Gone are the days when two-day delivery was exciting. Customer expectations and shopping behaviors around delivery speed have shifted. People want everything delivered ASAP, a preference that has been accelerated by the COVID-19 pandemic and the disruptions that presented.
As a result, many more e-commerce businesses are building ‘speed’ into their DNA, cutting down on the wait time window by expanding into same-day and two-hour or less delivery coverage.
The playing field is jam-packed with marketplaces racing to deliver orders at an unbelievably fast speed, begging the question, just how much does delivery speed really matter? Here’s a round-up of various studies offering insights on the question.
The shift to e-commerce was already happening but has been accelerated by the pandemic
Regardless, these events unfolded a new chapter in e-commerce, giving rise to instant commerce, also called quick commerce, kickstarting the delivery speed trend.
Expectations around delivery speed are higher than ever, thanks in large part to Amazon Prime
Amazon has always been ahead of the delivery speed curve and is known for having the fastest and most convenient delivery options. This e-commerce giant has subtly shifted consumer perceptions of delivery speed from a “nice-to-have” to a “must-have,” and continually pushes the envelope with faster and faster offerings such as its Prime two-hour delivery.
Prime first debuted in 2005, providing two-day delivery as part of its subscription-based membership. Then in 2009, when e-commerce was still in its infancy, Amazon became one of the only major retailers to introduce same-day delivery. Same-day delivery was initially offered across just seven cities and cost Prime members $6 and non-Prime members $15. And within the next five years, customers began embracing same-day delivery, ordering 10x the number of products using same-day delivery.
Amazon’s logistics clout has disrupted a decades-old market dominated by FedEx and United Parcel Service (UPS). Businesses like Amazon and Walmart have followed suit, throwing hundreds of millions of dollars into making same-day or two-hour delivery possible for their customers.
Image source: Vox
Online shoppers place a premium on convenience and speed.
Interestingly, a survey found that 96% of respondents equated “fast delivery” with same-day delivery, 61% wanted their orders to arrive within 3 hours after checkout, and 25% declared that they would outright abandon their carts if same-day delivery wasn’t an option.
Meanwhile, Instacart recently reported that 85% of shoppers in a survey by The Harris Poll said they prefer to receive grocery orders in two hours or less.
Shoppers are willing to pay more for faster deliveries
Time is money to many shoppers, particularly to hyper-busy segments such as parents or young professionals. This demographic is typically more willing to pay a premium for convenience. Here’s a rundown of several studies that shows the significance of delivery speed to these online shoppers.
53% of shoppers in the US showed a willingness to pay a premium price for a same-day delivery window. (McKinsey)
In 2020, Amazon reported 200 million paying Prime members worldwide, up from 150 million paid Prime members worldwide at the end of 2019.
In fact, according to Statista, millennials between the ages of 25 and 40 and Gen Z between the ages of 18 and 24 are more willing to pay for faster delivery than boomers or Gen X.
Call it the “Amazon Effect,” perhaps, but consumers now expect options for two-day, same-day, and even sub-two-hour delivery options at the checkout, and they are willing to pay for it.
Optimizing delivery speed promise can substantially affect a company’s sales
The recent study “Sooner or Later? Promising Delivery Speed in Online Retail” suggests that optimizing delivery speed promises can significantly impact a company’s sales. The research showed that when the retailer promised customers one day faster shipping, sales increased, profits increased, and customers spent more per order. The one-day faster promise increased sales by 0.73%, profits by 2.0%, and value per order by 3.5%.
Similarly, the research also illustrated that a slower delivery speed promise negatively affected the variables. For example, the data shows that a one-day slower delivery speed could result in a decrease in sales by 0.51%, profits by 2.7%, and value per order by 3.1%.
Repeat purchase rates associated with 2-hour delivery were even higher than same-day delivery
ROI data from Ohi, an instant commerce provider for DTC brands, shows a strong payoff for businesses that invest in delivery speed.
Ohi analyzed some of its large partner brands that use Ohi’s 2-hour and same-day delivery and found that orders with same-day delivery had 30% higher repeat purchase rates than standard UPS/FedEx. But interestingly, repeat purchase rates associated with Ohi’s 2-hour delivery were even higher: up to 24% higher than same-day delivery and 61% higher than standard UPS/FedEx.
Outcomes observed were similar for customer lifetime value (CLV). Customers who initially ordered with Ohi same-day had 23% higher CLV than orders fulfilled through UPS/FedEx. CLV for Ohi 2-hour delivery was up to 16% higher than same-day delivery and 43% higher than standard UPS/FedEx.
To sum up ‘delivery speed in e-commerce’
So is delivery speed essential to a great overall shopping experience? If your e-commerce business does not cut down on the gap between the checkout and the customer’s doorstep, your customers will seek an alternative brand or marketplace that satisfies their need for speed. Besides, building delivery speed into your e-commerce strategy can put your brand on the path to a frictionless buying journey for your customers, which will help increase your online conversion rates and improve customer loyalty.
At Ohi, we’ve flipped the script for e-commerce fulfillment, transforming it from what is traditionally seen as a cost center into a growth engine. Brands join the Ohi platform to deliver powerfully fast, brand-focused, and memorable post-purchase experiences that enable them to grow. Want to learn more about how Ohi enables instant commerce? Get in touch today.
85% of online shoppers look for better options when delivery speed is too slow.
Within the last couple of years, delivery speed has become a top priority for online shoppers and a huge opportunity for retailers. The evolving preferences of the savvy shoppers, their increased reliance on online shopping and need for instant gratification have propelled the rise of various instant delivery platforms like Ohi and marketplaces like GoPuff, Instacart. These next-generation platforms take the delivery speed and convenience of Amazon, Walmart, and other retail giants, and deliver a better and faster approach to instant delivery.
So, what is instant delivery, and why is it a must-have for your success as a retailer?
What is instant delivery?
Instant delivery isn’t a novel concept; many of us have already experienced ultrafast delivery via a quick and easy meal ordered through Grubhub, DoorDash, Uber Eats, or whatever your go-to meal delivery app is.
According to Chris Walk, the Founder and CEO of Omni talk, the idea of instant delivery is based on ‘the universal truth of speed,’ according to which, when given a choice, people will always choose to get something as fast as possible instead of waiting.
