working the employees tasked with fulfillment. Retailers need the ability to manage labor capacity and consumer expectations during the busiest times—one more great instance of where software can help differentiate.
By focusing on software, location, and last-mile delivery, retailers can better compete in the space. And as more companies enter the market, the next differentiator will be who can best scale these operations efficiently and quickly to meet growing demand.