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The Future of eCommerce Delivery

future of ecommerce delivery

The Future of eCommerce Delivery

The boom in eCommerce has also been beneficial to delivery, but the explosion in online shopping has had some unforeseen effects on shipping. For instance, shipping is now one of the key differentiators between many online competitors. Witness Amazon Prime: it has made delivery a central tenet of its pitch to customers – well, that and Jeremy Clarkson. Delivery, is the name of the game.

But eCommerce is fast moving and online shoppers are even more rapid in their demands and wants – and this is shaping how delivery is moving. So, what are the key future trends that we are likely to see around eCommerce delivery in the coming 12 to 24 months and what do they mean for online retailers?

Same day delivery

Same day delivery combines the convenience of online retail with the immediacy of bricks and mortar – but can it be done cost effectively? Consumers have already sent strong signals to retailers that they would be willing to pay for faster delivery. Amazon Prime is built on this idea, but would they pay enough to justify the costs?
As far back as 2014, a study by Mckinsey found that 50% of shoppers were prepared to pay up to €7 on a €59 purchase to have it the same day. More recently, research firm Stuart found that 72% of shoppers would shop more and spend more if same day delivery was available.
Amazon, of course, offers same day to some Prime members in selected areas, as does Currys and, increasingly, many other retailers. But the majority still shy away because of cost and complexity.
The thirst is there – Stuart research found that a third of shoppers would choose a high street retailer that offered same-day delivery – but it could be that it isn’t as expensive as retailers think, not least because it drives more sales. ASOS introduced same day delivery last year and saw sale rise by 30%. Its ‘Try before you Buy’ service – where the customer can order up to five items and only pays for the ones that they don’t return within 30 days – also helped, as together these two delivery options make for a compelling and differentiating business case.
The key thing with same day delivery is that retailers have find the price point that makes it both economically viable for them and their carriers, but also that encourages just enough people to use it to make it viable. This can be done by restricting its application to orders in certain areas, certain items or before certain times to ensure that it is as easy to manage as possible.

Pick-up and pack and deliver

One way round the same-day shipping – which is really next day delivery – conundrum is to opt to use a growing number of pickup, pack and ship companies that sort of act like personal couriers but between retailers and customers. Growing in popularity in the US, these small companies will act like fulfilment companies but on a more personal level for smaller eCommerce providers and offer the ability to ship same day across the US.
It is likely that the idea could catch on elsewhere in Europe and the UK, offering smaller eCommerce retailers the ability to compete on shipping with the big boys.
It is also not inconceivable that these small companies could offer the ability to pick up and deliver same day within, say, a city or local area – offering personal courier like services but at scale. One to watch.

Drones and robots

While Dr Ludwig Hausmann, partner at McKinsey may stress that, by 2025, the classic courier model will still be the norm and that mass delivery by drones and droids was unlikely, robots are starting to make an impact and will continue to do so.
Consumers are certainly opening up to the idea. A survey by SOTI finds that 60% of shoppers would be very or somewhat comfortable with new shipping methods offered by retailers, including drones (29%), autonomous vehicles (28%) and in-home delivery methods (33%).
But mere curiosity value won’t be enough to drive the rise of the robots, it will come about thanks to good hard economics. According to Pitney Bowes the accelerating growth in the number of parcels being delivered will force couriers to invest in new technologies to work alongside existing processes to meet demand, especially in the last mile.
This has already started to happen in London, where Takeaway companies Just Eat and Pronto are taking delivery of some of the first robots to be delivered by Starship Technologies in a testing programme that will also cover cities in Germany and Switzerland.
The delivery robots are designed to deliver packages, groceries and food to consumers in a two to three mile radius within 30 minutes. They drive autonomously while being monitored by human operators in control centres. They’ve already been on the road in European and American cities and so have covered almost 5,000 miles, meeting more than 400,000 people without, the technology company says, a single accident.
Drones, meanwhile, struggle to get airborne, if you’ll pardon the pun. While the economics of using them may stack up – especially out in rural areas – and with consumers keen to see more convenient delivery methods with things like drones, the UK’s Civil Aviation Authority is making it hard for businesses – even Amazon! – to get their drone deliveries off the ground. Expect to see more robots on the ground than airborne deliveries any time soon.

Carrier choice

Increasingly, who handles the last mile of delivery – and is in many ways the public face of your company as they hand the goods to the consumer – is becoming an area that affects sales. Poor experience of carriers being late, throwing things over the fence, or other delivery nightmares is starting to make some consumers shy away from using a particular retailer and seek out others.
Lack of the right delivery options – not least same day delivery – is also forcing consumers to demand carrier choice. In fact, as the Stuart research finds, 79% of consumers would switch who they buy from online to get the delivery method they prefer.
This may seem a bit esoteric, but in such a competitive environment as eCommerce, these things matter. And that is why some forward-thinking retailers are looking at how to not only offer more choice in when things are delivered, but by whom.
Integrating data from third party carriers, or from carrier management solutions increasingly allows the retailer to offer a choice of delivery days, times and carriers – all priced accordingly.
It may seem counter-intuitive, but some people will pick a certain carrier even if it costs more as they have had a better experience with them in the past. Similarly, in many non-urban areas certain carriers use the same driver and shoppers come to know them and like them, again affecting choice of carrier.
As eCommerce gets ever-more competitive, this choice of carrier option will become more widespread as retailers increasingly look to differentiate themselves with better customer service.

Order management systems

Once the preserve of the biggest retailers, these IT systems that used to manage inventory and shipping have moved to the cloud, are available as Saas technology and are ever more affordable to smaller and smaller retailers.
They are also increasingly sophisticated, acting like a central nervous system in a retail business linking all the data from inventory, warehousing, stores and logistics to CRM, customer service and even marketing.
OMS offer a way to see where all your stock is, tie orders to stock that is near to the customer or that is with a carrier, and bring about huge efficiencies in terms of knowing exactly what you have, where it is and how to most efficiently get it to where it needs to be.
This in turn feeds what delivery options, dates and times you can offer, as well as making your customer service agents even more effective at telling people where their orders are – especially useful during the Black Friday and Christmas peaks, when many retailers are bombarded with calls about eCommerce items in transit.
OMS goes deeper than this though. Understanding at a granular level your stock position and its location can also help promote items that you have many of – or under promote ones that are selling too fast – truly controlling how people shop.
Add Artificial Intelligence (AI) into the equation, and OMS systems can learn about consumers’ behaviour and what that means for stock control. AI can also help OMS calculate the most efficient ways to move stock around, arrange deliveries and more. This, in many ways, is the future of delivery and eCommerce combined. Ecommerce is the brain, OMS the nervous system.

About Parcelhub – The bespoke parcel shipping solution.

Parcelhub is a multi-carrier shipping and eCommerce customer services solution. Flexible and scalable, it integrates seamlessly with order management systems, providing hundreds of multichannel retailers, global brands and wholesalers with one access point to many of the largest UK and international parcel carriers.
Multi-channel eCommerce platforms are easily integrated and dedicated proactive parcel management comes as standard.
courier software for magentoDistributing more than 6 million parcels on its own carrier contracts every year, Parcelhub’s free multi-carrier shipping software grants hundreds of national and global businesses access to ‘pooled volume’ discounted rates from its carefully selected range of carrier partners, including: Yodel, Hermes, DPD, UK Mail, DHL, Whistl, UPS, DX, Parcelforce, CollectPlus, SkyNet, ArrowXL, Interpost, Panther Logistics, Direct Link and Palletforce.

Paul Skeldon

Contributing Editor at Parcelhub - Part of the Whistl Group

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