Same-day delivery: from fantasy to reality

As the appetite for online shopping continues to accelerate, same-day delivery has gone from a ‘nice to have’ to an essential capability for Australia’s leading retailers. Peter Jones, Managing Director and Founder of Prological Consulting discusses the unique challenges this presents and ways to make same-day delivery a reality.

Australia Post’s annual e-commerce report has confirmed that Australia’s insatiable appetite for online shopping is showing no signs of slowing down. The 2022 Inside Australian Online Shopping revealed that Australians spent $62.3 billion online last year, with more than 80 per cent of Australian households shopping online.

While 2021 smashed all previous records of e-commerce in Australia, Paul Graham, CEO at nation’s post and parcel network says this is set to double in the next five years – as we are yet to reach the same market penetration as our European counterparts.

The report revealed that the top selling categories in 2021 were department and variety stores, followed by fashion, home and garden stores with the fastest growing categories being athleisure, women’s fashion and footwear.

When it comes to same-day delivery in Australia, a nation-wide offering is never going to be viable. But for customers in Melbourne, Sydney and Brisbane – this is now a possibility, and as a result many retailers now find themselves faced with the challenge of developing this service capability.

What does same-day delivery look like?

Same-day delivery offers customers a quicker option and has historically often done when the delivered item is perishable or time-sensitive.

In the commercial world, same-day delivery has been around for a long time. Legal papers, time-sensitive information and critical medical supplies have been moving around our capital cities via couriers for years, and these usually run on a dollar per km model, much like a taxi service.

However, when you try and copy this model in the B2C world, the price point of individual items and objective urgency makes it very difficult to justify the cost to serve.

But with consumers placing more pressure on retailers, and online representing a growing share of the retail pie in Australia – organisations have had to up raise the bar in the pursuit of same-day delivery, and the reality is challenging.

While we’re never going to get away from the realities of an order being processed, prioritised, picked, packed and delivered in a 50-km radius of a distribution centre in a short time window, there are some processes that can be adapted to make this possible.

Many organisations will find that the best place to start is from your absolute cut-off time – and then work backwards. While in an ideal world you may make this as early as possible so you can deliver as late as possible, once you start delivering at 9pm – the proposition of same-day delivery is compromised as for many customers, there is little added benefit to receiving an item at 9pm on the same-day, compared with say mid-AM next day.

Prological has been working with a leading retailer who fulfils more than 50,000 order a day across a 21-hour processing period. Of those 50,000 only a very small proportion are same-day delivery – and most of these are in luxury womenswear. While this is a small percentage of their total order number – it’s an important service offering.

To offer same-day delivery at full-scale, this organisation would need a totally different process and system in place – but as this is a niche offering it’s become a reality for this leading online retailer.

Strong, robust and reliable order processing capabilities coupled with automation and an agile delivery method can really make the difference here.

Like this client, the companies who are doing this well are the ones who can distribute inventory from the same capital city as the order. When you have infrastructure and inventory in a particular location, same-day delivery does become a viable possibility and there is a growing need for retailers who operate in the luxury womenswear space to offer this service as well as other higher value categories

Why is it important to get it right?

While not every order will benefit from a same-day delivery service, from a brand perspective it can be very powerful. The customers who experience this premium offering, in a positive way will become ambassadors for your brand.

When your customer attends the event that they ordered the luxury fashion item for, they will be singing your praises and telling their peers about the great experience they had with same-day delivery, often resulting in the creation of a brand ambassador for life.

Same-day delivery will always be a niche service, but much like business-class on a plane it’s becoming increasingly important you let your customers know it’s an option they can have if and when required.