Same-day delivery: has the e-commerce market arrived in India?

same_day_deliveryThere is no doubt that the same-day delivery has changed the e-commerce retail in India. With Amazon, Flipkart, Snapdeal, Jabong or Myntra’s same-day delivery, the battle just got bigger, and the clock is ticking on traditional retailers who’ll need new ways to lure customers.

In a competitive retail space, e-retailers that transform the shopping experience to hit on convenience, economics, exclusivity and overall experience, will win over nearly every type of consumer. Speed of ordering and delivery is what will prompt consumer consideration. Same-day shipping services are changing consumer behaviour! In a market where the customer loyalty is a problem, it will help to build that loyalty, enhance brand awareness and keep up with the competition.

Key pain points

E-retailers, which propose that solution has the stamina and budget to give it a good run, there are a lot of moving parts. The distribution strategy needs to consider a range of questions: which product categories are most sensitive to delivery speed? How do customers’ needs change during the peak holiday season? Are time-definite delivery windows more valuable to the customers than overall speed?

The logistics required for making same-day delivery a reality are daunting. Supply chain, delivery, customer support, advanced e-commerce software and warehouse facilities are all crucial to making the new tactic a reality.

For the e-commerce retail, the effort doesn’t come without its risks though, which primarily revolve around execution. Same-day delivery requires a new level of inventory management and coordination among fulfilment centers.

Same-day delivery is an expensive offering, and the only way to make it cost-effective is to attach the promise to small, easily-transportable items that carry high margins.

Same-day delivery is only possible if businesses, no matter their size, learn how to leverage their delivery costs. Creating a low-cost model requires working with delivery companies and using technology to maximize efficiency.

Challenges

Execution of this strategy requires e-retailers to take a cross functional approach that involves thoughtful planning, IT investments and close ties with transportation partners.

Enhance real-time inventory management: inventory systems must provide transparency into where every SKU is located.

Optimize fulfilment systems: fulfilment systems are needed that can immediately determine which distribution center can satisfy an order. This decision requires balancing factors such as proximity to the customer, current inventory levels and staff capacity for selecting the ordered items and packing them.

Create a flexible workforce: Staff need training to use the retailers’ order-taking technology and must learn how to locate, pack and label items for shipment.

Develop robust logistics partnerships: it’s critical to select a transportation partner, or partners, capable of doing the delivery the same-day.

Send a strong marketing message: a large-scale marketing campaign is important in helping e-retailers spread the word about the same-day delivery offering and in articulating the benefits of ordering online.

Solutions

To make it a sustainable business strategy and put down the costs, the key point is to invest in robotics and technology. Take the Amazon’s model in the US. In March 2012, Amazon purchased Kiva Systems, a specialized maker of robots that services warehouses. We can already imagine Amazon’s warehouses: robots going from bin to bin picking out and picking up products to the shipping department. This mechanic should bring down Amazon’s cost of shipping in a noticeable way and speed the shipping, assuming that the robots can move along faster than a person.

By using automation in e-retailers’ fulfilment centers, you can improve your productivity by bringing the products directly to employees to pick, pack and stow.

However, a question remains open: “Is this really something people want?” The rush toward same-day delivery might be less of a great business idea than a by-product of furious competition by wealthy internet companies! Indeed, there is something consumers consistently prefer over fast shipping: free shipping.

Moreover, most consumers don’t necessary need same-day delivery. They are getting home from work, going online and placing an order. But they don’t want the item to arrive while they are making dinner or putting their kids to bed, let alone have it sit on their doorstep overnight.

The “I want it today” could be one of the greatest strategy in the market to show to the world that the e-commerce market in India is at the same level as the others, or the worst strategy which will cost a lot to e-retailers in a market where the profitability is already difficult to reach.

Guest Author:

David Abikzir, Chairman, Nymex Consulting- India.