If You're An e-Tailer And Not Delivering Same Day, Watch Out
Same day delivery of online ordering is the new supply chain standard.
8:30 AM. Sunday morning. My 8-year-old daughter brings her supersonic toothbrush to my wife and shows her that its hyperdrive isn’t working (or some other issue with the thing – it’s a toothbrush with more technology than my first car).
9:15 AM. My wife orders a replacement toothbrush.
7:00 PM. The same freakin’ Sunday. My daughter brushes her teeth with her brand new supersonic toothbrush. Did I mention that my wife ordered the thing that very same morning? Without leaving our home? Using the Internet? And that the same day delivery was a Sunday?
When I put Amazon on my Mount Rushmore of Supply Chain, it was because of everything they had accomplished to deliver to its customers overnight. Now, unless they come up with a way of delivering products before customers place orders, Amazon has taken optimized the supply chain of customer satisfaction as far as it can go.
Okay, they actually – sort of – deliver certain items before customers order them. My wife started a monthly “subscription” to one of her supplements. Instead of having to order the supplement every month, Amazon ships her what she wants, when she wants its. Optimized supply chain in action.
If you sell products online and you’re not delivering those products to your customers the same day they order them, watch out. Amazon is changing the e-Tailer game on the fly. And speaking of flying, they haven’t even launched their fleet of drones yet. So how does Amazon do it? And can you do what they’re doing?
Sure, you can. Here’s what it takes: 1) Inventory. You can’t deliver your customers what you don’t have. Whatever your website says you have for sale, you have to have it on hand and ready to ship. 2) A real-time, automated order processing system. The alternative to this would be a person answering the phones and taking orders every second of every day. But it’s more reasonable to get an order processing system to take orders at 1:30 in the morning. And then again during lunch. 3) Enough volume of business with a parcel delivery service (UPS or Fedex, for instance) to have them ready to pick up your order and deliver it to your customer the same freakin’ day.
4) Enough locations so that you can offer same day delivery in as many places as your customers are located.
Unless you’re an e-tailer that’s roughly the size of the Internet, Amazon is way, way ahead of you. Number 2 above is easy enough to acquire. Most e-commerce resources can set you up with a real-time, automated order processing system. This will guarantee you’ll get your orders to your warehouse within moments of your customer placing them. Good start. But…
Number 1 takes money. Can you reasonably afford to stock enough inventory to meet all of your customer requests, all the time – and have it ready to be picked and shipped the day the order comes in? One way that might make this possible is to limit what your website offers. Amazon doesn’t do this, in case you haven’t noticed.
But if you can manage your inventory so that you’re only stocking the handful of items that your website offers, you may have found a small-scale solution. This takes careful coordination between sales, marketing, webmasters and supply chain. Of course, in many small companies – that all might be the same person.
You can even find a way around number 4 on the list above. You might be able to offer same delivery in just one location. If your warehouse is in San Jose, California, you might be able to only offer same day delivery in the Silicon Valley. It’s not what Amazon’s doing, but it’s a manageable to get in the game.
But Amazon’s got number 3 on the list down. Here’s how down they’ve got it. They’ve negotiated their shipping rates to a point where they can absorb those costs. My wife hasn’t paid for Amazon shipping since the early 2000’s. They don’t need to make customers pay for shipping. Their same day shipping is free to Amazon Prime customers!
So, if you can pay for the inventory and systems and warehousing to make same day delivery happen – you can’t charge your customers for the service. It has to cost the same as your next fastest delivery – and if it isn’t free, then your customers might just get it from Amazon.
Of course, if you have a unique item that you decide not to allow Amazon to sell, you might have that market advantage. For now…
Amazon’s speeding the evolution of retail at quantum speed. They’re delivering what their customers want, when they want it – i.e. optimizing supply chain at a dizzying rate. And even if you figure out how to catch up to same day delivery, Amazon’s fleet of drones will end up changing the game again before we know it.