However, unlike same-day delivery, where products can be delivered within 24 hours, instant delivery is an ultrafast delivery that generally happens within two hours or as fast as 15 minutes from the customer’s time of order.
It is e-commerce fulfillment on overdrive, made faster and better with advancements in e-commerce technology. Instant delivery is very much related to the broader quick commerce model.
Ultrafast delivery businesses like GoPuff and JOKR focus on products meant for immediate consumption that customers frequently want immediately.
Instant delivery examples you might be familiar with
GoPuff – with facilities strategically placed across hundreds of markets, GoPuff maintains an extensive network of driver-partners, allowing it to deliver quickly within 30 minutes. Each brand’s products are sold alongside hundreds of other brands in GoPuff’s own marketplace.
Walmart express delivery – customers get ordered items on their doorsteps in two hours or less. The express delivery is available on many Walmart purchases, including groceries, apparel, electronics, and other essentials.
Amazon two-hour – previously just for Prime Now users, two-hour delivery is now available on groceries and many other goods through the Amazon app or website.
Instacart delivery – picks andfulfills orders from third-party retailers’ brick and mortar stores in as little as 30 minutes.
Ohi instant delivery – Ohi’s hyperlocal micro-fulfillment centers allow direct-to-consumer brands to offer instant delivery in two hours or less.
Instant delivery stats
68% of consumers said fast shipping would lead them to place an online order, according to a February 2021 Digital Commerce 360 survey. (Digital Commerce 360).
Around 61% of Nielson IQ’s latest survey participants said they would like to have their orders delivered as fast as possible.(Supermarket News)
Meanwhile, 65% of shoppers in another study said they would be willing to pay more for faster and more reliable deliveries. (Business Wire)
55% of customers on average will switch to a competitor that offers faster delivery service. (RetailWire)
According to Ohi’s analysis, two-hour delivery is associated with 61% higher repeat purchase rates. (Ohi)
85% of consumers in a study said they search elsewhere for better options when delivery speeds are too slow. (Flexe)
The same study also revealed that one of the top two reasons for shopping cart abandonment is that delivery speeds weren’t fast enough. (Flexe)
In addition, a 2021 global consumer insights survey conducted by PWC also shows that fast delivery is shoppers’ #1 overall consideration when buying online (ranked top three by 41% of respondents). (PWC)
How does instant delivery work?
Customers and retailers alike love a lightning-quick delivery service. But, have you ever considered how instant delivery services deliver, say, a carton of milk or a pack of sodas so fast?
There are a few different ways instant delivery platforms could operate to deliver your products to your customer’s doorstep in less than two hours. Instant delivery platforms and marketplaces can either run their own dark stores/fulfillment centers or fulfill orders from third-party retailers’ existing brick and mortar stores. Once a shopper places their order, they are fulfilled at the closest fulfillment center or third-party retail store by workers (“pickers”) and delivered by local couriers, often on bikes/scooters.
In this model, instant delivery platforms like Jokr and GoPuff pick the ordered products from their dark stores or MFCs to deliver typically within 10–30 minutes.
Technicalities could vary; however, here are a few salient features of a vertically-integrated model:
These marketplaces run their own first-party MFCs, typically one in each neighborhood, similar to dark stores.
Employees pick up orders, and couriers deliver them.
Running the first-part MFCs is also less expensive compared to the hefty cost of renting space in retail stores.
Following a customer’s order, workers (called “pickers”) fill it at the appropriate micro-fulfillment facility, and a local courier (typically on a scooter or bike) fulfills it.
These delivery platforms function on an “asset-light” model. For these platforms to operate, they don’t need to set up fulfillment centers, purchase inventories, or establish supplier relationships before expanding to a new city. Compared to the other two models, these are also far easier to scale.
These delivery businesses do not need fulfillment centers or dark stores to operate.
They pick products and deliver them directly from third-party physical retail stores.
After an order is placed, a personal shopper goes to the store (or multiple stores) to pick up everything, then delivers it to you at your doorstep (typically within an hour or two).
3. Direct-to-consumer delivery model, i.e., Ohi
This model is specifically for DTC brands or e-commerce retailers that are looking to add a DTC channel. The direct-to-consumer (D2C) instant delivery providers like Ohi provide instant delivery and micro-fulfillment solutions specifically for DTC sellers or e-commerce businesses looking to set up a DTC channel.
Although this model sounds very similar to the vertically-integrated model, they have some dissimilarities.
For instance, under the DTC model, customers will place orders directly on a brand’s DTC website, rather than on a marketplace website/app.
The instant delivery service takes care of the back-end order fulfillment functions.
These services have dedicated MFCs hyperlocal to the consumer, enabling instant delivery for their clients.
In addition to the above, instant delivery platforms like Ohi use eco-friendly transportation for last-mile delivery.
For many direct-to-consumer e-commerce brands, pairing with an instant delivery provider like Ohi is the only viable option to meet their online customers’ demands and stand toe-to-toe with Walmart and Amazon when it comes to delivery speed. The reason is that many DTC-focused businesses lack the network of retail stores needed to pull off instant delivery on their own. That’s where Ohi’s DTC-focused website integrations, micro-fulfillment network, and post-purchase experience centered on instant delivery come into play.
Here’s how Ohi’s quick delivery works:
Instant delivery vs. traditional 3PLs
All this instant delivery talk begs the question, how are instant delivery platforms different from third-party logistics companies?
Instant delivery and traditional 3PLs are poles apart in terms of delivery speed, transportation, and approaches to warehousing. Here’s a breakdown of the differences between quick delivery and traditional third-party logistics.
Instant delivery typically relies on micro-fulfillment centers (MFCs) positioned within densely populated areas, enabling ultrafast deliveries, i.e., within 15 minutes to two hours after placing an order. Whereas traditional 3PLs deliver in 3 to 5 days, their fastest expedited delivery is typically two-day or the next day.
Traditional 3PLs rely on massive warehouses, typically as large as 300,000 square feet. On the other hand, instant delivery platforms rely on micro-fulfillment centers that are much smaller – usually 2,000 to 5,000 square feet – located hyperlocal to customers in the densely-populated areas of major cities.
