Delivery anywhere: Why cost and speed are not enough for online orders
There was a time when pizza was the only product that could feasibly be delivered in 30 minutes or less.
Volvo will offer an in-car delivery service.
But then along came Amazon, which Michael Berelian, managing director at media and marketing services company Mindshare NA, noted has set the bar in terms of quick, free shipping while most other retailers lack the infrastructure to deliver within a similar time frame and remain profitable. What’s more, Amazon has even upped the stakes with delivery of certain items in one day – or even hours in some cases, he noted.
At the same time, Ben Sun, general partner at Primary Venture Partners and an investor in Jet.com, said the trend toward urbanization means same-day delivery is an even bigger opportunity for those willing to seize it. And that, in turn, means a potentially bright future for third party delivery services like Instacart, Google Shopping Express, Postmates and Deliv.
And while it’s more complicated than simply whatever retailer delivers fastest will quote-unquote win, there’s certainly a lot of innovation going on as retailers, couriers, start-ups and even brands attempt to strike the right balance of cost, speed and convenience to both level the playing field with Amazon, but also make consumers’ lives easier.
Here’s a look at how the delivery landscape is changing, enabling delivery anywhere – and even circumventing delivery people in some cases.
Shipping from store
For his part, Jason Goldberg, senior vice president of commerce at interactive agency Razorfish, pointed to “clever supply chain hacks” such as retailers like Best Buy and Target shipping goods from stores rather than fulfillment centers.
“They were able to ship items that were closer to the consumer and provide one- and two-day deliveries to more customers at a low price,” Goldberg said. “Both companies were able to get their delivery times below Amazon’s by leveraging their large networks of stores while keeping shipping costs under control.”
Further, other retailers are experimenting with services like Uber to help deliver packages instead of just people, Goldberg said.
And Phil Granof, CMO of mobile retail platform NewStore, noted Lyft is another potential player in this game.
“Customers do not need to be at their home or office to receive their goods: handoff is now possible anywhere – a coffee shop, for example, using the same borderless location ability and attitude that powers Uber,” Granof said.
Meanwhile, some retailers are experimenting with subscription services as a happy medium. Goldberg said this includes Dollar Shave Club, as well as Amazon Subscribe & Save, in which consumers subscribe to items and select delivery frequency.
But Berelian noted ShopRunner is another example of a membership service similar to Amazon Prime – and one that covers many retailers.
“This is a good example of retailers and brands tapping into a solution to keep up with the expectation of quick and free shipping,” he said. “Keeping up doesn't make you a market leader though — it simply allows you to compete. Many brick-and-click retailers are struggling to keep up and innovate in the space of delivery.”
But this is where it starts to get interesting.
Why wait for a delivery – or risk a missed delivery attempt – when you could simply pick up an order at an appointed location?
That’s the idea behind self-service options like Amazon Locker, which allow customers to choose a secure pickup location for their orders. According to Amazon, its Lockers are “available in a variety of locations throughout the U.S.” And, Seth Kakuske, product manager at Veriship, which builds software for shippers, said, Amazon is looking at expanding the service in Europe.
Walmart, too, says it is testing self-service lockers at ten locations in the Washington DC area.
And, Kakuske noted, even UPS has its own so-called Access Point Lockers.
And that is perhaps in part because fast delivery isn’t just about a good customer experience. There are also backend advantages, such as reducing overall delivery costs, Kakuske said.
“If the carrier can deliver your package to you the first time, then they don’t have to keep spending money on a courier’s time, truck costs and opportunity costs to re-attempt the same delivery,” he added.
But what if you didn’t have to go anywhere at all? In fact, what if your order just appeared in your car? As if it was left by magic package delivery elves?
That’s precisely what a number of car manufacturers and couriers are piloting in Europe.
DHL and Smart, for example, are partnering to test an in-car delivery program in several German cities later this year. The press release notes it is “a new and attractive service for a young, extremely online savvy target group” that seeks to “improve the quality of urban life."
Volvo, too, has teamed up with order delivery start-up urb-it for a service it says promises in-car delivery of online orders within two hours to customers in Stockholm. The trial will expand to other European cities this year and more than 200 cities worldwide by 2025, Volvo said. It is an expansion of an in-car delivery service Volvo launched on Black Friday last year.
“With our in-car delivery service, we effectively turn your car into a delivery location and assign a one-time digital key to the delivery person,” said Björn Annwall, senior vice president of marketing sales and service at Volvo Car Group, in a statement.
To be fair, Amazon tested a similar delivery service with Audi owners in Munich in 2015. An Amazon rep, however, was not available for further comment by deadline.
And while this doesn’t constitute magic package delivery elves per se, drones have plenty of their own allure.
Take Prime Air, for example. Amazon says this “future delivery system” will potentially deliver packages in 30 minutes or less – just like pizza delivery men and women of yore.
“Putting Prime Air into service will take some time, but we will deploy when we have the regulatory support needed to realize our vision,” Amazon says.
Other companies like Google and Walmart are also reportedly working on their own drone delivery schemes.
And drone delivery service Flirtey recently partnered with convenience store 7-Eleven on what it called the first-ever FAA-approved drone deliveries — of Slurpees, a chicken sandwich, donuts, coffee and candy.
According to Jake Rheude, director of business development and marketing for Red Stag Fulfillment, an order fulfillment company for heavy, large and/or valuable products, one big challenge with drones is developing an operating system that makes commercial sense and doesn’t break regulations for unmanned aerial vehicles.
Weight is another.
“Trucks are still much cheaper for large, heavy loads or items that have to be transported for over 50 miles,” he added.
And, in a similar vein, robots may also cut out the human delivery-/middleman and/or enhance efficiency.
Look at DHL, for example, which issued a robotics challenge, asking the public to “design the prototype of a self-driving delivery cart that can autonomously accompany our postmen and -women during last-mile delivery.”
“The value here is that couriers won’t have to carry as many packages and won’t have to make as many time-consuming trips back to the truck to get more packages once they’ve delivered the few that they can carry on their own,” Kakuske said.
He also pointed to self-driving delivery robot start-up Dispatch, which raised $2 million earlier this year and is reportedly building a fleet of autonomous delivery vehicles that can navigate sidewalks and bike paths and carry up to 100 pounds.
If you can’t beat ‘em, join ‘em
And, of course, while there is a lot of innovation going on in delivery, some retailers may ultimately find selling through Amazon is the most cost-effective method, said Andy Wong, partner at digital services firm Kurt Salmon Digital.
And/or they can just keep innovating.
“Once near-immediate delivery becomes ubiquitous, it will change the way we think of e-commerce. Right now e-commerce is a process – browse, choose, add to cart, check out, track shipment, etc.,” Wong said. “In the future, with combinations of things like Amazon’s Echo and same day delivery, the e-commerce purchase process from recognizing and need to having it fulfilled will continue to shorten and compress until it’s seamless. But, at that point, will we still even call it e-commerce?”