When two days is too long, on-demand networks step in to deliver orders in hours or even minutes. This is hot enough that four-year old startups are having to share the space with the likes of Target, WalMart, Home Depot and even Amazon. Ultimately, delighting customers is driving it all.
Three men walk into a bar. Each of them has just purchased the same item. Before going to the bar, the first man went to a store and bought a shirt. It now sits in his car. The second man went to that store’s website, found the shirt and purchased it. Two days ago. It was just delivered to his home. It now hangs in his closet. The third man went to the bar minutes after ordering from his smart phone the same shirt as the other two. It will be delivered to him at the bar.
Welcome to on-demand delivery.
Oh, how far we have come in such a short time. The delta of supply chain change is getting much bigger as it compresses time. And on-demand delivery is the most recent incarnation of that.
Last month, we talked about on-demand warehousing. That’s all about availability of space for inventory. Its cousin, on-demand delivery, is all about time to deliver an order.
“On-demand delivery is becoming table stakes for many companies as it connects businesses and people,” says Ben Harris, director of supply chain and advanced manufacturing for the Metro Atlanta Chamber. In this issue’s NextGen interview, he explains that on-demand delivery focuses on building customer loyalty by surprising and delighting. After all, when was the last time you had anything delivered at a bar?
Right now, on-demand delivery is a hot spot of the gig economy. Using a crowd-sourced local delivery network, companies as diverse as retailers, the construction industry, grocers and restaurants hook up with couriers to deliver orders in hours if not minutes. One- and two-day delivery is also possible, but is not the sweet spot right now.
Each on-demand delivery company has its own electronic platform for connecting businesses and customers. From desktops to smart phones, deliveries can be scheduled and freelance couriers assigned. The platform also allows those independent contractors to take on multiple deliveries that fit into their route. Businesses and couriers sign up to be part of the service.
Some of the on-demand delivery companies are small and local. Others are national and even international. Kanga says it has made crowd-sourced local deliveries in North America, South East Asia and Africa. Roadie has made deliveries in 11,000 towns across America, more than Amazon Prime, which focuses on urban areas.
It’s worth noting that not every on-demand startup is destined for greatness. Earlier this year, BloomThat was acquired by FTD. Last month, FTD shut down this on-demand delivery service for flowers.
On-demand delivery, for the most part, does not rely on a centrally scheduled, dedicated fleet such as UPS and FedEx use. However, that profile might be changing as we speak.
Late last year, Target announced its purchase of Shipt (not to be confused with Shippit) as the core of its own dedicated on-demand delivery network. Target paid $550 million in the all cash transaction. Shipt was founded in late 2014. To make things even more interesting, Target says it will continue to use Instacart, another on-demand delivery service, alongside its Shipt capabilities.
Not to be excluded, WalMart announced last month that it is testing an on-demand delivery network. The retailer is partnering with Spark Delivery, focusing on groceries initially.
And just as you would expect, Amazon is not overlooking the promise of on-demand delivery in less than two days. In early September, it was reported that Amazon had ordered 20,000 Mercedes vans to be driven by independent contractors to deliver Amazon orders. According to the Wall Street Journal, “Amazon is indicating it expects at least 500 delivery companies to join the program initially. Amazon received tens of thousands of applications.”
Meanwhile, Home Depot announced last month that as part of its $1.2 billion supply chain upgrade that it will get into on-demand delivery. The DYI chain already partners with Roadie and Deliv.
With those three heavy weights announcing on-demand delivery programs in September alone, there is clearly something in the air here. On-demand is on the move.
So, who exactly pays for on-demand delivery? There are a couple of scenarios here. One is a surcharge added to the purchase price of the item delivered. The other approach is for the business to eat it, or at least partially.
Perhaps Home Depot’s executive vice president of supply chain and product development Mark Holifield said it best in the Wall Street Journal. “Delivery can be expensive. What we look at is delivery helping us to make stronger customer relationships.”