The Effects of On-Demand & Retail Delivery

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How On-Demand Delivery and Retail Are Changing the Industry

The era of e-commerce has encouraged the development of online shopping behaviors and expectations from consumers that must be met by retailers to maintain and develop sales opportunities. Retail e-commerce sales worldwide are projected to increase by roughly 50% between 2018 - 2023; with projected e-retail revenues growing to $6.54 trillion by 2022. Regardless of a business’s status as brick-and-mortar, small business, or a large-scale merchant, online retailers may need to adapt to the evolving demands of the e-marketplace, as it may determine success in online sales.

What Is Retail Delivery?

Retail delivery began as a premium service of convenience by giving the consumer the choice to purchase products and have them delivered directly to a chosen address. This type of service offers convenience to the consumer by eliminating the need to travel or take time to go to a physical store when they need a product. However, getting products delivered changes the way that businesses can offer customer service and customer satisfaction.

Full-service retail often benchmarks success by winning customer satisfaction through customer-friendly and qualified employees. Self-service retail offers the chance for consumers to autonomously locate goods, carry out a transaction, and bag their products independently and at their leisure via brick-and-mortar stores. No-service or online retailers rely heavily on the navigation of websites, the performance of the transactions, and the deliveries of their products as important attributes of shopping experiences.

With the projected increase in e-commerce sales and no human service transactions, the delivery of the product must offer more than just convenience. Retailers with the ability to track assets and ensure quality delivery services may increase the chance to connect to consumers by providing another layer of customer service through successful, fast, efficient, and/or easy delivery.

Advantages of Retail Delivery

Retailers and manufacturers that use services to manage their products efficiently with automation and provide delivery through a retail store may have advantages to both consumers and themselves. These advantages may include:

  • Customer Loyalty. Retailers will increase consumer trust in their brand if they track assets and manage inventory in a way that delivers products safely and quickly.
  • Extended Consumer Base. Customers do not have to be within geographic range to a brick-and-mortar store to purchase a product, offering a broader scope of potential consumers.
  • Convenience. Retailers that utilize software to manage inventory digitally can organize deliveries and purchases from consumers who order online, with no need to travel to a brick-and-mortar establishment.

What Is On-Demand Delivery?

Consumer expectations of online retail include the importance of fast delivery, which was found to be important to 39% of online shoppers who participated in a survey. On-demand delivery platforms offer express delivery services that allow customers to select when and where their order should be delivered. These platforms leverage part-time independent contractors and gig workers who bring products to customers almost instantly after they have been ordered, or at a specifically designated time and destination.

Many consumers are gravitating toward retailers that offer on-demand services for the convenience and ability to control delivery. A Rock Research study estimates the growth of the on-demand economy to reach 93 million consumers in the U.S. by 2022. The same study of on-demand consumers revealed that:

  • 18% live in an inner-city
  • 45% had four-year college degrees or higher
  • 47% report an annual income of at least $75,000
  • 54% live in a suburb
  • 55% were between the ages of 25 and 44
  • 59% were male
  • 68% report a household income of at least $50,000

While the on-demand economy primarily caters to the younger, more affluent, and highly educated, there is considerable room to grow due to its innovative nature.

Advantages of On-Demand Delivery

On-demand delivery offers the opportunity for businesses to reach new markets by meeting the needs of the consumer. Benefits to both businesses and consumers may include:

  • Fast and Competitive Purchases. On-demand offers customers the chance to order products quickly, giving businesses the opportunity to fulfill customer needs.
  • Lower Service Costs. Customers can choose delivery options that suit their budget. Businesses can lower delivery costs by using on-demand independent contractors.
  • Convenience. On-demand applications often take care of tracking, payment, and delivery, making transactions and delivery easy for both business and consumer.
  • Expanding Customer Bases. On-demand delivery offers the opportunity to reach new consumers.

How Is Online Shopping Affecting Fulfillment at Retail Stores?

Businesses are striving to compete in the era of e-commerce by curating more experiences and incentives for customers to continue shopping at brick-and-mortar locations. This includes increasing or championing store-based services that cannot be adapted online, such as customer service and highly knowledgeable employees. There are also ways to incorporate a digital experience with a physical location, such as a buy-now-pick-up option, electronic coupons and savings through apps, and electronic guidance through stores. Some businesses may adapt through on-demand delivery, as well as partnering with and partaking in services that complete deliveries.

Small Businesses

Small businesses may not have the power of large supply chains or huge quantities of products to compete with larger companies, but there are opportunities to remain competitive in online spaces, as well as to make in-store shopping more compelling. Small business owners may choose to take action by offering a free delivery service to remain competitive, for example. Etsy CEO Josh Silverman asked small business retailers on Etsy to consider changing prices on products to incorporate free shipping, stating that “we know that shoppers on Etsy are 20% more likely to complete their purchase when the item is marked as shipping for free.”

There are warehouse and operating integrations that can be used by small businesses to utilize pre-existing markets and platforms. Small businesses may also consider transitioning from in-house to outsourced fulfillment of products bought through their e-commerce storefronts.

Brick-and-Mortar Businesses

Brick-and-mortar businesses are also beginning to change due to the Amazon effect and may need to consider new tactics regarding marketing, customer service, and competing in an e-commerce dominant economy. Traditional mass merchants that have historically relied on brick-and-mortar storefronts may be able to gain a competitive e-commerce edge with new initiatives and options, such as in-store pickup, same-day fulfillment, and on-demand delivery.

The Target Corporation — a major retailer with a strong brick-and-mortar presence — has made investments in remaining brick-and-mortar stores. Target Corporation is investing in updates to the stores, and maneuvering operations to meet online demand. CEO Brian Cornell discussed 2019 first-quarter earnings, stating that they saw “a significant reduction in expenses… 40%” by moving fulfillment from distribution centers to storefronts, and a “90% reduction in cost” with same-day fulfillment, such as order pickup and drive-up. These changes have come at the cost of investing in payroll in the backroom of stores to manage inventory, as well as reinvestment in the customer-service environment on the sales floor.

Retail merchants may not have to give up their storefront presence to remain competitive in the era of e-commerce, but may find value in updating their manufacturing and inventory management software. Salespeople, warehouse workers, and other decision-makers can manage digital inventory data software anywhere as long as there is Wi-Fi access, making it easier to update backroom and storefront operations.

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