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Is Same Day Delivery Really Worth It?

As another Back to School season quickly approaches, and we continue to see more and more shopping being done online, the question of expedited and same day delivery is being brought up again. I have learned a few things over time that have made me realize that same day delivery is not the golden goose we originally thought. Here are a few reasons to reconsider same day delivery:

1. The concept of “free same day delivery” can be a misnomer. Delivery comes at a cost for all retailers, and same day delivery exponentially so. To combat this issue, retailers will typically build in at least a portion of the delivery cost into the goods. In the end, you may be paying as much or more for a product to arrive the same day that you didn’t need for a week.


2. Amazon has built a business by conditioning their consumers. 5 years ago, it seemed crazy to everyone to pay extra for even 2 day shipping. “Why would I pay extra for something that I am not in a rush to get?” With the creation of Amazon Prime and offering free membership for the first year, they were able to condition the consumer to begin using the expedited services. When the membership fee eventually kicked in, the average consumer was no longer comfortable with just ground shipping. A nominal yearly fee seemed more than reasonable for the amount saved on 2 day. What was not taken into account was the additional built-in fee to the cost of the product (Consumer Watchdog study of over 4,000 items on Amazon showed that more than 40% of referenced prices listed on items were higher than any competitor price). As a consumer, it has become more important to ask how soon we really need something, and is this truly the best price I can pay.


3. With the trickle down effect of offering same day delivery, we have seen the extinction of everything from mom and pop hardware stores to former market leaders like Sears and Kmart. In many cases, the idea of free shipping and the offer of same day delivery was not feasible for their supply chain, and a major reason for their downfall. The next time you place a same day delivery order for toilet paper – the #1 product ordered for same day delivery – ask yourself if it would make more sense to walk to the corner store to pick it up. It will more than likely be quicker and cheaper than ordering online. It’s a small way we can all support the local economy and still get "same day" service.

 

So, what's next?

As the cost of shipping continues to rise, there are changes in the environment occurring. Retailers are taking more advantage of their built-in network. The concept of micro-fulfillment centers within retail stores is becoming more popular to decrease the cost of local and same day shipping. Even behemoths like Walmart see micro-fulfillment centers within their stores as a way to combat the growing physical presence of Amazon. The importance of 3rd party fulfillment partners will continue to be an important avenue for the smaller retailers trying to compete with Amazon. 3PL’s can offer smaller retailers the infrastructure and capabilities to provide competitive expedited and same day shipping that they wouldn’t have on their own.

Technology will also have a strong presence in the future of same day shipping. The most common evolution in this space has been drone delivery. Of all companies, the first drone delivery was actually Domino’s Pizza in November of 2016. While there is still a long way to go before we can expect to see drone delivery as a normal part of life, testing has already begun in controlled areas. In addition to research on drone capabilities, work is being completed to regulate flight patterns and FAA delivery rules. With so many aspects coming to a head, there is a very good possibility that drone deliveries could be available to you as soon as 2020. Amazon continues to push further towards Unmanned Ariel Vehicles (UAV) and their recently patented “flying warehouse.” With this, they expect to eventually offer all deliveries within 30 minutes to consumers. While this seems like a pie-in-the-sky concept, it is not as far off as most realize.

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As the delivery space for retailers continues to evolve, it is hard to predict where things will go from here. One thing that is certain is that consumers have to educate themselves on what cost is actually going into their same day delivery. It is not as simple as $95/year fee or discounted shipping cost on an order. Before your next same day delivery order, ask yourself these questions:

 

  • Have I checked to see if I can get this product locally, or even within walking distance?
  • Is this truly a competitive price or can I get it cheaper somewhere else online or in a store?
  • What additional costs am I not taking into account? How many orders am I really making per year that uses this membership fee? Do I have to take time off of work to be home during the delivery window?
  • What actual benefits am I getting from receiving my order today?
  • As the industry continues to evolve, will I be willing to pay more for same day service in the future? If not, then maybe I should look into other options.

 

Billions of dollars are being invested in getting packages to our doorsteps as fast as possible. That is also billions of additional dollars that could be spent towards curing cancer, solving the hunger crises, improving the environment, and a myriad of other problems that face current and future generations. It is something to think about before you place your next same day delivery order for your Back to School supplies.

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