Another difference is the form of delivery chosen for the last mile. For transportation, traditional 3PLs rely on bigger delivery vehicles, since orders are delivered in huge batches owing to the increased travel distance. However, because of the vastly reduced distance between MFCs and the end customer, instant delivery providers often use eco-friendly two-wheeled vehicles such as bikes, e-bikes, or scooters.
Depending on the size of the business, a typical e-commerce store may have 15,000 or more SKUs. Amazon, for example, has the potential to store about 350 million SKUs, including both fast-moving and slow-moving items. On the other hand, Instant delivery services rely on micro-fulfillment facilities with a capacity of 2,000 to 4,000 SKUs (total SKU count for all brands within the MFCs) of typically fast-moving items.
Types of businesses instant delivery works best for?
While it’s true that instant delivery has opened up a lot of doors to brands that couldn’t otherwise offer the convenience and speed of two hours or less delivery, it is not a one-size-fits-all solution.
Here are three factors to help you determine if instant delivery is the right fit for your business:
1. Brands that have a higher-order volume and lower SKU count
Instant delivery is a good fit for products with a high order volume or products that sell fast and have a lower SKU count. As instant delivery providers rely on micro-fulfillment centers, a larger SKU count would reduce shelf space, therefore, it is ideal for fast-moving consumer goods.
With the localized nature of MFCs, instant delivery doesn’t lend itself particularly well to highly specialized items like bespoke crafts, artisan goods, or customized products.
2. Brands that sell consumables or products that are needed right away
Delivering bulky items such as large electronics or furniture is far from possible on a bike or scooter, which is the mode of transportation for many instant delivery businesses.
In addition, 15 minutes or two-hour or less delivery services use localized micro-fulfillment centers with a smaller storage capacity. Hence, it would be pointless to cram the smaller space with bulky goods that won’t turn fast.
For this reason, instant delivery works best for non-bulky products that can be packed and shipped quickly without a lot of manpower or special handling. This means that a carton of milk or a can of soda can be delivered withinstant delivery; however, bulky items such as furniture, large electronics like TVs, and larger appliances are a no-go.
So, does instant delivery makes sense for your e-commerce business?
Benefits of instant delivery
1. Cut down on delivery time and last-mile costs
The longer an order has to travel to get to the customer’s doorstep, the more chances for things to go wrong in that last mile, such as order mixups, traffic jams, and other delays.
As opposed to traditional 3PLs, instant delivery companies can get goods into the hands of customers in a relatively short time. As quick commerce businesses like Ohi rely on micro-fulfillment, the last-mile transportation times and costs are reduced considerably, making it more feasible to offer two-hour or less delivery. This converts to a positive post-purchase experience, enhanced consumer satisfaction, and a significant return on investment for e-commerce businesses.
3. Ensure operational excellence
Instant delivery platforms like Ohi use modern technologies (including AI or machine learning forecasts) to provide your DTC with inventory accuracy and on-time delivery rates that outperform the conventional third-party logistics providers. Platforms like Ohi also integrate with various last-mile delivery providers to make sure your customers get fast and efficient delivery that translates into higher customer happiness and fewer or zero CX support inquiries on late/missing deliveries.
3. Potential for brands to be sustainable
According to Shopify, consumers demand fast, free, and sustainable delivery at checkout. In addition, nearly 72% of customers want brands they shop at to use sustainable packaging. According to another study, around 80% of customers say sustainability is essential.
Not only does an instant delivery solution have the potential to meet your customers’ sustainability demands, but as mentioned earlier, it can also translate into better delivery and post-purchase experience as well.
As instant delivery platforms rely on hyperlocal micro-fulfillment centers, there is very little reliance on fuel-based transportation or wasteful exterior packaging materials, which together minimize your brand’s carbon footprint.
Instant delivery providers like Ohi enable their partner brands to offer carbon-neutral delivery to their eco-conscious customers.
Instant delivery is transitioning from a nice-to-have to a must-have
Simply put, two-day and next-day delivery is not fast enough for the modern consumer. Therefore, growth-minded e-commerce retailers are increasingly considering methods of enabling instant delivery, as this is a proven strategy to improve their customer experience and enable enhanced customer acquisition and retention.
About Ohi
At Ohi, we’ve flipped the script for e-commerce fulfillment, transforming it from what is traditionally seen as a cost center into a growth engine. Brands join the Ohi platform to deliver powerfully fast, brand-focused, and memorable post-purchase experiences that enable them to grow. Want to learn more about how Ohi enables instant commerce? Get in touch today.
Quick Commerce 101: What is Quick Commerce & Key Considerations
The COVID-19 pandemic and the lockdowns that came with it helped give rise to a new category of e-commerce – quick commerce (or q-commerce) – characterized by ultrafast delivery speed generally within two hours or less. Roughly valued at $25 billion in 2021, the Q-Commerce industry will expand to $72 billion by 2025.
So – what is q-commerce, and what sets it apart from traditional e-commerce?
What is quick commerce?
As the name suggests, quick commerce or q-commerce is all about speed and convenience. It may not be DC’s Flash-fast (2,532 miles per hour), but it is far faster and more convenient than traditional e-commerce.
The term refers to e-commerce businesses that deliver goods within a couple of hours or even minutes, as in the case of some fast grocers.
Although the term is sometimes used interchangeably with “on-demand delivery” or even terms like “instant commerce”, the idea of quick commerce isn’t a new one. It’s been around in the food industry for ages now, and it’s merely been ushered into the mainstream by evolving consumer preferences.
Many q-commerce companies, including many that focus primarily on groceries with a marketplace model, like GoPuff, Weezy, Jokr, Glovo, Delivery Hero, and Instacart, have seen increased interest over the past few years. These instant commerce businesses focus mainly on products intended for immediate consumption that customers often need or want instantly delivered. (More on product fit later.)
What are the key differences between quick commerce & traditional e-commerce?
From product fit to delivery speed and warehousing, quick commerce and traditional e-commerce are worlds apart. Here’s a detailed overview of how q-commerce is different from conventional e-commerce.
1. Delivery speed: minutes & hours versus days
The most distinctive feature that sets quick commerce apart from traditional e-commerce is delivery speed/time. Quick commerce businesses typically have micro-fulfillment centers (MFCs) positioned within densely populated areas, enabling ultrafast deliveries, i.e. within 15 minutes to two hours after placing an order.
