Do you remember waiting a week for your ecommerce orders? This was a fact of life not too long ago. In 2014, Slice Intelligence tracked 238 online retailers and found their average delivery time was 8.3 days. By 2016, that average had fallen to 5.1 days, and for 30 high-volume e-tailers tracked by Digital Commerce, the average delivery speed was down to just 4 days. By the 2017 holiday season, a number of top-performing retailers shaved delivery times to a mere 2.6 days, a speed that was rarely offered previously but which is now expected.
Average delivery times are bound to get speedier, as same-day delivery is quickly becoming the new store-to-door standard. Nearly all consumers surveyed by eFulfillmentService last year said they considered same-day shipping (97%) or next-day shipping (95%) to be “fast” shipping options. Only 42% of those surveyed thought that three-day or four-day delivery was fast.
Here’s another fact: if your company sells physical products online, and you don’t offer same-day delivery, you’re already falling behind. More than half (51%) of ecommerce retailers have a same-day shipping option at checkout, and 65% of ecommerce retailers plan to offer same-day delivery within two years. Many of your competitors do this because customers demand it. Nearly half (49%) of consumers are more likely to shop online if they know they’ll be able to opt for same-day delivery.
Oracle CEO Mark Hurd discussed this paradigm shift at length during his keynote at this year’s Modern Supply Chain Experience conference. “Whether you like it or not,” he said, “the phenomenon that you need immediate gratification is now core to everything we do... I buy not just on price, I buy on price and availability. If you can’t make what I need available to me now, I’m buying from somebody else.”
Reliably offering same-day delivery requires a mastery of distributed logistics and a commitment to innovation in supply chain management (SCM) technology. Few ecommerce companies have the resources to build out their supply chain infrastructure and their supply chain technology stacks. This is especially true of the majority of ecommerce startups that have to bootstrap their growth without capital from venture funds or angel investors.
The upside is they no longer have to.
Early ecommerce companies were often far more innovative on the front end than they were with their supply chain infrastructure. Just look at Webvan or Pets.com, two infamous dot-com era ecommerce pioneers that promised the moon before they could deliver it. Their spectacular flameouts weren’t necessarily because consumers didn’t want to order groceries or pet food online. You can buy both from a number of different sites right now. Rather, they were too early. The technology and the infrastructure that make ordering groceries or pet food online profitable today simply didn’t exist until years after Webvan and Pets.com went bust.
If those companies were to give it another go in 2018, they could save substantial resources on developing their own SCM applications and building out their own warehousing and transportation infrastructures by simply taking advantage of off-the-shelf third-party solutions.
Cloud-based SCM application suites, such as Oracle SCM Cloud, provide all the functionality an ecommerce company might need to grow from a small online storefront into a global operation. And dropshipping companies, which often utilize the same cloud-based SCM applications as their ecommerce partners, have become prevalent options for product-focused startups looking to grow within the constraints of shoestring operational budgets.
Mark Hurd anticipated these emerging trends in 2004 when he wrote The Value Factor. “The supply chain,” he wrote, “has dissolved into a series of inter-company relationships.”
This aptly describes how most ecommerce companies work today. They use one company’s SCM software, rely on a different company to warehouse products and fulfill orders, and depend on yet another company to get those products to their buyers. They may not have a hand in developing or producing the products they sell at all. Many ecommerce companies have achieved great success by bringing to market a catalog of products designed by one partner and manufactured by another, based on nothing more than an idea or a napkin sketch.
It’s far easier, and far more affordable, to succeed in ecommerce today than it was when Webvan and Pets.com started. With a multitude of third-party sources offering to handle nearly every stage of the supply chain, choosing the right partners and the right technology can make all the difference. Is your company choosing wisely?