Making deliveries profitable or, at least, economically viable, is a hard task. When deliveries are same-day or, as in the latest trends, same-hour, said task becomes borderline impossible.
To make things worse customers, more than often, expect delivery to be free.
The oldest certified method to prevent deliveries from killing an e-commerce and its logistics provider is to elect a minimum order size that makes customers eligible for free delivery. In other words, the delivery is paid by a fraction of the profit.
Recently, though, customers have shown irritability when confronted by this policy. We’re travelling towards an increasingly on-demand e-commerce landscape and forward-thinking/long term planning isn’t really part of the equation.
To circumvent the issue operators have to be creative, very powerful or both.
Amazon, of course, has Prime, which costs 99.9$ a year. Surely it doesn’t pay for all the next-day deliveries of shopping-addicted customers (but they buy a lot, so it’s a win-win scenario) but considers that for every compulsive shopper there could be ten who pay the 99.9$ and then make one or two orders per month, maybe less. Others just want to access all the non-item goodness that comes with Prime: like awesome original tv-shows. This road has been recently travelled by WalMart too, with ShippingPass, test deliveries by courtesy of Uber and Lyft.
But the ways of Amazon are infinite, so, if you are a Prime member but you’re not really into on-demand ultra-fast shopping there’s an option: Amazon No Rush. That means you can have your items in 5-10 business days. It’s not only free: you get paid to do that! Not in hard cash, of course, but in Credits that you can spend on other Amazon branches. Right now you get 5.99$ to re-invest in Amazon Pantry. Basically, as the saying goes: “one hand washes the other” or “catching two birds with one stone”. They relieve pressure from logistics by having some slower-than-average deliveries and get to promote parts of the business that need a little push.
This teaches us a fundamental lesson: not all added-value services need to translate into higher costs for the Seller or the Customer. That’s because the best possible range of delivery options isn’t vertical, it’s horizontal. Think of it as a landscape where everyone is entitled to choose the road that better suits his needs. The slow one lets you enjoy more scenery.
This is a strength that last-mile companies have yet to master: Amazon acts onto itself but thousands of other e-commerces vie for competitiveness and have to rely on third party logistics and software. That’s where we can make a difference: we’re the ones who come face to face with the customer, who are in contact with him/her right from the moment items leave the cart.
Think of the way tested by Instacart some time ago to absorb part of its expenses. The grocery delivery startup is wrestling its way out of unprofitability by having Brands pay for deliveries. It goes like this: if you buy $10 of RedBull, RedBull will pay for your delivery, which becomes free. The same is done here in Italy by Esselunga: delivery is about €7, but every day different Brands sponsor for delivery, last week, for example, at checkout you could read this message: free delivery if you buy 3 packages of Tonno Nostromo (That makes for 12 cans of tuna).
We’re not just moving the goods through their “final” journey: we’re also a fertile ecosystem, whose bounty of messages/communications/solutions has yet to be discovered. Last-mile companies must create a delivery infrastructure on top of which merchants can build new revenue streams and visibility. How much is a paid appointment with a shopper worth, if you know their habits and their preferences? The live attention of the Shopper counts a lot in these times, in which share of attention is more important than the share of market. Last-Mile can bring a corner of your branded shop into the Shopper’s house and blossom conversion rates akin to those of brick and mortar stores.