Same day delivery, really needed?

More and more, I see e-stores advertising with next day delivery, and even same day delivery. Numerous examples coming from a fast search on the web are:

  • A 90-minutes processing time of the order at Bol.com. This results in an next day delivery.
  • Coolblue offers a same day delivery for 17.95 if ordered before 3PM.
  • Logistics service providers like TNT Express, DHL and UPS are also gearing up towards same day deliveries, sometimes with partners like Docdata.
  • Amazon shipping even earlier than you ordered the product via smart analysis of their databases.

These examples say a number of things: some customers seem to be willing to pay a premium fee for extremely fast service (i.e. a same day delivery). Also the use and mining of the rich data sources available (aka big data) is getting more and more in practice in logistics. Obviously, in the Amazon example, this leads to better information on the expected future orders, allowing an efficient prepositioning in their e-fulfillment network. Finally, it also shows the perceived need for speed (N4S).

It is exactly this last point which is questionable. One thing which is not clear to me, and what I would like to figure out more in detail, is whether this speed is really needed. Is same day or next day delivery really needed? If so, in how many cases is this used then? If I order something online, most of the times I do not want to have the order then next day, as I am working then, and/or nobody is at home, etc. Along the same line, I would also be interested in the hit rate (i.e. probability of finding somebody at home when offering the parcel for the first time) of the Logistics Service Providers for these next day deliveries and later deliveries. This last number seems to be top-secret, but results in many extra movements. So to me, this N4S leads to inefficiencies and costs.

Additionally, the last mile is difficult and complex (see also DHL’s 2014 outlook). To handle these complexities, more (time and space) buffering and a restructuring of the delivery chain is needed. More buffers means more time to organise more efficiently. This will lead to less movements but fuller delivery vans. This comes back to the same issues related to last mile logistics. Restructuring of the delivery chain can be done in many ways. What I see happening in the Netherlands is that the customers home door is put more and more upstream in the delivery chain, via the use of lockers in supermarkets, fuel stations, etc. Also here, many initiatives are ongoing (see e.g. Last Mile Logistics for unmanned lockers).

Costs for next day delivery (or same day delivery) are higher than later deliveries, following the less efficient organisation of the delivery chain. Interestingly, this is not always visible to customers (as delivery is in many cases free). But, unfortunately,  if I ask for a later delivery than next day (and hence logistics is more efficient), I do not get a discount…

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s