Thanks to e-commerce giants like Amazon, lightning-fast fulfillment has become the standard in much of the U.S. and Europe. Free or low-cost next day and same day delivery options have shifted the window of customer expectations, putting pressure on competitors to employ an efficient and cost-effective delivery system in order to stay relevant. Speedy turnaround is the expectation now — not just an add-on.
While e-commerce continues to thrive and companies pour investment into last-mile to keep up, the hidden environmental costs of rapid delivery are becoming more apparent. As more businesses, activists, and government oversight agencies examine the entire supply chain for carbon efficiency, last mile sustainability increasingly faces scrutiny.
Same-day delivery compresses the whole processing, packing, and fulfillment process into a twenty-four hour period (so long as the customer meets cut-off timeframe requirements). It’s no surprise that the speed and vigor of this fulfillment strategy presents a number of big challenges for companies big and small.
What challenges come with enabling same-day delivery?
- Meeting expectations. While most customers anticipate free shipping from ecommerce retailers, nearly half will pay extra for same-day. A quarter of consumers said they’d pay more to receive orders within one or two hours. That sets expectations and opportunity sky high, and creates a bigger impact when they aren’t met.
- Complex supply chain dynamics. Condensing delivery timelines from days or weeks down to hours leaves very little margin for error. To streamline ops and improve speed, many retailers employ a network of small localized fulfillment “hubs” that require sophisticated process and inventory management software systems to run.
- Maintaining a low price point. Lightning fast turnaround doesn’t come cheap. Costs may include hardware, software, and labor — specifically in-house last mile courier fleets — that far exceed traditional fulfillment. Retailers and shippers are employing a number of pricing strategies and caps on quantities shipped to maintain speed without driving shipping costs through the roof.
Efficiency in one place often comes at the expense of efficiency elsewhere, and many wonder if speed is creating waste and added pollution.
Next-day delivery allows customers to receive orders quicker than ‘standard’ delivery services – processing, packing and delivery all take place the day after the order has been received.
In many circles, the expectation is that next-day delivery is the new standard and should be offered free of charge. About half of customers surveyed say they’ll wait two days for orders, versus only about 25% who will wait longer.
What challenges come with enabling next-day delivery?
- Traditional fulfillment. Same-day delivery all but requires some form of internal last-mile management. But many companies will use a third party delivery or traditional mail courier to handle next day delivery, which adds partner businesses to the equation.
- Overhead costs. Many customers won’t pay extra for next-day shipping, which forces businesses to eat the cost of fulfillment in order to stay competitive.
- Fleet management. To keep costs down, last-mile needs to be extra efficient when it comes to route setting and planning.
Which delivery method is more sustainable?
|Same-day delivery||Next-day delivery|
At the moment, next-day delivery leaves more time to build efficiencies into the last-mile process, which allows retailers to bundle routes and manage environmental impact using advanced software. In time, same-day delivery could become a more sustainable solution as more last-mile firms adopt zero-emissions vehicles — but currently, there’s no contest.
What’s the verdict?
Customers value speed, but many also take carbon footprint into consideration as well. The business and investment community, led by the ESG movement, is also taking account of how individual retailers can limit the environmental impact of day-to-day operations.
Managing last-mile fulfillment has never been easy, but technology is paving the way to create more efficiency for retailers. A lot of firms focus on building their delivery infrastructure to compete with the big names like Amazon, Target, and Wayfarer (this is especially true in the emerging ecommerce market for furniture and large appliances). That leads to a lot of costly investment, not to mention added risk.
For companies seeking an edge in an increasingly competitive landscape, finding the right partnership is essential. Your company can build out an innovative tech stack with bespoke infrastructure, or you can get started today by partnering with a leading 3PL firm. Globecon has decades of experience handling drayage, freight forwarding, and portside warehousing for leading ecommerce companies. We use a state-of-the-art technology suite to ensure your customers get their goods — fast!