E-retailers exploring same day delivery
You ordered a product online and it gets delivered to you by end of day. Surprised!! But you would simply say WOW!!! We as consumers would feel delighted, lot more excited and confident about e-shopping.
Today e-retailers are wooing their customers not only with discounted pricing, promotions and multiple offers on their vast assortment of product but also with same day delivery. They are coming up with innovative offers which targets various age groups, flexible payment options and especially deals designed for women to boost sales. With these lucrative offers comes the challenge for delivery. Normally carriers would provide next day delivery or take even more time based on pin code and serviceable area. This is due to traditional supply chain model for e-retailers and minimum number of hours required by carriers to delivery across or within geographical area.
Traditionally supply chain model for e-retailers has been to stock inventory at downstream i.e. Distribution Centers (DC). The DC becomes the single source of supply for carriers to serve certain geographic area for direct customer delivery. It helps e-retailers -
· To have centralized inventory visibility
· To Source products at only DC's from various geographical area
· To handle and maintain the products well
· To provide value added services like gift wrapping, special packaging, and bundling.
· Ease of product tracking for orders picked by multiple carriers.
This models the backbone of supply chain for e-retailers. In few cases there are direct delivery from suppliers but the percentage is very less. Now with this model it would be difficult to achieve same day delivery as the products are far from delivery destination.
The KEY to have same day delivery or closer to it lies in having the products stored near to potential delivery destination. It would help in faster deliveries as soon as the order is placed. Effective collaboration would be required with local suppliers to keep optimum supply at source locations. They would be required to co-ordinate closely with carriers for same day delivery. Retailers like Walmart, who have physical presence are feeding the inventory from stores to fulfill its online orders. Retailers like Google Shopping are tying up with local retailers in the area for same day delivery.
Let us figure out the challenges for e-retailers in this model if the supplies has to be maintained by local supplier.
· No centralized inventory visibility
· Build a more efficient and resilient supply chain
· Need to maintain adequate availability of stock upstream i.e. local suppliers
· Set up of Order communicating channel and delivery information capture with local suppliers
· Extend Information flow and capture in case of supply from own stores
· Seamless information flow between e-retailer, local supplier, call center (if any) and carriers
Robust forecasting of demand at locations should be done by e-retailers to avoid stock out like situation during normal, seasonal and festive season. The forecast should be shared with local suppliers to fill up their stocks and be prepared for any rush of delivery. Carriers can be intimated about surge in demand in advance so that they can plan out better.
Same day delivery would definitely bring in customer delight and further motivate them to go for online shopping. Once e-retailers comes out with ways and means to overcome the challenges, I think that same day delivery will become more of possibility. Let me know your opinion and other ways how e-retailers can get closer to same day delivery?