With micro-fulfillment centers and requisite supporting technology for demand forecasting, inventory allocation, and last-mile courier delivery in place, q-commerce businesses are able to pick, pack, and dispatch orders near instantly.
In contrast, traditional e-commerce stores deliver in 3 to 5 days, with expedited delivery sometimes available for delivery in 1-2 days.
2. Micro-fulfilment centers vs. traditional warehouses
Traditional warehouses are massive spaces, can be as large as 300,000 square feet. Micro-fulfilment centers are much smaller, usually 2,000 to 5,000 square feet.
As discussed, one key feature that sets quick commerce apart from traditional e-commerce are the micro-fulfillment centers or micro-warehouses.
Traditional warehouses can be massive spaces – typically as large as 300,000 square feet. For example, the typical Amazon warehouse is around 800,000 square feet.
Since these warehouses are so big, they tend to be located on the outskirts of cities, in industrial or rural areas where there’s more space for such large buildings. Because these warehouses are outside of big cities, they are typically not suitable for fulfilling last-mile deliveries into the city, as couriers would have to travel to and from the poorly-situated warehouses, making last-mile delivery both time-consuming and costly.
By contrast, q-commerce orders are typically fulfilled through a network of micro-fulfillment centers that are much smaller – usually 2,000 to 5,000 square feet – located hyperlocal to customers in the heart of major cities. This greatly reduces the distance to the customer and enables ultrafast and efficient last-mile delivery.
A common approach to establishing micro-fulfillment centers is to purchase or lease underutilized commercial spaces in urban areas, where people live and work. Some quick commerce companies are even looking at alternative means of converting rental flats or even shipping containers into micro-fulfillment centers, though these come with their own unique sets of challenges.
3. Sustainability: two wheels vs. truck or air delivery
Another distinction in quick commerce is the mode of transportation used for last-mile delivery. Quick commerce businesses can often use eco-friendly two-wheeled vehicles such as bikes, e-bikes, or scooters for delivery because of the significantly reduced distance from MFCs to the end customer. In very densely populated areas, quick commerce couriers even rely on foot couriers.
With many brands and customers now demanding sustainable practices from businesses they frequent, quick commerce has seen great momentum due to its reduced reliance on traditional delivery vehicles like cars, trucks, and airplanes.
Traditional e-commerce, on the other hand, frequently uses larger delivery vehicles for transportation. For instance, according to CNBC, Amazon owns 40,000 semi-trucks, 30,000 vans, and a fleet of more than 70 planes to ensure speedy delivery of its products.
As an example of the difference between traditional and quick commerce, Stanford research showed that DTC quick commerce provider Ohi’s deliveries were 5x more eco-friendly than standard ground delivery and 22x more eco-friendly than next-day air.
4. Product Fit: Smaller, curated selection of goods versus a wide variety of goods
A typical e-commerce store might carry 15,000 SKUs or more, depending on the size of the business. For instance, Amazon warehouses are located in the outskirts of the city and are comparatively more extensive in the area; therefore, they have the capacity to store around 350 million SKUs, including both fast and slow-moving products.
By contrast, q-commerce businesses rely on micro-fulfillment centers that generally only have a capacity of 2,000 to 4,000 SKUs (total SKU count for all brands within the MFCs) of fast-moving items. Therefore, micro-fulfillment isn’t the best fit for every brand and type of product. Due to space limitations in MFCs, bulky products and products that don’t turn quickly are not ideal in the quick commerce model.
Understanding the different quick commerce models
1. Vertically-integrated instant delivery model, i.e., marketplaces like GoPuff
In a vertically-integrated instant delivery model, q-commerce marketplaces such as Gopuff and Jokr pick and deliver shoppers’ orders from the range of essential items they have in their dark stores or MFCs, typically within 10–30 minutes.
While the specifics might differ slightly, most of these vertically-integrated instant delivery services tend to have the following approach:
These marketplaces have established their own first-party MFCs, akin to dark stores, typically one per neighborhood, and engage employees to pick orders and couriers to deliver them. GoPuff, for example, operates more than 500 micro-fulfillment centers.
Since dark stores or MFCs are not designed for shoppers, the space can often be utilized more efficiently than traditional stores.
The cost of running them (at scale) is also typically lower than the cost of renting space in retail stores.
These marketplaces rely on well-integrated software and IT systems that can effectively track and manage inventory in their fulfillment centers.
After a customer placed an order, workers (“pickers”) fill it at the appropriate micro-fulfillment center, and a local courier (often on a scooter or bike) delivers it.
This model operates in contrast to third-party platforms like Instacart, which frequently rely on offering substitutes and replacements in the shopping process, due to limitations with real-time inventory tracking and influence over product offering.
Unlike vertically-integrated instant delivery and direct-to-consumer models, third-party delivery platforms function on a decidedly “asset-light” model. This means they don’t require fulfillment centers, inventories, or supplier relationships to be established before expanding a new city.
Unlike other on-demand delivery services, the third-party delivery model doesn’t involve any warehousing component. So, how does it work?
These services deliver products directly from third-party bricks and mortar retail stores.
After an order has been placed, a personal shopper goes to the store (or multiple stores) to pick up everything, then delivers it to you at your doorstep (typically within an hour or two).
As these delivery businesses do not require fulfillment centers or dark stores, they are able to scale relatively quickly. For instance, from July 2020 to July 2021, Instacart increased its delivery reach from 30,000 stores to nearly 55,000 stores in North America and is presently available to over 85% of US households.
To expand network density, these delivery platforms simply add new retail partners. For example, Instacart has added apparel (H&M), beauty (Sephora), general merchandise (Big Lots), and prescription delivery (Costco) to its portfolio to attract a more comprehensive set of audiences.
3. Direct-to-consumer quick commerce, i.e., Ohi
With the rise of DTC e-commerce in recent years – as per eMarketer US DTC sales grew by 68.4% from 2019 to 2021.) – it is inevitable that many DTC brands demand an instant delivery solution, too.
In recent years, quick commerce providers like Ohi have built instant delivery and micro-fulfillment solutions specifically for DTC sellers.
Many DTC businesses don’t have their own warehouses or order fulfillment capabilities. Instead, they traditionally rely on 3PLs (3rd Party Logistics companies) to fulfill orders, typically in 3-5 or 4-7 days. In some cases, orders can be delivered in 1-2 days depending on the proximity of the end customer to the warehouse fulfilling an order.
