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NowCommerce - We want it fast!!!

Online shopping has continuously been gaining grounds. Today, this selling channel is competing head-on with the brick and mortar channel. In wake of this competition, e-tailers are continuously working towards reducing their fulfillment times by targeting ever elusive issues like 'Same day delivery (SDD)'. SDD popularly referred to as NowCommerce, implying online retailing of goods that can be delivered within hours of ordering.


NowCommerce would however not be successful with all products across the broad base of customers. E-tailers would have to identify exactly who needs to be targeted, as referred more aptly by retail consultants as "Affluent millennials".  The service should especially focus on high margin, low carrying cost commodities.


A quick pro & con analysis of the SDD model offers the below mentioned findings. The key advantages offered are improved customer service and high customer satisfaction. Items are prepositioned in local market thus, rendering logistical optimization. The provider will need to scale up with the ability to have delivery and pick-up done fast. Reverse logistical capabilities would also improve in tandem. All these capabilities would in turn imply reduction in warehousing costs.


This service will offer a strong and stark competitive advantage. It would also enhance brand image of the product offerings.
The critical disadvantages on the other hand are, in turn, the need to maintain capacity needed to fulfill SDD requirements (higher inventory needs).  The supplier to local DC shipping cost would be higher because of decreased volume.

Observing the features of SDD as it exists today:

Cost - Today, customers have to pay extra in order to lower the delivery cycle time. Same-day delivery might be a saving grace for the urgent one-off purchase - last-minute Christmas gift, for instance - but in broader terms, will consumers pay extra for the convenience? The result of the survey undertaken by BCG showed only 9% of the US consumers was ready to improve their online shopping experience.

Inventory Stock Up - In order to meet such aggressive targets w.r.t. fulfillment lead times, it is essential that e-tailers maintain local DCs strategically located. The multichannel providers would definitely be at advantage on this front.

Adoption of technology - This implies automation of the logistics and management to the maximum possible extent. E-tailers are investing heavily into machine intelligence technology & automated robotics.
State of art fulfillment systems need to be maintained. They should be quickly able to identify the best suited & fastest replenishment center for the raised order. Communication of online order to the delivery channels should be lightning quick.

Local partnerships - Sole e-tailers need to tie-up with local retailers to get their orders fulfilled. Many leading companies have identified niche markets, where customers would order by a certain time to get their purchase delivered the same day.   The local partners (transportation partners) can aid e-tailers in faster delivery times or it can aid them by provisioning local inventory.

Across channel co-ordination in case of multichannel retailers is quintessential. The need of the hour is for the management to remove any inventory silos which exist.

All these factors imply that retailers would definitely need to up their costs in order to compete on this differentiating ground. The need is to strike a balance between the costs incurred and profit margin. Many companies encountered a roadblock in the NowCommerce arena. With biggies entering the NowCommerce battlefield only time will tell whether this turns out to be a fad, or is here to stay !

 

 

References:

http://www.onlineeconomy.org/nowcommerce-mass-market-retails-race-to-same-day-delivery

https://www.bcgperspectives.com/consumer_and_retail

http://finance.yahoo.com/blogs/the-exchange/same-day-delivery-consumers-want-want-now-134709782.html

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