Delivery time – THE logistics topic in 2014 – The trend that redefines delivery times

Today, competition in e-commerce for customers and market share goes far beyond mere price wars, as more and more consumers value not only low prices but also comprehensive service. Shipping is a key factor, as the speed at which online orders arrive is a decisive criterion for a growing number of customers when making a purchase decision.

In the fiercely competitive, booming online market, providers have the opportunity to differentiate themselves from their competitors with fast service. This speed isn't limited to faster distribution or immediate processing of incoming orders, but encompasses overall process efficiency in logistics: from warehousing and order picking to packaging, significant time savings can be achieved. Reducing lead times is now primarily achieved through extensive automation of the entire process.

In the following, we will discuss the different approaches to the topic of delivery speed, its costs for manufacturers and customers, and the challenges that the intralogistics industry has to face in this regard.

Faster and faster – keyword: Same Day Delivery

Ordering meat online at lunchtime and putting it on the grill that same evening? Or ordering a sweater online at 11:00 AM that you'll be wearing for lunch just 90 minutes later? With same-day delivery, this is no longer a pipe dream, and various retailers are already offering this service. For example, the online grocery retailer Otto Gourmet, in cooperation with the parcel and same-day delivery specialist Time Matters, now guarantees that steaks ordered in the morning will be delivered "ready-to-grill" within the specified time window that evening in the major cities of Hamburg, Berlin, Düsseldorf, Cologne, Frankfurt, and Munich. The German provider Tiramizoo, which collaborates with retailers such as Media-Saturn and Lodenfrey, is taking a similar approach. The fashion house shipped its products on a same-day basis during the Christmas season, charging €9.90 for local delivery. For a comparable test run by the Thalia bookstore in Hamburg, books, DVDs, etc. cost €4.90.

The British company Shutl has gone even further, enabling its customers to receive their goods just 90 minutes after ordering online, with peak delivery times as low as 15 minutes. The additional costs for customers average around £10. Naturally, such rapid delivery required the development of a new courier, express, and parcel (CEP) service. To achieve this, Shutl consolidated numerous courier services onto a single platform and also partnered with local delivery providers, including bicycle couriers. This resulted in a dense network of couriers that Shutl can consistently access to meet its tight delivery targets. It's a concept that major online retailers are closely watching. Initially, a subsidiary of the Otto Group invested in the company before it was eventually acquired by eBay.

Other countries are already further ahead. eBay, for example, launched its similarly rapid eBay Now over a year ago in several major US cities. Customers who buy goods from local retailers can have the products delivered to their homes within just one hour, if desired. Amazon offers a comparable service across the major metropolitan areas of the US, on both the East Coast (New York) and West Coast (Los Angeles and San Francisco). Google is also experimenting in this area with its pilot project, Google Shopping Express . For a six-month period, customers in the San Francisco Bay Area can order goods that will then be delivered to their doorsteps within one day. The difference to the other approaches is—in typical Google fashion—that this service is currently being offered free of charge.

In the UK, a pioneer in e-commerce in Europe, Shutl has been offering same-day delivery since 2010. Customers are charged around £10 for the delivery of a standard parcel (up to 3kg). According to Shutl, the service is already in high demand, indicating a willingness among shoppers to pay for the ultra-fast delivery.

Overall, customers in Germany, where free delivery is highly valued, are hesitant to opt for same-day delivery precisely because of these additional costs. The ECC study "Success Factors in E-Commerce," supported by the logistics company Hermes, revealed that only 1.6 percent of the more than 10,000 customers surveyed voted for same-day delivery. Furthermore, almost a third of those were unwilling to pay extra for this service. This attitude is diametrically opposed to the significantly higher costs associated with this shipping method, as logistics companies incur considerably higher delivery costs, which they must pass on to their customers.

Logistics companies are thus confronted with the question of whether same-day delivery will remain a niche sector for a growing but relatively small target group. The dense network of warehouses and distribution centers required for such an express service can only be realized with considerable investment. It reaches a volume that not every online retailer can handle, especially since many have recognized the cost and logistical advantages of centralization and concentration in a few large warehouses in recent years. Therefore, the question arises not only for these companies whether alternatives to same-day delivery might be more appropriate – at least in the short and medium term in the German market.

Alternatives – From 3 days to same day: What customers really expect from delivery services

Speed ​​and service have become crucial competitive factors. And even if customers aren't explicitly demanding same-day delivery yet, according to a Hermes study, two-thirds of end customers expect delivery within two to three days of ordering – a tight timeframe that already poses major challenges for retailers and logistics experts.

However, thanks to a high degree of automation, they have succeeded in continuously reducing processing times, so that delivery to the customer has now become a critical success factor. Anyone who is urgently waiting for a package knows the frustrating experience of finding only a note in the evening instead of the delivery, informing them of the unsuccessful delivery attempt and instructing them to pick up the package at a warehouse or postal center.

Courier, express, and parcel (CEP) services can provide the following solutions to address these issues:

Delivery within time slots

Courier, express, and parcel (CEP) service providers are increasingly offering their customers fixed delivery windows, providing greater convenience for package recipients. This service also includes time-limited deliveries to alternative addresses provided in advance by the customer, as well as the short-notice redirection of shipments. Furthermore, web-based tracking solutions allow customers to monitor the shipment's status in real time. In a similar model, the customer receives an SMS or email notification of the delivery window and then has the option to reschedule the delivery once.