This is where direct-to-consumer (D2C) instant delivery comes into play. Instant delivery providers like Ohi can enable DTC brands to leverage micro-fulfillment with a robust technology platform that handles the requisite demand forecasting, inventory management, and handoff to an optimal last-mile delivery courier.
The result? These DTC brands are then able to offer surprisingly fast e-commerce deliveries, with service levels ranging from sub-two-hour and same-day to next-day, depending on a customer’s location.
While this model may seem operationally similar to the vertically-integrated delivery model, there are a few key differences, for instance:
With the DTC model, your customers can order directly from your existing website, accessing instant delivery options through an e-commerce platform integration. Ohi integrates with Shopify, Shopify Plus, WooCommerce, BigCommerce, Magento, and Salesforce Commerce Cloud, for instance.
Your curated DTC shopping experience remains front and center; however, the instant delivery service takes care of the back-end order fulfillment functions and keeps this powerful ROI-generating capability operationally simple.
However, similar to the vertically-integrated delivery model, DTC instant commerce providers like Ohi also operate micro-fulfillment centers in densely-populated urban locations with high demand.
These dedicated MFCs are hyperlocal to the consumer, enabling instant delivery in major metro areas such as New York City, Los Angeles, San Francisco, Brooklyn, Chicago, Philadelphia, etc.
As was discussed previously, the use of micro-fulfillment enables Ohi to use eco-friendly transportation for last-mile delivery. Most of Ohi’s brand partners have opted into Ohi’s unique carbon-neutral delivery service, which relies on eco-friendly transport, sustainable packaging, and a carbon offsetting partnership.
Benefits of Quick Commerce
1. Speed
Compared to conventional e-commerce, q-commerce businesses can get goods into customers’ hands in a small fraction of the time. This translates to increased customer satisfaction and has been shown to provide meaningful ROI for e-commerce brands.
In addition, a 2021 global consumer insights survey conducted by PWC also shows that fast delivery is shoppers’ #1 overall consideration when buying online (ranked top three by 41% of respondents).
2. Reliability
Many micro-fulfillment-based quick commerce companies like Ohi use advanced technologies (including AI or machine learning forecasting) that provide extremely high inventory accuracy and on-time delivery rates that surpass traditional e-commerce companies.
Platforms like Ohi also integrate with a wide range of last-mile delivery couriers to ensure timely and accurate delivery to the end customer, resulting in increased customer satisfaction and reducing or eliminating “where is my order” CX support tickets.
3. Sustainability
In a world where nearly 80% of customers say sustainability is important for them, quick commerce can align eco-consciousness with an objectively better delivery experience. Greatly reduced reliance on fuel-based transport, the ability to reduce/eliminate exterior packaging materials, and other provider-specific practices (like Ohi’s carbon-neutral delivery service) make quick commerce worth shouting from the mountaintops from a sustainability perspective.
Conclusion :
Given current retail trends, the immense interest in quick commerce from retail and DTC businesses is not surprising. Businesses that want to evolve to meet increasing customer expectations for instant delivery now have an unprecedented range of options, and investing appropriately in quick commerce solutions can provide them with outsized returns for both customer acquisition and retention.
About Ohi
At Ohi, we’ve flipped the script for e-commerce fulfillment, transforming it from what is traditionally seen as a cost center into a growth engine. Brands join the Ohi platform to deliver powerfully fast, brand-focused, and memorable post-purchase experiences that enable them to grow. Want to learn more about how Ohi enables instant commerce? Get in touch today.
Deliver Drinks Faster: How DTC Beverage Brands Can Benefit from Instant Delivery
Aiza Chaudry
Insights
Many beverage brands jumped on the direct-to-consumer bandwagon during the pandemic, and brands that were already DTC made big returns. And as more people ordered drinks online, these DTC early birds were the first to disrupt the beverage industry.
Plot twist: the game is no longer only about having an online presence or selling directly to consumers; consumers now want beverages faster.
This early success attracted a slew of new DTC-focused players, creating competition within a niche market. Even large omnichannel beverage brands had fear of missing out, so many also began selling DTC to stake their claim in a growing market. Meanwhile, marketplaces like Amazon, with Prime Now delivery, were already leading the fast delivery trend.
All of this has resulted in the present situation: if your DTC beverage business doesn’t provide instant delivery, your beverage business will cede market share to competitors who do.
Why DTC Beverage Brands Need to Harness Instant Delivery
With Amazon, Walmart, Instacart, and quick commerce marketplaces like GoPuff delivering drinks within one to two hours, why would any customer be interested in ordering directly from a beverage brand’s website?
These top retail giants have set the bar for convenience very high, driving up consumer expectations by delivering many of their essential and not-so-essential products within an hour or two.
And if your DTC beverage business doesn’t upgrade to Amazon-like delivery speed, you will eventually lose customers to leading marketplaces like Amazon, Walmart, or other big companies that are on top of their instant delivery game.
Beverage delivery challenges
While the one to two hours delivery window isn’t an unrealistic standard to meet, most direct-to-consumer brands lack the fulfillment capabilities to provide rush delivery all on their own. Even when brands have an in-house micro-fulfillment warehouse, fulfilling orders comes with its fair share of challenges such as warehouse rent and equipment, labor, utilities, insurance, materials, inventory management software, shipping, etc.
Furthermore, fulfilling and shipping beverages safely is another challenge, especially delivering glass bottles over long distances via services like UPS/FedEx, which charge by the weight. There’s always the impending risk of breakage, resulting in losses and, worse yet: unhappy customers.
And if it’s a drink that requires refrigeration, for instance, a kombucha, then there are the absurdly high costs associated with shipping weight, extra-packaging materials, and expensive cold packs.
In short, traditional delivery options require beverage brands to spend a significant amount of extra time and money.
That’s where instant commerce comes into play
As your instant commerce partner, Ohi will help your DTC business stand toe-to-toe with Amazon or big-box stores like Walmart.
Traditional e-commerce fulfillment is harmful to the planet, as orders travel by plane or ground over long distances.
