Learn how order fulfillment has changed and what it might look like in the future.
Consumers stand to win as the major retail platforms continue to battle it out for market share. What are they winning? More convenience through faster product delivery – and every retailer has their own game plan.
Amazon Prime has driven major improvement in shipping logistics and fulfillment – and now it seems that all the major retailers are trying their shot. Changes in delivery times have started changing rapidly over the past year and look set to continue to improve in 2020.
Target, Walmart and now even other retailers like Best Buy are starting to roll out faster delivery on customer orders. Increased customer demand for faster delivery has led to different tech companies popping up to meet the need.
But as delivery times get shorter and shorter what can we realistically expect the future of fulfillment to look like?
Consumers used to think two-day shipping was fast
It wasn't even that long ago that Amazon shocked the retail and e-commerce world with its two-day shipping announcement for Amazon Prime Members. That was a huge surprise to consumers who had grown accustomed to receiving their orders in three to five days – or even seven to ten days.
Product delivery and logistics had not really made many big strides forward prior to the announcement. Amazon was able to reduce shipping time by investing in its supply chains and technology. The big question was how would other traditional retailers be able to compete with such fast shipping?
Now it seems almost comical to think that two-day shipping was so fast. Amazon took advantage of a customer convenience factor that no other retailer had really leveraged because they were too concerned about their bottom lines.
Now platforms like Target and Walmart have seen the success of Amazon's fulfillment strategy and have started playing catch-up to get ahead of the e-commerce platform. Previous budget-conscious restrictions appear to have gone out the window as online sales continue to increase.
Big delivery changes in 2019
This year has seen some big changes in product fulfillment, which is really pushing the limits of logistics – and retailers' bottom lines. Amazon, Target and Walmart all continue to battle for e-commerce dominance, and faster fulfillment has been their main tool to try to win that battle.
Target started heating up the competition early this year by announcing that same-day delivery would be available in certain markets. It was quickly followed by Amazon and Walmart who both made similar announcements. Amazon announced that shipping for Prime customers would start shifting from two-day shipping to one-day shipping and the retailer has since made 10 million products eligible for this program. Walmart said that free next-day delivery would be available on all items, and wouldn't require its customers to pay a membership fee.
Those changes alone would have previously been viewed as enormous shifts in e-commerce shipping. But the three retail behemoths were not done there. In September, Walmart announced that same-day delivery would be rolled out in 200 metro areas.
Amazon and Target responded by changing fees. Amazon dropped the fee on its Amazon Fresh program and Target adding unlimited free same-day delivery for a subscription with Shipt for $99 a year.
Other notable changes in delivery times from major retailers have come from Best Buy, who announced free next-day delivery for the holidays. There are also a variety of delivery services like Instacart that make it possible to pay to have anything delivered on the same day, with the delivery person actually going to the store and buying the product for you.
Each platform is trying to outdo the other in a bid to win more customer loyalty. But will that really work in the long term? Do consumers actually feel loyalty to the companies they buy their products from if they are all the same and arrive at the same time? Or is this just a race to the bottom as one platform tries to steal market share from all the others?
One thing that is for sure is that the end, consumers win. What is less clear is if this is actually a winning strategy for these retailers.
How much faster can product fulfillment get?
One thing is known with absolute certainty – delivery speeds have an upper limit. Instant delivery still seems like a futuristic concept and is probably not coming in the immediate future. But how much faster can delivery truly get?
I expect that in 2020, same-day delivery will become the norm for order fulfillment – especially on Amazon, Target and Walmart. The platforms seem determined to provide the fastest service possible to win over customers. That means that we could also see faster fulfillment rolling out as soon as next year.
Predictive analytics is playing a vital role in placing inventory in the right place at the right time. As more purchases continue to happen online, those analytics will improve even further and become more efficient and accurate.
A realistic possibility in the not-so-near future is same-hour delivery, at least in most metro areas of the United States.
Walmart and Target seem extremely well-positioned to make this possible as they each have thousands of brick-and-mortar locations. Stores will become more like fulfillment centers, which gives the two retailers a leg up on Amazon when it comes to last-minute delivery. However, Amazon has plenty of tricks still up its sleeve with the impending future of drone and autonomous driver delivery.
Amazon has invested heavily in autonomous technology – from freight delivery to the door-to-door delivery robot Amazon Scout. Its fulfillment centers largely are already autonomous and making its shipping services function with limited human interaction is just the next step.
It also seems unrealistic that individual tech-delivery platforms will be able to compete against the major platforms. The most likely situation seems to be that they will either go out of business or be acquired by a larger retailer, like Shipt was by Target.
One of the largest challenges to faster e-commerce delivery is the sheer pace that overall e-commerce sales are growing by. And, what type of impacts will increased delivery speed have on our environment?
Can we afford faster delivery?
Amazon has announced its goal to be carbon neutral by 2040, but the move from two-day to one-day shipping may have significant impacts. If online purchases increase because they offer more convenience, it could actually lead to more freight deliveries from heavy-duty trucks – which is already responsible for a quarter of all transportation-related carbon emissions.
The company's commitment to faster shipping will also mean more delivery trucks on the road – and it is not entirely clear whether it will achieve its carbon-neutral goal on its own. Currently, Amazon outsources much of its delivery services to third-party providers. While it may be able to reach its carbon-neutral goal with its own delivery vehicles, it remains to be seen if it can do so when its service providers are taken into account.
The expected increase in online purchases will also lead to additional waste created by product packaging. Moving to more environmentally-friendly packaging will be necessary to off-set the additional environmental damage that faster shipping will bring.
Hopefully, these companies are as focused on the impacts of faster shipping as they are about getting your next order to your door. Otherwise faster delivery could become more of a hindrance than a convenience.