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Jan 12, 2017

The race for home deliveries

by Mary Anne FitzGerald - Client Services Director

The race for home deliveries

It used to be simple for retailers. People came to your shop, chose what they wanted to buy, paid and took their purchases home. Home delivery was a discretionary, added value extra. The local butcher of yesteryear and a certain James Sainsbury had a boy with a bike for special customers with accounts.  Other businesses could arrange delivery of larger purchases, at a price and normally because it suited the retailer. Either the item was too big to stock in store, needed to be made to order or it was a specialist item. So if the customer wanted it they could wait. ‘Up to 28 days’ was a standard offer.

How things have changed and no more so than in the world of fmcg.

Last month, Amazon completed its first UK drone delivery to a farmer in Cambridgeshire who received a Fire TV and a bag of popcorn in 13 minutes from placing his order. So, perhaps autonomous aerial delivery could become commercially viable sooner than previously thought. At least as long as your customers have massive gardens, live close to the depot and want to order items weighing no more than 2.6kg.

Amazon has been testing different drone designs for years as part of a much bigger plan. The online retailer has designed and patented a floating warehouse that sits thousands of feet in the air, from which it could dispatch swarms of delivery drones to metropolitan areas.

When a shopper makes an order, an onboard drone would dive down to earth and deliver it, before being sent back up to the station by an equally unmanned shuttle that could also restock and refuel the floating warehouse as well as transporting staff.

The "airborne fulfillment centres", suspended by cables from zeppelin-style airships, could float at 45,000 feet above urban areas which is above the altitude of commercial aircraft, but descend to 2,000 feet if they need to cover a smaller area such as a dense sporting event or to deliver items more quickly. At this height, they would be visible, allowing advertising to appear on the warehouse itself and would be able to deliver perishable food or prepared meals.

Back on the ground and in the now.

Over 130 years after Sainsbury’s made its first bicycle delivery, the supermarket has resurrected the tradition with the launch of a one-hour grocery delivery service. Through its Chop Chop app, shoppers can order up to 20 items to be delivered for a £4.99 fee from a local store within an hour. Currently only available in certain areas of London, Sainsbury’s say it is Ideal for emergency purchases. In this case there seems to be a free baby with delivery…

Amazon and Morrisons have recently extended their delivery tie-up enabling Prime Now members to order their weekly grocery shop for delivery within an hour in London and Hertfordshire at a cost of £6.99. This is in addition to Morrisons’ retail partnership with Ocado.

Online sales represented 0.6% of the 2.9% rise in like-for-like sales posted by Morrisons last week. And although online is a much smaller part of its business than rivals such as Tesco, CEO David Potts is positive about the growth potential, saying “What impressed me with our wholesale partnership with Amazon was that thousands of customers made orders at 4.32pm on Christmas Eve and then received Morrisons groceries two hours later.

Shoppers now expect their goods delivered when it suits them. In certain circumstances, next day delivery is no longer good enough. Same hour or day shipping is now seen as the new competitive and necessary offering for many retailers. A surge in demand means it’s likely to become the norm in 2017 – for those who are willing to pay for the privilege. And pay they will - if the fulfillment option fits into the way they want to live their lives.

And there is plenty more to come whether it’s drones, driverless cars or delivery robots (or most likely a combination of these and others). Innovation hasn’t stopped growing and neither will shoppers’ expectations.

Customer choice is King, but we knew that all along. Ah good, the Just Eat robot has arrived with my lunch while I wait in for my new sofa which should have been delivered last week…

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Categories

Retail, Mobile, Digital, Shopper

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