On the other hand, Ohi’s instant commerce solution is fast, sustainable, and cost-effective. Because we keep our inventory “hyperlocal” in micro-fulfillment centers across major metropolitan areas, this helps our partner brands deliver drinks within two hours or same-day. In addition, it’s vastly more cost-effective as there’s no long-distance delivery involved.
After your beverage business teams up with Ohi, we will first analyze your product demand at the SKU level. Then, a dedicated team will continuously work with your operations team to ensure there is always sufficient inventory across Ohi’s nationwide micro-fulfillment centers.
In addition, our technology will constantly monitor delivery speed and consistency, adjust courier efficiency, and other factors to guarantee your customers always receive their ordered beverages within the delivery window they selected.
Top DTC-Focused Beverage Brands Benefiting from Instant Delivery
Olipop
Olipop is a leading fizzy tonic brand. The maker of a new kind of soda makes their sodas from all-natural ingredients, combining the benefits of prebiotics, plant fiber, and botanicals.
Although Olipop has a powerful omnichannel e-commerce presence, the brand believes that a direct-to-consumer strategy is vital to its success. And to meet its high customer experience expectations, the brand required a D2C/DTC fulfillment partner.
After teaming up with Ohi, Olipop’s ROI has undergone a steady boost. Olipop now delivers its consumers fast delivery of its sparkling tonic alongside a fantastic post-purchase experience via Ohi’s platform.
In addition, many of their customers order subscriptions regularly now. With Ohi, Olipop customers can schedule and reschedule deliveries within seven days and three different time windows.
Olipop saw a 150% increase in customer lifetime value (CLV) and a 140% lift in lifetime orders for Ohi-shipped orders (versus non-Ohi).
The notable increase in repeat purchases highlights the value of “fast, free, and flexible” delivery for customers and shows just why Olipop’s customers have rated Ohi 4.6/5 stars for exceptional service.
Health-Ade
Health-Ade is one of the country’s most prominent pro-biotic kombuchas that encourage people to #followtheirgut.
The DTC-focused beverage brand was looking for a better alternative to traditional 3PLs in its major metro areas to reduce fulfillment costs while offering a fantastic customer experience.
Traditional e-commerce fulfillment was not a good match for Health-Ade: they realized that delivering glass bottles over long distances via UPS/FedEx using a traditional 3PL would be impractical. In addition, there is the risk of breakage, high delivery weight, and extra-packaging costs. Lastly, kombuchas need to be refrigerated to retain freshness and probiotic qualities, demanding the use of expensive cold packs.
Ohi enabled Instant commerce for Health-Ade to help them deliver Kombuchas to their customers within a week of deployment. And Health-Ade’s customer lifetime value (CLV) has since increased by 49% on orders shipped with Ohi (versus standard FedEx/UPS), reflecting how valuable the instant delivery experience is to customers.
Athletic Brewing Company
A leading non-alcoholic beer brand was looking for an instant commerce solution to improve its customer experience and enable D2C growth.
With its wonderful-tasting, non-alcoholic brews made from premium quality, all-natural ingredients, Athletic Brewing Company is spearheading a craft beer revolution. Founded by co-founders Bill Shufelt and Jon Walker for “the modern beer drinker”, these low-alcohol beers are for people who aren’t willing or able to withstand the effects of alcohol intake.
Unsatisfied with the traditional 3PLs fulfillment functionality as they were not D2C-friendly, Athletic Brewing partnered with Ohi.
After teaming up with Ohi, Athletic Brewing has seen a 30% lift in repeat purchase rates (Ohi-shipped orders versus orders that ship via FedEx/UPS). Athletic Brewing customers rate Ohi an average of 4.7/5 stars.
The above-discussed success stories sum up the difference instant delivery can help make.
Deliver Drinks Faster!
85% of consumers will shop elsewhere for better options when delivery speeds are too slow. Slow delivery speed remains a primary reason for shopping cart abandonment. However, instant delivery is said to have contributed to higher conversion rates. In fact, it is the biggest motivator for 68% of shoppers.
The beverage market is ripe for rapid expansion; however, if your DTC business doesn’t keep pace with the marketplaces and large retailers, you’ll inevitably lose market share.
About Ohi At Ohi, we’ve flipped the script for e-commerce fulfillment, transforming it from what is traditionally seen as a cost center into a growth engine. Brands join the Ohi platform to deliver powerfully fast, brand-focused, and memorable post-purchase experiences that enable them to grow. Want to learn more about how Ohi enables instant commerce? Get in touch today.
Instant Delivery: How Top D2C Brands are Leveraging ‘Speed’ as a Competitive Advantage
Aiza Chaudry
Other
News flash: the slow and steady tortoise no longer wins the race.
The modern shopper’s need for fast delivery has intensified, thanks in large part to the expectations that industry bellwethers like Amazon, Walmart, and Target have helped shape in the past couple of years.
Direct-to-consumer brands and smaller retailers literally have zero chance of protecting (much less growing) their market share without similarly adopting the ways of the speedy hare.
Fortunately, the emergence of instant commerce and micro-fulfillment players like Ohi empowers them to close the gap and even out-compete many leading marketplaces when it comes to e-commerce fulfillment.
How top DTC brands are leveraging instant delivery
Instant delivery is way more than just a ‘nice-to-have’. It’s a must-have upgrade, and it’s very much mandatory if you want to meet your customers’ expectations.
A 2021 global consumer insights survey by PWC revealed “fast/reliable delivery” as consumers’ #1 overall consideration when shopping online.
And businesses who don’t upgrade to at least Amazon-like delivery speed will eventually lose out to Amazon or other big retail companies that are solving for instant commerce.
Happy customers help you grow your brand’s bottom line. According to proprietary Ohi research, the D2C brands that are leveraging instant 2-hour delivery had 24% higher repeat purchase rates compared to same-day delivery and an astounding 61% higher repeat purchase rates when compared to standard UPS/FedEx.
Instant delivery is game-changing for D2C-focused brands, and here are a few success stories that illustrate that very point.
Top DTC Brands Benefiting from Instant Delivery
Olipop’s CLV has grown by 150% with Instant Delivery
Olipop is a leading fizzy tonic brand, the maker of a new kind of soda made from all-natural ingredients, combining the benefits of prebiotics, plant fiber, and botanicals.
Although the brand has a solid omnichannel presence, they believe a direct-to-consumer strategy is crucial to growth.
