Not too long ago, the great attraction of e-commerce was being able to shop whenever and wherever you wanted. Increasingly, however, it’s also about getting what you want in the shortest time possible.
“Fast and reliable delivery tops the list of customers’ expectations when it comes to e-commerce as many of them are looking for instant gratification,” says Cassie Mah, head of operations at online luxury fashion platform Reebonz. She adds, “Research shows that companies experience higher percentages of repeat purchases from customers who receive their orders fast.”
A prime example is e-commerce titan Amazon, which has set the bar high by offering same-day delivery in some markets. This has left medium-sized online retailers struggling to play catch-up and minimise the standard shipping window of five business days.
“Amazon kind of set the path for everyone… People just expect things faster,” says Heather Kaminetsky, vice-president of global marketing at luxury fashion e-tailer Net-a-Porter in an interview with The Wall Street Journal. More than half the company’s orders from the New York market are for same-day delivery, which comes at a fee of US$25 ($34) per order.
Gaining this competitive edge comes at a price. The biggest players are sinking billions into improving every step of their supply chains, from picking and packing products, to last-mile delivery (that final link in the logistics process, when the product is delivered to the customer). Here’s a look at the real-world, back-end efforts that companies are making to get that online order to you faster than ever.
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Age of Automatons
How much Amazon paid to acquire mobile robotic fulfilment specialist Kiva Systems in 2012. An Amazon rep estimates that the addition of the robots has slashed operating expenses by some 20 per cent.
Increase in efficiency of high-end fashion retailer Net-a-Porter’s back-end processes since working with logistics specialists TGW to customise a robotic system that selects and packs orders at speeds of up to 48kmh.
The price of a multi-customer advanced robotic system installed in Singapore’s new logistics facility, the Advanced Regional Centre (ARC) by DHL Supply Chain. The warehouse opened in Tampines this April.
FORTY The number of luxury brands, including Armani, Bottega Veneta and Moncler, whose online stores are powered by the Yoox Net-a-Porter Group. The group designs their virtual platforms and manages all web services and online fulfilment.
Same but Different
Two brands, two very different packing times. Luxury brands’ packaging guidelines – involving more elaborate packaging with ribbons and the like – can translate to big differences in the number of orders picked and packed in a Yoox Net-a-Porter warehouse in an hour:
For Net-a-Porter, warehouses with high ceilings have become paramount because they allow the company to install its automation system. Their third facility in Hong Kong, for instance, relies on 100 employees to ship and pack merchandise as the building’s ceilings are not high enough.
Down to the Hour
UK customers can choose their own one-hour delivery slot, on any day within the next seven days. That’s the promise of Precise, a new service by global fashion retailer Asos in partnership with carrier DPD.
9.9% How much rental rates for prime warehouse space in the US increased from 2014 to 2015, according to a report by real-estate brokerage firm CBRE Inc. Retailers are seeking facilities closer to densely populated areas to facilitate demand for fast deliveries
Where Singapore stands on a list of the most expensive markets for prime logistics rents. Rentals of prime warehouse facilities here average US$10.91 per square foot per year. Hong Kong tops the list at US$28.94 psf per year.
S$1,000 a month
How much it costs local online shawl retailer Adlina Anis to use on-demand delivery service RocketUncle to handle same-day deliveries. “It’s cheaper than hiring drivers, who don’t do much between deliveries,” says founder Zayed Talib. Other on-demand delivery services like Ninja Van, RocketUncle and GoGoVan are also popular with local start-ups.
Sportswear brand Lululemon Atheletica under-promises on delivery time to avoid disappointing customers and give shoppers a pleasant surprise when they deliver early. Its website states seven business days, though 90 per cent of its deliveries happen within three days.
“Achieving efficiency calls for understanding inventory management as well as the last-mile options in a particular market. For example, a brand with centralised inventory can choose to also link the product inventory sitting in their retail stores, in order to enable quicker deliveries and/or pick-up options for the customers.”
– Pranay Mehra, senior vice-president, SingPost eCommerce, on lowering inventory costs.
US$5 BILLION Amazon’s net shipping costs in 2015. The company has invested in drones, bicycle couriers, truck trailers and even an Uber-like crowd-sourced system as it moves away from third-party delivery services like UPS and Fedex, towards having its own direct-shipping capabilities.
Forget same-day delivery. This is the future delivery standard to aim for as Amazon continues developing airplane and helicopter drones to achieve this.
US$16 BILLION The amount Alibaba plans to invest in strengthening its supply chain. This will include the additional creation of 1,800 distribution centres and 97,000 delivery stations in more than 600 cities across 31 Chinese provinces “to make it easy to deliver goods to anywhere,” says Judy Tong, president of Alibaba Group’s logistics arm, Cainiao.