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ARTICLE Business TipsMay 13, 2016

E-commerce delivery expectations: how “fast” is feasible?

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Delivery and order fulfilment is a big focus for retailers in 2016, with many online stores looking to bring down delivery times to hours rather than days. We look at how delivery times have decreased and whether customers are prepared to pay more for a faster service.

As e-commerce becomes more of a mainstream way to buy products and services – including perishable items like food – consumers have growing expectations of how soon they can receive their items. In the US, e-commerce giant Amazon offers an Amazon Prime Now service where customers can get products delivered by local couriers in under two hours during a chosen delivery window, and restaurant orders are delivered within one hour of the time of the order. Amazon has also floated the idea of using remote controlled “Octocopter” drones to deliver parcels to a location using GPS in as little as 30 minutes.

Drones aside, increasing options for delivery – from regular mail to Uber-like services – enables online store owners to offer faster order completion and keep up with experienced buyers wanting their products soon after the checkout button is clicked.

Buyers will pay for premium delivery

At Sydney-based online costume store Costume Direct, Business Manager Adrienne Bicknell says people definitely have higher expectations of delivery speed than they did seven to eight years ago.

“Most people want their costumes quickly, so we use next-day express post services to most postcodes around Australia. We also offer same-day delivery in Sydney and a pickup service,” Bicknell says.

While Costume Direct has been selling costumes and party equipment for adults and children for the past 10 years, it introduced its same-day delivery option five years ago to fill customer demand. The speed of same-day delivery depends mainly on the traffic, and the uptake of this service tends to be seasonal and more towards end-of-week orders. Popular occasions for quick order demands include school events, Halloween and Christmas parties. “It’s a reasonably popular service and at busy times makes up as much as 10 per cent of all deliveries. We charge between A$20 and A$60 for courier deliveries and people are prepared to pay for it,” Bicknell says. “However, a flat fee of A$10.95 for overnight delivery regardless of what is ordered is suitable for the majority of customers.”

Even though there is a seasonality aspect to the business, Bicknell says most of the time Australia Post is quite reliable and only a very small number of parcels go missing or don’t get delivered on time, including during peak times.

“People have to pay for the postage, but we do accept returns for an exchange or refund,” Bicknell says. “As they are costumes we had problems with people wearing the costume to a party then returning it, so we started a seven-day return policy and this is now less of a problem.”

Fast delivery for a competitive edge

Does quick delivery give a competitive edge? Bicknell is certain this is the case at Costume Direct and “people indicate that it is one of the reasons they buy from us”.

The online store is also dabbling in new technologies for delivery, including pickups from Uber drivers. “We have had customers organise their own Uber pickups,” Bicknell says. “They tell us the driver will be there in five minutes and we hand the parcel over to them and they deliver it. In our experience they have been quick at arriving and this can expedite delivery.”

Regarding advanced delivery technology like aerial drones, Bicknell says while they are not on the radar at this stage, they could be well suited to delivering costumes, which are light and generally not breakable. “We could look at drones, but a lot of costumes are sent interstate so I’m not sure how practical that might be!”

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