And for that purpose, the brand needed a D2C/DTC fulfillment partner to meet its high customer experience expectations.
Olipop’s ROI has steadily increased since teaming up with Ohi.
Thanks to the flexible and fast delivery of its sparkling tonics on Ohi’s platform, Olipop now provides its customers with a tremendous post-purchase experience that matches its excellent pre-purchase experience. As a result, many of their customers have repeat subscription orders; with Ohi, Olipop customers can schedule and reschedule deliveries within seven days and in three different time windows.
For Ohi-shipped orders, Olipop experienced a 150% higher customer lifetime value (CLV) and a 140 percent increase in lifetime orders (versus non-Ohi).
The significant increase in repeat purchases highlights the significance of “fast, free, and flexible” delivery for customers and explains why Olipop customers rate Ohi 4.6/5 stars for exceptional service.
Ovira more than doubled its repeat purchase rate
For centuries, women have endured painful periods (dysmenorrhea), pains associated with endometriosis. Ovira is a DTC-focused company devoted to helping women end this pain. Ovira’s revolutionary device, Noha, minimizes pain using pulse therapy.
Because period pain can be spontaneous and unbearable, Ovira wanted a fast delivery of the Noha device.
Ohi seemed like the perfect instant fulfillment partner Ovira sought to meet its customers’ need for convenient and fast delivery.
Having teamed up with Ohi, Ovira now delivers delightfully fast, on-brand, and memorable post-purchase experiences that enable brand growth.
With instant delivery as part of its post-purchase customer experience, Ovira’s repeat purchase rate has more than doubled (+120% for Ohi-shipped orders in comparison to orders shipped via FedEx/UPS). In addition, Ovira’s customers who ordered with Ohi rated us an average rating of 4.7/5 stars.
These numbers clearly emphasize what it means for Ovira’s customers to have instant pain relief products.
Health-Ade’s customer lifetime value topped 40%
To minimize fulfillment costs while providing a great customer experience, one of the country’s most popular kombucha brands sought a better alternative to conventional 3PLs in its major metro areas.
Health-Ade, established in 2012, has quickly developed a nationwide customer base that adores its kombuchas for their delicious taste, an exciting variety of flavors, and countless health benefits.
Kombucha has special handling/transport requirements because it must be refrigerated to maintain peak freshness and probiotic qualities.
Traditional e-commerce fulfillment wasn’t a good fit for Health-Ade: they realized that delivering glass bottles over long distances via UPS/FedEx using a traditional 3PL wouldn’t be viable. First, there’s the risk of breakage. And then there are the ridiculously high costs associated with shipping weight and extra-packaging materials and the need to keep the kombuchas cold, typically necessitating the use of expensive cold packs.
Health-Ade required more efficient handling of e-commerce fulfillment in its most critical metro areas.
Ohi delivered on all that and more.
Ohi enabled instant commerce for Health-Ade allowing them to deliver Kombuchas instantly to their customer base within a week of deployment.
After partnering with Ohi, Health-Ade has seen its customer lifetime value (CLV) increase by 49% on orders shipped with Ohi (versus standard FedEx/UPS), showing just how valuable the instant commerce experience is to customers.
Health-Ade’s customers have rated Ohi an average of 4.6/5 stars for service excellence.
Athletic Brewing Company experienced a 30% increase in their repeat purchase rate
Athletic Brewing, a non-alcoholic craft beer brand, was looking for a faster and more reliable fulfillment partner and had been unimpressed with traditional 3PLs’ fulfillment capabilities and overall lack of D2C-friendliness.
As impressive as Athletic Brewing’s products are – beers brewed from high-quality, all-natural ingredients for “the modern-day beer drinker”- they needed an instant commerce solution to kick their customer experience up a notch and drive meaningful D2C growth.
After learning how Ohi could elevate their customer experience and drive significant ROI while keeping its powerful brand front-and-center, the brand turned to Ohi’s instant delivery solution.
Athletic Brewing provides its customers powerfully fast, brand-focused, and memorable post-purchase experiences via the Ohi platform.
Athletic Brewing now enjoys a 30% uptick in repeat purchase rates on Ohi-shipped orders compared to orders delivered through FedEx/UPS. Additionally, athletic Brewing customers rated Ohi an average of 4.7/5 stars.
With Ohi’s shipping options – 2-hour, same-day, and next-day delivery – the DTC-focused brand delivers great-tasting beers to its customers alongside a custom-branded post-purchase experience.
Customers receive real-time tracking information via email/SMS (tailored to Athletic Brewing’s brand guidelines), allowing them to track their orders to their doors.
So how does Ohi do it?
We keep our inventory “hyperlocal” in micro-fulfillment centers in major metropolitan areas. This enables our partner brands to deliver their products to customers within the same day or two hours – in time for a spontaneous dinner, a late or early morning drink, or to relieve period pain.
We’re proactive – our dedicated teams analyze your brand’s product demand at the SKU level, consistently working with the operations team to ensure there’s sufficient inventory available across the micro-fulfillment networks. In addition, Ohi’s account managers work with brands to ensure seamless procedures while identifying ways to boost efficiency and ROI for our partner brands.
Our technology constantly monitors delivery speed and consistency within the Ohi network, modifying courier utilization and other factors to ensure customers get what they ordered within the chosen delivery window.
And because we keep our inventory as close to customers as possible, our packaging and last-mile shipping are also more environmentally friendly.
Fast & free wins the race!
Many of the world’s top marketplaces and big retailers are already looking beyond same-day delivery and upping the ante once again with sub-hour delivery options.
And with 15-minute delivery becoming a thing in New York City and elsewhere, your D2C brand crossing the finish line in 3-5 business days just won’t suffice any longer. The race will have been long over before your brand reaches the line.
About Ohi At Ohi, we’ve flipped the script for e-commerce fulfillment, transforming it from what is traditionally seen as a cost center into a growth engine. Brands join the Ohi platform to deliver powerfully fast, brand-focused, and memorable post-purchase experiences that enable them to grow. Want to learn more about how Ohi enables instant commerce? Get in touch today.
E-commerce Supply Chain: Instant Delivery & Other Best Practices to Maximize Operational Efficiency
Aiza Chaudry
Other
One rusted cog can derail your entire supply chain, impacting operational efficiency, resulting in decreased margins, lost revenue, slow supply chain velocity – and above all, decreased customer satisfaction. By optimizing your e-commerce supply chain, you can overcome these buffers, and return to maximum operational efficiency.
