Next day everything: Making delivery faster and cheaper
The holy grail of the online retail business community is reliable, super-fast delivery. The reason for this is that delivery quality can make or break customer satisfaction and is perhaps the one element which has traditionally not been controlled by the retailers themselves in the process of ordering a product online.The carriers themselves cannot be controlled by the retailers and even the very biggest retailers are beholden to a limited amount of potential delivery agents. As the timely and secure delivery of a product is critical to the overall experience, e-commerce companies have traditionally had no control over a vital aspect of their business. However the future of e-commerce will require new ideas and methods of delivery and in 2018 we are beginning to see these elements emerge.
- For online retailers and e-commerce companies, the quality, reliability, security, flexibility and timely nature of the delivery service for their product is absolutely crucial to the business model.
- Since many of these retailers have no customer facing physical stores to support returns or allow collection, the delivery aspect has to be excellent. Customers want to be able to return items swiftly, they want next day delivery or better and for delivery to be as cheap and convenient as possible.Amazon spends billions more on shipping than it is able to bring back in charges and fees, and many brick-and-mortar retailers that have extensive online operations complain that e-commerce sales come with a much lower margin than in-store sales.
- Sales in store come with specified additional overheads, other than the cost of the store and staff which remains the same regardless of sales numbers, but each individual e-commerce sale needs to be picked, packed, and shipped, and retailers are at the mercy of the distributors. Currently, Amazon relies on third-party shipping partners like UPS and FedEx for most of its deliveries in the US, but having an in-house shipping network would theoretically cut down those expenses. It could feed delivery fees back into the business and it could rapidly develop new delivery methods that would save it money.
- A critical part of the problem for carriers is that they really do not want to lose any of their most lucrative parts of their business which is the inner city parcel business. As has been seen in the UK, Amazon would absorb its own most lucrative lines and only use carriers to deliver to awkward parts of the country which are more costly to deliver to. This would be highly damaging for companies such as FedEx and UPS.
Reasons to buy
- Learn about the new key players in the retail market and the direction it is headed
- See how new consumer behaviour is effecting the retail market
- Examine the new trends in online retail and delivery services
- See the direction of travel in bricks and mortar stores
- Examine the new technology that is being introduced to retail
- Why are so many bricks and mortar stores going bankrupt, yet online companies are moving into the highstreet?
- What new technology is coming to retail to enhance the shopping experience?
- Why is delivery so expensive and why are major players building their own fleets?
- What new opportunities are there in retail and what consumers could be better catered for?
- What are the demands of millennials and generation z doing to companies?
- Executive Summary
- Next day Everything, making delivery faster and cheaper
- Retailers care about delivery quality because their offering is poor without it
- Shipping costs are becoming a huge, expensive problem for all kinds of retailers
- Home delivery is currently failing as a concept, which is a major problem for retailers
- Amazon already has a significant delivery network in operation in some markets
- Amazon moving into the delivery business should worry transportation carriers
- Making efficiencies, speeding up the process and innovating is the name of the game in delivery for the next decade
- Autonomous delivery is the aim for all kinds of retailers but the current designs are not yet good enough
- Delivery Drones and Amazon Prime Air is a unique idea but it doesn’t yet beat a delivery driver
- Airborne delivery airships could provide an answer, but the technology is not there yet
- Further Reading
- Ask the analyst
- About MarketLine
- List of Figures
- Figure 1: Amazon shipping cost, shipping revenue and net shipping costs 2010-2016 $m 5
- Figure 2: Amazon, disparity between sales and shipping expenses growth 2010-2015 6
- Figure 3: Amazon UK delivery carrier breakdown from Amazon seller 2016 8
- Figure 4: Ocado Autonomous delivery test vehicle in the UK 9
- Figure 5: Nuro Robotic vehicle delivery 10
- Figure 6: Nuro Robotic vehicle delivery 11