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.
Before sub-two-hour delivery entered the game and pushed the reset button on customer expectations, same-day delivery was the fastest delivery option, and 41% of online shoppers happily paid for the service.
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 and fulfills 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.
Here’s a quick rundown of different models:
1. Vertically-integrated instant delivery model, i.e., GoPuff
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.
2. Third-party delivery platforms, i.e., Instacart
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
Instant delivery works well for products that customers want or need on an urgent basis. Products including food, beverages, beauty, personal hygiene, fem-care, or home-testing kits – the kind of products your customers might find at a local convenience store or pharmacy – are ideal for instant delivery.
3. Brands with non-bulky items
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 with instant 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.
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.