Before we get to optimization best practices to deal with supply chain kinks, here’s a brief overview of supply chain optimization.
Optimizing e-commerce supply chain: why it needs to be top of mind
Supply chain optimization is the process of fine-tuning your supply chain to remove any trouble spots so that it performs efficiently.
Although your supply chain might seem like an unsung hero that works behind the scenes, the success of your entire online business literally hinges on your supply chain.
Any disruptions in the supply chain i.e lack of visibility in micro-fulfillment operations, ineffective order processing, delayed or wrong orders, all impact the customers. And customers don’t want the constant worry of receiving the wrong or damaged products or delayed delivery.
Ever wonder what Amazon’s secret to success is?
The e-commerce leader owes its success to its advanced supply chain model. What began in Jeff Bezos’s garage give-or-take 25 years ago, with solely books as products, is today recognized as the largest and most efficient supply chain operation in the world.
Supply chain optimization: best practices to eliminate buffers
With fast and free shipping as a key driver for online and cross-channel purchases for the fifth year in a row, the biggest opportunity for brands and retailers lies in creating more efficiencies in the supply chain. (Walker Sands, award-winning marketing agency)
This is to say, a well-organized and efficient supply chain can expedite nearly all major e-commerce micro-fulfillment operations and distribution processes, ensuring that customers’ expectations are fulfilled. Let’s get straight to the optimization practices.
Automate your supply chain processes
It’s true we’re living in the age of smart machines, however, automating the supply chain does not entail bringing on board the likes of HK-47 (the evil robots from the Star Wars franchise) or a very self-aware Ava (Ex Machina).
Automation will help you increase employee productivity, reduce human error and costs, and increase operational efficiency. A report by McKinsey says automation is capable of accelerating the productivity of the global economy by between 0.8% and 1.4% of global GDP annually.
Here are a few supply chain operations you can automate:
Order fulfillment
Inventory management (including updates)
Payments and invoicing
Customer service
Picking and packing
Defining as well as tracking revenue and expansion goals
Using bulk actions to handle high-order volumes
As an example, Ohi’s inventory and order management platform gives DTC e-commerce brands actionable insights into SKU-level demand, enabling brands to automate functions for efficiency and savings. Ohi merchant partners have seen increases of up to 120% in repeat purchases, along with 28% higher conversion and 35% increases in lifetime customer value.
During the pandemic supply chain disruptions, brands like Nike realized the importance of automating operations. Nike, for instance, made a few important changes in its supply and decided to use radio-frequency identification (RFID) technology to automatically identify and track its footwear as well as some of its apparel. What’s more, with greater visibility into its inventory levels throughout its supply chain, the brand was better able to meet demand across its many retail/distribution channels.
Improve your delivery performance
Delivery performance is how successful the supply chain is at delivering products and services to customers.
In a competitive marketplace increasingly driven by instant delivery, customer expectations for delivery speed/timeliness are extremely high. People want to have everything delivered fast, and they have little patience for missing or late shipments. They have plenty of options in terms of marketplaces and other brands, so one delayed delivery can cause them to cancel their order and move on to your competitor.
One dilemma for DTC/D2C brands is that many aren’t capable of delivering orders with Amazon Prime Now-type speed. Here at Ohi, we’ve cracked the formula and are helping our brand partners offer ultrafast delivery via our micro-fulfillment centers. Meanwhile, Ohi’s latest delivery scheduling feature makes it easy for customers to schedule, track and even reschedule when needed – home delivery when it is most convenient for them.
All Ohi brand partners, including leading beverage, CPG, and beauty players – Olipop, Alkaline88®, Health-Ade, and SolaWave – now have access to the delivery scheduling option to help boost their conversion rates and customer lifetime value.
Monitor and interpret real-time data for on-going improvement
Only 6% of companies report full visibility on their supply chain. 69% of companies do not have total visibility. (zippia)
Having access to the right data from an analytics standpoint can help you make educated decisions for supply chain planning. Inventory turnover rate, order accuracy, time to ship, storage capacity used, and the average cost per unit for storage, inbounds, fulfillment, and shipment are all critical metrics to track, as they provide insight into which areas of your supply chain are thriving and which require improvement.
In fact, analyzing the right kind of data that can provide supply chain visibility in real-time will also help foster better risk management.
Staying in the dark and avoiding numbers never helped anyone; without real-time information, you will frequently find yourself looking in the rearview mirror and unable to respond quickly to dynamic supply and demand conditions.
Optimize for sustainability
Your first step is to analyze your entire supply chain process and identify which areas can be improved. Some of these elements will be easy to identify; for instance, delivery vehicles that consume a lot of fuel or wasteful packaging materials.
If you aren’t already, make environmentally-friendly packaging and instant delivery a part of your supply chain. Besides saving the planet, sustainability is also becoming an increasingly important purchase factor for customers nowadays.
For instance, here at Ohi, our instant delivery generates the least carbon emissions because we ship products from micro-fulfillment centers that are located very close to customers. Because we use bike/e-bike/scooter couriers and foot couriers whenever possible in densely populated urban areas, instead of vans or cars, our transportation carbon footprint stays small.
In fact, Ohi deliveries were shown to be 22x more eco-friendly than next-day air and 5x more eco-friendly than 3-5 day ground.
As for packaging, for many of our rush and same-day deliveries, Ohi uses eco-friendly reusable totes, minimizing the use of cardboard/plastic waste in our packaging.
A healthy supply chain is crucial to e-commerce success.
E-commerce top guns like Amazon and Walmart are not slowing down on innovation and growth – and the supply chain continues to be one of their most powerful levers to outcompete DTC/D2C stores and smaller retailers. Strengthening your supply chain is therefore all the more imperative if you want to stay relevant and grow your e-commerce brand in these times.
About Ohi
At Ohi, we’ve flipped the script for e-commerce fulfillment, transforming it from what is traditionally seen as a cost center into a growth engine. Brands join the Ohi platform to deliver powerfully fast, brand-focused, and memorable post-purchase experiences that enable them to grow. Want to learn more about how Ohi enables instant commerce? Get in touch today.