Especially for working people who are not at home during the day and have no alternative drop-off options, on-time delivery represents a much higher service level than, for example, same-day delivery. In Great Britain, the delivery service DPD already offers a service with a delivery window of just one hour, which has been very well received by recipients.

Delivery points

Another option is alternative delivery points, which are becoming increasingly popular with a growing number of consumers. These are usually kiosks, beverage stores, or other shops with extended opening hours, where customers can easily pick up their packages on their way home from work.

A pioneer in this field is the logistics company Hermes Fulfilment, which now has a nationwide network of 14,000 parcel shop locations. However, its competitors are also expanding their networks. For example, DPD has doubled the number of its cooperation partners to 8,000 in recent years.

According to DPD, one in three recipients now has their parcel left at a nearby parcel shop of their choice. Furthermore, another study by Comscore concludes that 61% of customers prefer to have their goods delivered to a nearby parcel shop rather than to their own front door, which may be locked.

Along with the increasing acceptance of parcel shop systems comes intensified competition among parcel delivery services for the dwindling number of partners at attractive locations where parcels can be dropped off and temporarily stored until the recipient picks them up. But brick-and-mortar stores are just the beginning. Some providers are already testing the option of leaving parcels in the customer's vehicle. A transmitter attached to the car tells the delivery driver where it is parked. Using a key or a special chip card, the driver can then open the trunk and leave the package inside.

Each of the described alternatives has the potential to significantly increase service levels and customer satisfaction. At the same time, they are faster and cheaper for CEP service providers to implement than a nationwide same-day delivery network.

Even though most European e-commerce companies are still resisting same-day delivery, the topic is clearly already on their customers' minds. At least the big players will therefore have no choice but to seriously consider implementing this service into their offerings.

Suitable for:

• From 2014 top topic to today: Same-Day Delivery (SDD) – How have delivery times developed compared to 2024?

Impact on intralogistics

However slow the start of same-day delivery may be in Germany, according to an industry study by McKinsey & Company, it will reach approximately three billion euros in Europe by 2010, thus growing faster than online retail as a whole. By 2020, ultra-fast delivery is expected to account for 15 percent of total sales of standard parcels.

Therefore, suppliers from all areas of intralogistics cannot ignore this trend. But how are manufacturers in the warehousing industry dealing with their customers' demands for ever-increasing speed in storage, retrieval, and order picking?

What does the market demand?

While large providers can finance investments in state-of-the-art warehousing and order picking technologies themselves, the numerous medium-sized and small online retailers have the option of purchasing the corresponding know-how in warehouse logistics from external fulfillment service providers, or having their goods flows handled through them.

But whether fulfillment service providers or companies investing themselves, both demand that manufacturers in the intralogistics industry take into account their need for ever shorter storage cycles and constantly accelerating order picking performance.

The producers' response

Naturally, intralogistics providers are increasingly adapting to the growing demand for customized solutions for e-commerce businesses. For example, manufacturer Kardex Remstar offers Parts4You, a single-part picking solution. This warehouse management software is primarily aimed at companies that need to pick small orders with low quantities from a large product range.

It is therefore ideally suited for e-commerce companies. The system enables approximately 350 picks per hour from an assortment of up to 10,000 items. Storage and retrieval processes can be handled in parallel, further increasing time savings during order picking. The system operates on a goods-to-person principle, thus saving travel time for personnel and machines. Furthermore, the potential savings in terms of required space are considerable; for example, the paternoster storage system provides over 1,000 square meters of storage space on just 84 square meters.

Furthermore, the company's Sort2Ship addresses the growing need among e-commerce service providers for flexible solutions for buffering and sequencing shipping orders. Sort2Ship allows customers to consolidate order items from various storage systems, such as vertical lifts, carousel racks, or static shelving, into a single order in a time- and cost-efficient manner. Automated conveyor technology transports the containers holding the order items to the buffer warehouse, where they are temporarily stored in a minimal space. On demand, the containers can then be sorted and prepared for packaging or directly for loading. Distribution centers and e-commerce providers handling thousands of order items per day, in particular, can use the software to increase their picking performance by up to 35%, thus ensuring short delivery times.

Another way to increase picking rates and thus speed in the shipping warehouse is the use of horizontal carousel storage systems, which deliver the required items directly to the warehouse.

Transport to the picking location. Thanks to the automatically controlled delivery of products to the workstation, employees can concentrate on picking and packing, resulting in greater speed and accuracy. Furthermore, warehouse staff are spared the time-consuming process of walking to scattered goods, which significantly reduces walking distances and thus improves workplace ergonomics.

📣 Similar topics

• 📦 Revolution in e-commerce: How delivery times are changing the market
• 🚀 Same Day Delivery: The new standard for express shipping?
• 💡 Innovative logistics solutions: Time savings through automation
• 📋 Customer demands in focus: Why delivery speed is crucial
• 🛠️ Intralogistics of the future: Flexibility for large and small businesses
• 🌍 International pioneers: What Germany can learn from the UK and the USA
• 🕒 Customized delivery: How delivery windows make everyday life easier
• 🛍️ Alternatives to daytime delivery: Parcel shops and new delivery points
• 🔄 Fulfillment service providers: Outsourcing as a competitive advantage
• ⚙️ Technology as the key: Automated processes for faster shipping

#️⃣ Hashtags: #ECommerce #Logistics #SameDayDelivery #CustomerSatisfaction #Automation

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