I have yet to take advantage of Amazon’s $5.99 expedited same-day delivery service, though I regularly take advantage of their standard two-day delivery with Prime and share it with several family members.
I wish I had taken advantage of the service as recently as last week as Amazon’s regular two-day service failed to deliver diapers for my son before we ran out. He ended up wearing his sister’s pink Doc McStuffins pull-ups for a short stint over the weekend. A fact I’m not proud to admit. He’s only 1-1/2 years old, so he’ll never remember it when he’s older!
Growth of Same-Day Delivery
Knowing what goes on behind the scenes in the logistics business from the time I submit my order online to the time it hits my doorstep, I can appreciate companies that are willing to put themselves out there in order to differentiate from the competition. Many of the companies offering same-day delivery, such as Amazon and eBay, are doing so despite losing money with these service offerings.
New entrants to the same-day market such as Google Shopping Express and Newegg will continue to be a growing trend and the Material Handling and Logistics US Roadmap released earlier this year predicts that by 2025, the typical order-to-ship processing times in e-commerce distribution centers should be sufficient to support same-day delivery of in-stock items.
Forrester Research predicts that by 2017, e-commerce retail will comprise roughly 10% of all retail sales. Their report cites two principle reasons for the growth in e-commerce:
- The increasing use of mobile devices resulting in consumers spending more time online
- Traditional retailers making greater investments in systems capable of handling the demands of e-commerce and omni channel operations.
Photo courtesy of: day2now.com
Use of Omni-Channel Fulfillment
Traditionally, retailers have separated distribution operations for the fulfillment of retail stores and e-commerce customers. In looking to the future, the challenge will be to implement distribution systems capable of handling the tough demands of omni-channel operations. Some of these challenges involved with improving the level of service with omni-channel fulfillment include:
- Location, Location, Location! And the good locations are never cheap. To meet the demand for tighter deliveries, companies must look to locate their distribution facilities near major metropolitan areas where real estate commands a premium. In order to remain competitive and turn a profit, maximizing the use of the vertical cube for greater storage capacity will become increasingly important.
- Compression of the Order Fulfillment Process. With traditional fulfillment allowing a longer cutoff window to meet service levels, same-day shipping requires the pick-pack-ship process to be handled not in hours but literally minutes. Adding to this complexity is the nature of an e-commerce order which typically is comprised of individual SKUs versus full cases, resulting in labor-intensive and more difficult picking operations.
- New and Emerging Technologies. With the fulfillment process timeline being compressed, companies will need to look at ways to reduce the time needed to fulfill an order and eliminate excess touch points and travel time in warehouse operations. New goods-to-person technologies such as shuttles, robotics, and automated sortation and retrieval systems (AS/RS) will become increasingly commonplace as companies manage these demanding service levels.
I’m excited to work with several companies who focus heavily on e-commerce sales, and I’m looking forward to being involved in the innovation that comes with meeting the demand that our future customers require. The advancements in technology that will result will most certainly change not only supply chains, but also our lives!