The past 18 months has been a headline-making year for same day delivery. The underlying logistics of parcel delivery has played an important role in everything from Amazon’s acquisition of Whole Foods to Target’s purchase of Shipt. Billions of dollars are being invested in building out a superior customer-focused service—from online to in-store to direct to consumers.
As retailers continue to seek ways to provide the same day delivery option that 80% of consumers expect according to Temando, we can rest assured that 2018 will be another momentous year for expedited delivery. We’ve taken five and a half years of delivery experience to update you on the latest trends that you should know:
1. Rx goes same day
The aisles of the grocery store are being disrupted. In the past few years, we’ve seen multi-billion dollar industries go through rapid change as they adopt online and direct to consumer strategies enabled by same day delivery. Saucy and Drizly have offered mobile liquor delivery, Chewy and Petsmart have changed the way people order pet food, and consumers are quickly becoming accustomed to this level of convenience.
Next in line for same day delivery’s disruption looks to be pharmaceuticals—an industry that experts have long said is prime for innovation. We recently released Deliv Rx to help local and national pharmacies offer their products with more conveniently delivery to their customers.
Despite the best efforts of companies like CVS Caremark and Express Scripts offering mail order prescriptions, 90% of the 4 billion prescriptions made each year are still fulfilled in-store. The fact that the ill and the elderly have to leave their homes to get the prescriptions they need is an archaic process, and one that looks to change quickly in the coming months.
Amazon, the typical catalyst in industry disruption, has already begun laying the groundwork of moving into pharmaceuticals. This past October, the Bezos-led retailer purchased wholesaler licenses in a number of states and reportedly discussed building a managerial team back in May. Amazon rolling out the selling and delivery of pharmaceuticals would light a fire under the incumbents in the space.
2. Secure, unattended in-home/office delivery comes of age
We’re well into the mass adoption of e-commerce. Online purchases have grown 125% in the past seven years, gen-xers are ordering more online than ever before, and consumer trust in internet retailers is at an all time high.
But there’s still a lot of room to grow.
The hundreds of thousands of online purchases have to be delivered to your homes and offices, and without the proper security measures in place, there is a certain amount of risk involved. A recent study found that one in five homeowners have been victim of package theft in the last 12 months and that theft increases 81% during the holidays.
The future of secure home delivery looks to make major strides in the coming months, with Walmart testing in-home, garage and even refrigerator delivery powered by a combination of smart lock company August Home and Deliv. Amazon has quickly followed suit with Amazon Key, an in-home delivery service where consumers can remotely unlock their doors and view the delivery via a live-streamed video on their mobile device.
3. CPG Brands make the most of last mile
Direct to consumer brands have been shaking up the CPG world—think of Dollar Shave club. CPG brands are now beginning to test direct to consumer strategies and owning the customer experience. Campbell’s, for instance, recently announced they’ll be testing locally-sourced soups delivered directly to consumers. We expect to see more such tests in as retailers begin to focus on efficiency and heightened customer experience.
The second piece of CPG brands’ use of last mile solutions is more efficient fulfilment. Currently, when retailers run out of an item or a particular SKU, there haven’t been efficient options to fulfill small orders. Shipping from warehouses has been done in large trucks — which is not efficient for smaller deliveries. Mobility startups have been developing the routing and logistics knowledge to make granular fulfillment more cost effective by carpooling deliveries for smaller items.
4.Grocery e-commerce explodes as grocers continue to test new online solutions
The traditional grocery industry has come under immense pressure in the past few months as grocers adopt to a quickly evolving customer experience. Amazon’s July acquisition of Whole Foods further fuels grocers’ search for e-commerce solutions.
Grocery chains have leaned on online marketplaces to ease their way into e-commerce, but they’re also testing owning the customer experience. Retailers creating a shopping experience that isn’t disintermediated by a marketplace like Amazon has been a common trend in other industries.
The grocery industry now seems to be moving in the same direction. In 2018, we’re expecting to see more grocers begin to test corralling their customers to their own websites, powering the delivery with alternative delivery solutions like Walmart’s recent same day delivery offering or Target’s acquisition of Shipt. Startups like mywebgrocer and Instacart have rolled out white-labelled products that have been adopted by the likes of Giant Eagle and Costco.
5. Warehousing up for disruption
With 80% of consumers expecting same day delivery as an option, retailers are in need of reworking their fulfillment process to deliver items faster. Fulfilling orders within hours requires retailers keep inventory closer to consumers, and new companies are emerging with creative warehousing solutions that allow for retailers to do just that.
The traditional 3-5 day shipping standard was based on the premise of sellers shipping thousands of items from a centralized warehouse. One warehouse could service hundreds or thousands of miles around it. But to help retailers deliver same day, disruptors are beginning to offer decentralized warehousing, letting retailers keep smaller allotments of inventory in dozens of markets.
Darkstore and Flexe allow the flexibility that retailers need to offer rapid delivery without investing in the 140+ fulfillment centers that it takes Amazon to offer same day shipping. Consumer demand for same day delivery will bring a rise in retailer demand for local inventory, a recipe for an upending of traditional warehouses.
Overall, the importance of same day delivery and efficient logistics will only increase as we continue to move towards a future of convenience and choice for consumers. From pharmaceuticals to on-demand groceries, the next year is sure to have all sorts of exciting developments in store for us all!