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Same Day Delivery Scale - Can Your Order Management System Handle It?

During the early days of the pandemic, we saw in real-time how the investments in omnichannel fulfillment played out for retailers. Some saw big payoffs, and others found themselves scrambling to use their stores as fulfillment and pick-up locations, quickly bolting on solutions like Curbside pick-up.

Another such “bolt-on” was the rise of Same Day Delivery (SDD) as a fulfillment method. Most retailers saw SDD as an extension of their buy online pick up in store (BOPIS) process as they did with Curbside. This was certainly the fastest path to SDD benefits, but it came with a number of operational challenges and trade-offs.

In this post, we’ll examine what’s happened since those early days of SDD enablement and how it serves as a good example of what’s happening in the omnichannel fulfillment domain today as well as what you can do to improve SDD operations and profitability.

Free and Fast?

Consumer expectations for fast delivery remain, but in 2023 many retailers are struggling to figure out how to manage ballooning fulfillment costs with services such as Same Day delivery. As pointed out here, many are rethinking free shipping thresholds or increasing the cost for premium delivery services. 

The delivery market has responded with a number of innovations, such as improved last-mile routing capabilities and local sortation for route density.  But most retailers are not taking advantage of these efficiencies as they are still treating SDD like a BOPIS pickup.  This prevents retailers from batching multiple orders into a single pick-up for the provider, just like a traditional carrier.  Granted the time constraints are much more condensed in a same-day delivery use case, but there is an opportunity to drive lower per-delivery costs. 

The Cons of Using BOPIS to Scale SDD. 

Treating SDD as a BOPIS pick-up vs. a shipment also has other disadvantages:

  • Front of the store is cluttered with holding areas for SDD providers. This can cause congestion and space issues in the pickup storage area.
  • Multiple pick-ups drive quality issues with the wrong packages being picked up.
  • Unknown and multiple pick-up times create inefficiency for front-of-store labor.
  • A BOPIS process typically does not involve any packaging operation, which can lead to damage.
  • Communication with the consumer in this model is often disjointed as the retailer has lost visibility once the order is picked up.

Scaling SDD through the Shipment Process

The alternative is to treat SDD like an actual shipping method and manifest / batch packages to providers just like you would with UPS, Fedex, etc. This approach offers the following benefits:

  • Staging orders for SDD and other carriers, typically in the back of the store, away from customer traffic.
  • Batching allows for multiple order pick-ups by one provider, improving density and cost.
  • Facilitates higher-quality labeling and packaging operations.
  • Allows retailers to evaluate multiple ship nodes if there is a “no pick” at a store during the shipping process.  
  • A shipping operation creates the ability to rate shop across SDD providers

Perhaps the biggest unlock to treating SDD as a shipping method is that it also opens the door to enabling lower cost next day local delivery from the same or new providers.   This creates much more pick up density which lowers delivery costs and can replace the high cost of a next day shipment from a traditional fulfillment center.

What is in the way?

So if the benefits are clear to treating SDD like a shipping method, why aren’t more retailers doing it?   In some cases, it’s a volume issue, and the opportunity to create multiple order pick ups isn’t material enough. More often, it’s a technology issue.  

 SDD requires the use of store inventory and making a same-day promise, but most legacy applications were not designed to make same-day promises when using a shipping method for fulfillment. At the same time, the OMS store fulfillment processes were not designed to integrate with SDD providers or provide batching capabilities that are unique to SDD requirements. The traditional OMS system was designed to deliver speed against a BOPIS process and to deliver efficiency for a shipping process. An evolved SDD capability demands both.    

Only the most advanced retailers are currently executing SDD as a shipment method. This is because they have made an investment in modernizing the OMS to take advantage of all these new fulfillment capabilities.  

But this advantage doesn’t have to be afforded to only those with large teams running their own solutions. Augmenting your OMS with composable microservices in store fulfillment and promising is a path some are taking to adapt to the continuous innovations in the omnichannel fulfillment space.  

Profitably scaling SDD delivery is a great example of how a flexible OMS is becoming table stakes in the omnichannel fulfillment landscape today.    

same day delivery case study

 

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