Amazon’s promise of two-day delivery at no additional cost to members of its Prime loyalty program has driven online shoppers to expect two-day delivery of all products ordered online. And those demands are about to get even greater after Amazon in late April announced plans to roll out one-day delivery for Prime members.
The news has left many online retailers—many of which are already struggling to meet delivery expectations and contain shipping costs—wondering what that means for their future.
One reaction may be to rethink their approach, says Steve Congro, director of omnichannel fulfillment technology at Saddle Creek Logistics Services. “A huge mistake retailers make is trying to compete head-to-head with Amazon and its offer of free one- or two-day shipping, but that’s just not economical for the average retailer,” he says.
Instead, retailers should focus on implementing omnichannel fulfillment and delivery strategies that allow them to become more reliable to their customers. “Even if your strategy isn’t one-day or two-day delivery, you need to ensure you can deliver consistently at a manageable cost while keeping customers happy,” he says. “It’s important to weigh the cost of expedited services against consumer demand.”
Keeping products near consumers is one way retailers can keep costs down, Congro says. “If you can utilize inventory that you already have located close to your customer base, that will not only speed up delivery to your customer, but also save on shipping costs,” he says.
That’s where recent advances in order and inventory management technology can help retailers. The systems that work best add a layer of intelligence that enables them to handle multiple fulfillment locations, receive orders from multiple sources and manage back orders.
“Technologies that were once considered luxuries are now becoming much more commonplace,” Congro says. “Omnichannel fulfillment has gone from being a concept you’d hear about from time to time at a trade show to something that retailers know they must take advantage of to stay competitive.”
Some logistics companies offer order management and shipping rate shopping services that help online retailers take advantage of these advanced technologies. “Saddle Creek, for example, can help retailers manage fulfillment and delivery for a fraction of the cost of pursuing on their own,” he says. “Our in-house expertise allows us to work with clients on industry best practices and maximize technologies in a mutually beneficial manner.”
In the midst of rapid growth, The Honest Kitchen, a pet supplies online retailer that sells through about 5,000 independent pet stores as well as ecommerce outlets, needed to rethink its logistics network. The company implemented Saddle Creek’s OMS, among other systems, to build an automated system that supports its omnichannel environment. These tools allow The Honest Kitchen to execute faster shipments by utilizing Saddle Creek’s distribution centers in Joliet, Illinois, and San Diego.
“Saddle Creek’s systems decrease transit times to our customers, which is really important when you’re trying to compete with the likes of other online retailers that are providing two-day shipping or less,” says Jake Fuller, vice president of operations at The Honest Kitchen.