Note: Today’s post is part of our ‘Editor’s Picks’ series where we highlight recent posts from our sponsors that provide supply chain insights and advice. This article is by Wayne Snyder of Blue Yonder and examines the intricacies of the ever-growing same-day delivery market.
The same-day delivery market is expected to double over the next three years. According to a survey by Gatepoint Research, 40% of retailers make this one of their priorities for 2022. And according to Bringg Barometer 2022: State of Retail Delivery and Fulfillment, 99% of retailers aim to offer this service within three years. While we see growing customer demand for fast delivery, as evidenced by the explosion of quick-delivery grocers and ties to Uber Eats and DoorDash, delivering cost-effectively remains a challenge. For many retailers, the focus has been on the last mile, but now the focus should be on the first leg.
First step: the right inventory in the right place
In order to meet customer needs, retailers need to better understand their customers’ expectations. To provide this service, inventory must be close to the customer, which is why stores are quickly becoming a key part of the digital experience. But which commodity should be where? For many retailers, store planning remains store-focused, but the impact of the web must now be considered. How should stores be laid out to support online purchase, in-store pickup that requires efficient in-store pickup? Are there any items that need to be kept in the back room for easy collection? What assortment is needed for the omnichannel shopper?
As the distribution network becomes more complex, the key is smart demand forecasting capabilities that understand the different buyer journeys. What a customer wanted to buy in one place but had to travel elsewhere to get it becomes important to understand. Historically, demand and supply were aligned, but in the complex world of omni-execution, different actions are needed to ensure the right products are located in the best place to maximize inventory, reduce risk and improve the customer experience.
Second step: improve the customer experience
For many years, the consumer started their buying journey through one channel and ended it through another. Both in-store and online experiences should be seamless. For the past few years, shoppers have expected to see item availability before visiting a store, which has taken on even greater importance during the COVID-19 pandemic. However, most websites still don’t make it easy for customers to see stock levels and custom delivery options. while they shop. It is a must, not only for the customer but also for the retailer. Rather than showing that items are out of stock, you can easily notify a customer of a nearby store that has availability. Rather than making broad delivery promises, you can display exact delivery times tailored to that shopper, improving both conversion and satisfaction.
According to Blue Yonder’s 2022 Consumer Sustainability Survey, nearly half (44%) of consumers said their interest in shopping has increased in a sustainable way since the start of the pandemic. This can include keeping inventory closer to the customer to reduce emissions or offering green delivery options to consolidate orders in the most efficient way. In this way, shopping online can provide much more sustainable options than visiting a mall.
Third step: flexible distribution network
The distributed network of the future is a mix of warehouses, micro-execution sites, dark stores, and extensive use of store footprint. The inventory will be held by third parties, sold on marketplaces or delivered directly. The need is to respond close to the customer with the flexibility to orchestrate by order. We are already seeing growth in smaller footprints, highly automated micro-distribution centers and the use of robotics, cobotics, smart storage and autonomous vehicles. Although fast delivery is growing, not all items are needed immediately, so retailers need to ensure they can deliver with the right combination of speed, cost and convenience.
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