From autonomous delivery to GPS tracking on drivers and third-party partnerships, retailers and restaurants are turning to technology and innovation to help combat the growing demand for delivery.
There will be an estimated 2.05 billion digital buyers that will lead to ecommerce accounting for 15.5 percent of retail sales around the world this year, according to a report by Oberlo, maker of a drop shipping app. All of that inventory has to be housed and transported somehow before it is delivered to those shoppers, and that has caused an issue across the United States.
A December 2019 NBC News article states: “Start with the warehouse space, from the massive 1 million-square-foot fulfillment centers to the ‘last mile’ depots closer to city centers. Though the U.S. has added around 1 billion square feet of warehouse space in the past six years, the vacancy rate is near a historic low and rent is still rising, according to CBRE data.”
This demand was behind the development of the country’s first three-story warehouse. Built by Prologis in Seattle in 2018, Amazon and Home Depot moved in as the building’s first tenants. Amazon uses almost 500,000 square feet of space, while Home Depot has nearly 100,000 square feet, according to the Wall Street Journal.
While warehouse space is at a premium, that is not the only issue facing brands today. The method of delivery also is changing, as seen through new third-party partnerships – as we saw with Postmates and Old Navy – and brands starting to invest and learn more about robot delivery. For example, Sodexo recently launched food delivery via robots at George Mason University. Last-mile delivery via robots and drones has its challenges. It is expensive and challenging logistically and from a customer experience perspective, but it’s an option more brands are intrigued by to speed up the supply chain.
Another way brands are combating the delivery overload is by trying to avoid delivery all together by offering and improving buy online, pickup in store (BOPIS) options. When two-day or next day delivery isn’t fast enough, BOPIS can become a more appealing option for customers. A recent study found that buy online, pick up in store is gaining popularity with younger shoppers, with nearly two-thirds of Gen Z using it within the last month.
With more brands looking to adapt to changing customer demands, how does this affect customer loyalty and experience?
“Traditional brick and mortar, as well as omnichannel retailers, need to continue taking advantage of one of their greatest assets: Their stores. Brands like Sephora do an excellent job of this by offering in-store beauty services and classes for loyalty program members. Lululemon is offering sweat classes and other curated events as a benefit of the new premium loyalty program it’s been successfully test piloting,” said Tom Caporaso, CEO of Clarus Commerce. “Purely transactional benefits, especially instant ones, are still important because they make people feel smart every time they shop. But we’re seeing a shift into more experiential benefits because they increase emotional loyalty to brands. These benefits allow brands to differentiate themselves and can really drive customers back into the stores.”