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Retail leaders: Same-day delivery is no longer optional

In most years Nothing Bundt Cakes capped Mother’s Day orders and deliveries. It certainly could not handle the same-day delivery surge that resulted from procrastinators scrambling to find something for their mothers and wives.

That is, until 2020, when in the midst of a pandemic, Nothing Bundt Cakes was able to accept unlimited (and last-minute) orders at its more than 400 bakeries across the United States. Its solution was crowdsourced delivery offered by Roadie.

“We tried other on-demand delivery providers, but none could cover all of our stores,” explained Kelly Zwolinksi, director of operations. “We were also frustrated by limits on delivery hours and capacity. With Roadie, we’re able to offer franchise owners a turnkey solution that actually helps them sell more.”

Nothing Bundt Cakes handled a 113% increase in orders that Mother’s Day weekend. But the company’s story is only an example of the growing trend to faster and faster delivery of online orders across the retail sector. Roadie, a crowdsourced delivery platform with over 150,000 drivers across the U.S., is seeing that trend firsthand, and now has some data that backs it up.

Most retailers to offer same-day delivery

Roadie, a UPS (NYSE: UPS) company, worked with studioID to survey over 200 retail and supply chain leaders and found that, if trends bear out, 99% of retailers will offer same-day delivery by 2025. The reason is simple: They believe customers want it.

The survey, Roadie’s 2022 Last-Mile Outlook: The Future of Crowdsourced Delivery, found that 26% of U.S. retailers currently offer ultrafast, aka same-day, delivery, and that an additional 73% plan to add the service within the next three years.

“Giving customers this kind of choice is a smart move considering that too-long delivery times are a common reason why digital shoppers back out of an order,” the survey noted, citing a 2020 McKinsey & Co. survey. That McKinsey report found that 46% of consumers would abandon an online shopping cart due to longer than expected shipping times. “And research shows customers are willing to pay for it. That discovery means companies without ultrafast delivery will continue to leave money in abandoned shopping carts,” Roadie added.

The Roadie survey found that 64% of logistics executives believe a significant percentage of shoppers — about 40% — would be willing to pay for same-day delivery. Thirty percent of those are convinced more than 61% of shoppers will pay for the service.

Valerie Metzker, head of partnerships and enterprise sales at Roadie, said the willingness to pay for ultrafast delivery can help ease the transition for retailers to offer the service, and it doesn’t have to be a cost center.

“Some organizations mark up the delivery fee so it’s a profit center; others charge customers exactly what it costs them so it’s a straight pass-through; and still others subsidize the cost,” Metzker said.

Watch: Why UPS bought Roadie

Nothing Bundt Cakes charged a same-day delivery fee, but it led to increased sales. That is something that McKinsey is also finding in its research.

“When you meet your customer’s expectations, you win more business,” Manik Aryapadi, a partner at McKinsey, said. “They [customers] think: ‘Now that you’re offering same-day service, I’m buying things that I would not have originally.’

“If you’re able to deliver within the window that you promise your customers, you are actually driving up your ‘Net Promoter Scores,’” he added. “That means you’re also improving their lifetime value because they’re happy consumers.”

Roadie said adding ultrafast delivery leads to more sales, more customers and better customer retention. A SOTI report, From Clicks to Ships: State of Mobility in Retail 2022, found that 60% of consumers would stick with a brand that delivers their order the fastest.

Same-day delivery challenges

“More than two out of five logistics executives surveyed by Roadie and studioID said they are concerned about rising transportation rates (41%) and inflation’s impact (45%) on the costs of goods and services in relation to their last-mile delivery strategy,” the survey stated.

And that is just one of the problems. Staffing, tracking, route planning and overall supply chain and inventory/demand forecasting are among top concerns for retailers.

“Retailers want to focus on what they do best, and it’s not delivering orders,” Metzker said.

Roadie’s crowdsourced delivery network utilizes gig economy workers, providing flexibility and scalability, but that is really the end of the process, which encompasses much more coordination to create a seamless experience.

“If you’ve ever selected ‘Get it today!’ when buying online from your favorite retailer only to get a message soon after saying they cannot fulfill your order, then you understand the importance of a powerful inventory management system,” the survey noted.

Inventory and warehouse management systems are key to ensuring product is available and able to pick up on time. These systems must also integrate with the delivery provider’s systems.

“You need to get really smart about placing inventory at the right node, which means you need to know what inventory already exists in that node. That requires real-time inventory visibility, and it’s why you see investments in RFID, blockchain and other technologies that enable you to have that,” Aryapadi said. “Without real-time inventory visibility, your optimization will be garbage in, garbage out.”

The last mile starts in the warehouse

A separate white paper released by Roadie in early April noted the importance of the warehouse to fulfillment success.

“Although each business and warehouse is different, there are several common steps to take when adding crowdsourced delivery to your operations,” the white paper states. “Whether you’re just starting out with crowdsourcing or are evaluating an ongoing partnership, it’s critical for the whole team to understand crowdsourced delivery best practices and make sure they are well documented for future reference.”

Roadie said brands should improve inventory visibility, train employees, start small before scaling and learn from mistakes. Importantly, the company noted that most crowdsource drivers will not have uniforms and may be unfamiliar with how to navigate a warehouse (if that is where the pickup will occur), so ensuring staff is available and trained to assist is important to meet same-day delivery demands.

“When customers want something quickly, they’ll go with the provider that can get the order to them when they need it,” Metzker said.

Click for more articles by Brian Straight.

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