Transport & Logistics

Minute by minute shipping: will online retail be taken over by the same-day delivery promise?

4 Oct 2013, by Test Test

Amazon tried it. Google is starting to do it. And most of us have dabbled in the offerings of the Iconic. But is the promise of same-day shipping a major decision factor for consumers? And is it cost-effective enough to justify the speed? We’ve taken a look at the latest same-day delivery promises and broken down the pros and cons. 

Google made headlines with the announcement of its new online shopping initiative that has been earmarked as a direct hit at Amazon. Google Shopping Express enables consumers to shop at their favourite online stores, and even if the order is placed after 4:30pm they can still receive their awaited goods by 9pm the same day.

google-shopping-express

Research conducted by PricewaterhouseCoopers last year, indicated that buyers are not only influenced by fast shipping options but it is the level of variety that gets them to commit to buying online.

“Improved search engine functionality, price comparison tools and sites, and a rising penetration of smartphones and tablet PCs, which allow any time/any location accessibility as well as barcode scanning, are all increasing pricing transparency. As in recent years, lower prices is the key driver for shopping online – 55% of online shoppers in Australia and 51% in New Zealand indicate that lower prices than in physical stores is the most important reason why they shop online.”

So are Australian retailers including the Iconic and WantItNow making the right choice when they promise to deliver on the same day?

In an article published in the Wall Street Journal, Greg Bensinger concluded that same-day delivery offers instant gratification.

“Driving [the] proliferation [of same-day delivery] is the desire to give consumers instant gratification with their online orders to drive sales, as well as giving customers another incentive to skip lines at their local retailer. Many of the companies are hoping to compete with Amazon, which has built a reputation for speedy, low-cost deliveries through its network of sprawling warehouses.”

same-day-delivery1

However, the downside to the service is the cost of delivery for one small package directly to one consumers home when the traditional retail model has been developed from bulk shipping of goods to a centralised warehouse and then to the store.

“There are high upfront costs to running a troop of couriers, for instance. EBay is paying couriers about $12.50 per hour, plus 55 cents per mile driven, and furnishes drivers with a parking card for when a lot is convenient. EBay plans to invest more into the service, including new uniforms and advertising on buses and, possibly, on couriers’ cars.”

P13M41_OnlineRetailLogistics_EMbanner As most people within the logistics industry know, it isn’t always possible to deliver to all areas. Especially regional areas where there is an infrastructure deficit and it would simply be impossible to get goods delivered promptly to remote areas. So it’s fair to say that the same-day delivery promise can only be made in metropolitan areas such as Sydney and Melbourne. Omnichannel retailers including Betts, Dan Murphy’s, Zu Shoes, Cue and JB Hi-Fi all have disclaimers on their sites stating that regional shipping either takes 5-7 business days, or they cannot guarantee shipping at all.

So we may not be any closer to answering the question, but one thing is for sure; online retail is only set to expand with the use of efficient delivery mechanisms and a rise in the use of mobile phones and tablet applications to purchase goods. Retailers need to consider if they prioritise accurate dispatches , or if speedy fulfillment will be their main selling point.

For information on issues like this, we’d love for you to join us at our inaugural Online Retail Logistics conference that will be held in November. To view the full agenda and register please follow this link. 

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