FAST, FASTER – SDD!

February 02, 2015/POSTED BY Kai Gehrmann/

Amazon, Zalando, Ebay – they’ve all permanently changed our purchasing behavior, especially our expectations as regards the speed of delivery. Few years ago I would have been happy if my purchase landed in my post box within a week. Now, however, I look nervously at the online tracking information after only one day and then wait in eager anticipation at the door.

Sources in the industry predict that we’re going to wake up in mail order heaven very soon: “Same Day Delivery” (SDD). SDD, the delivery of goods on the same day, is almost upon us.

Driven by both the increasing intelligence and speed of automated processes and by the availability of more complex Big Data information chains, previously time intensive processes are now becoming perfectly harmonized. A process, which in the past was a one-dimensional information chain, is now becoming multi-dimensional and can even act proactively.

A process, which in the past was a one-dimensional information chain, is now becoming multi-dimensional and can even act proactively.

The outlook is very promising: every second customer in Europe wants SDD and would be prepared to pay up 10% of the purchase price for the service. Over 70% of customers would opt for the service even if the price was between 3,50 and 4,50 – the typical current delivery and handling costs.

At first glance it looks as if the last citadel of local retailers has been stormed by online-based traders: the immediate availability of goods at the moment of purchase.

However, the risks, effort and costs are immense.

1. Product availability: everything that is to be delivered to the customer on the same day has to be stored locally.

2. Transparency on the online platform and logistics at the back-end: online traders must communicate to customers exactly which products are available for SDD and must update this information in real time.

3. More efficient logistics and infrastructure – SDD processes must be integrated and developed within traditional delivery chains.

It is more likely that the internet mail order giants will be the earliest to offer this service due to their existing infrastructure and efficient delivery logistics processes and this will intensify the competition BETWEEN online retailers rather than competition with local retailers.

Perhaps SDD doesn’t solve the critical problem after all: although online-tracking tells me that the packet is in the final stages of delivery, I spend two hours waiting impatiently at the door and then decide to go jogging. But when I return home I find the dreaded yellow notice stuck to my post box: “Unfortunately we missed you today – the packet is available for collection at your local post office – from tomorrow.

 
 
*Source: McKinsey and Company under the title “Same-Day Delivery: The next evolutionary step in parcel logistics”