Tag: 2 hour delivery

Instant Delivery: A Quick Guide for Retailers

instant delivery
Aiza Chaudry
Insights

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.

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.

The Rise of Green E-commerce: How Online Businesses Can be More Eco-friendly

The rise of green e-commerce: how online businesses can be more eco-friendly
Aiza Chaudry
Insights

80% of consumers in a survey by NRF and IBM said that sustainability is important to them. Meanwhile, about 60% are willing to change their shopping habits to be more sustainable. 

Whether it was Greta Thunberg’s protests on preserving the planet, the recent wave of abnormal floods, or simply the ongoing rise of awareness, sustainability, and environmental concerns are top of mind for today’s consumers. This wave of green consumerism is pushing many online retail brands – big and small – to take action by adopting sustainable or eco-friendly ways to mitigate their carbon footprint. 

Many more customers are beginning to realize and question just how traditional supply chain and shipping models wreak havoc on the environment.   

The dark side of ‘click-from-couch’ 

Although e-commerce produces 36% fewer emissions in comparison to in-store shopping as per a report by MIT, this increasing click-from-couch behavior within the last couple of years even for the smallest of things is stacking up on the carbon emissions. 

Walmart carried out a self-audit and found that “e-commerce, on average, tends to produce more emissions per item for three reasons: e-commerce requires additional packaging, customers purchase fewer items per online transaction, and multi-item orders often result in multiple deliveries.”

In short, more polluting vehicles and packaging waste is killing the planet

Quite often, for products ordered by online shoppers, trucks are underutilized, delivering only a small number of packages. A lot of these packages contain individual products that are shipped via different carriers. This puts more vehicles on the roads contributing to carbon emissions. 

And let’s not forget about the packaging – the total amount of cardboard used for packaging each year equates to a shocking 1 billion trees. Meanwhile, other packaging materials like plastic, tape, or bubble wrap have their own individual fair share of landfill waste, which, by the way, often isn’t or can’t be recycled.

And this waste continues to pile up. If Captain Planet and the Planeteers weren’t fictional characters of a 90’s TV show, most of these businesses would be shut down by now. But it’s all the more reason why it’s critical that online businesses adopt a sustainable approach. 

Sustainability benefits everyone: people, planet, & businesses 

In the mid-’90s John Elkington, a serial entrepreneur, coined the idea of the triple bottom line. The idea is based on business profitability centered around “people, planet, and profit.” Elkington’s idea defines how a business while being more responsible towards the environment and people can still generate profits.  

The idea is simple – by implementing social good and practicing ethical and sustainable practices businesses can stand out as leaders – eventually leading to increased profitability.

Many brands, big and small, are already striving towards achieving net-zero carbon emissions

Brands such as Nike and Adidas – employing the triple bottom line concept –  have taken the lead on sustainability, establishing themselves as more forward-thinking and competitive. 

Nike intends to power its facilities entirely with renewable energy by 2025 and is aiming to function with net-zero carbon emissions. They claim to repurpose more than 90% of the waste from Air sole materials to create new, inventive cushioning systems.

Patagonia is another prominent brand making a difference. Well-known for its sustainability and environmental activism, Patagonia switched to organic cotton, and a high proportion of its materials are made from recycled fabrics, including polyester, nylon, and wool. Rejecting fast-fashion, it produces high-quality, long-lasting goods and provides a repair and reuse program as well. The brand had 40% growth over the last year and has pledged to become a carbon-neutral company by 2025.

Sustainability doesn’t just save the planet, but it also helps businesses stand out in the market of beacons of societal responsibility.   

How can e-commerce businesses be more eco-friendly?

Being environmentally conscious is important for more than just customer-facing products and brands. E-commerce businesses very often overlook the supply chain and how it contributes to carbon emissions. 

That’s one area where Untuckit wins big. In addition to using ethically sourced materials for production, that’s another area where it reduced its carbon footprint. It uses recyclable and biodegradable materials for shipping products, reducing its carbon footprint further. 

Here are a few ways your e-commerce business can stave off its supply chain emissions and be more sustainable.   

1. Switch to sustainable delivery and packaging

Packaging waste is obviously one of the biggest drawbacks of online shopping, and anyone who has ever purchased a small item from Amazon and had a canoe-sized box delivered to their house knows this full well. All that plastic, tape, and bubble wrap only add to the carbon emissions. 

Fortunately, many of the large mail service providers are now taking part in eco-friendly initiatives that use recycled shipping materials as well as paperless invoicing and tracking options. Many of these couriers also provide their customers with additional green and sustainable programs that allow shoppers to offset carbon emissions from their deliveries.

While these options aren’t as great as outright eliminating the need for exterior boxing and packaging materials (as micro-fulfillment with Ohi does), they are a step in the right direction for traditional delivery companies like UPS, FedEx, USPS, and DHL.

As for eco-friendly packaging – there are many options available to choose from as compared to a few years back when there were limited options available. You can opt for recyclable packaging i.e cardboard boxes, molded pulp packaging, etc. 

Or you can choose reusable packaging like glass milk bottles, pallets, or shipping containers, etc. 

There’s a third option- compostable packaging. It degrades faster than other materials. When deciding which type of packaging to go for, it’s important to keep in mind how it complements your specific product.

2. Team up with an eco-friendly fulfillment partner

For many businesses, the supply chain is the largest source of emissions. By teaming up with instant commerce or micro-fulfillment partners like Ohi, brands can offer fast and sustainable fast shipping to meet customer expectations. 

As a matter of fact, sustainable DTC organic beverage brand Health-Ade and eco-friendly apparel brand Untuckit both rely on Ohi to deliver their products sustainably in their largest metro areas. Health-Ade has enjoyed a 49% increase in its customer lifetime value (CLV) as a result of its sustainable micro-fulfillment strategy. 

How does Ohi add value to e-commerce brands with sustainability and fast shipping?

Having crossed out the air or long ground routes from the equation, our fast delivery generates the least carbon emissions because products are shipped from fulfillment centers that are located very close to customers. It’s sustainable and green because we use bike/e-bike/scooter couriers and foot couriers in densely populated urban areas, instead of vans or bikes, reducing our carbon footprint.   

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 far as packaging is concerned, as opposed to traditional packaging that involves plastic or cardboard waste, Ohi encourages the use of eco-friendly reusable totes for 2-hour and same-day deliveries whenever possible. 

But we realized that despite our efforts to offer sustainable delivery, there was some residual carbon footprint left. So we teamed up with EcoCart, a sustainability technology that helps businesses calculate and offset their carbon emissions.

Our partnership with EcoCart allows Ohi to calculate and address the rest of the residual carbon footprint through carbon offsets and provide a carbon-neutral delivery.

3. Offset your carbon footprint (i.e. with EcoCart)

Everything produces emissions, but by using carbon offsets, you can neutralize the carbon you produce by donating to a forest protection project that prevents deforestation.

One of the easiest ways to do that is via EcoCart. EcoCart’s plugin for e-commerce businesses determines the emissions produced by your online business and allows your business (or your customers) to offset exactly the amount of emissions an order has produced.

Adopting the above-mentioned sustainable practices will help your e-commerce business stand out from your competitors while making a lasting difference for the environment. After all, there is only one planet Earth, and it’s our collective responsibility to take care of it. 

7 Ways E-commerce Businesses can Increase their Average Order Value (AOV)

pexels-photo-5076525.jpeg
Aiza Chaudry
Insights

While it’s important for e-commerce businesses to turn visitors into paying customers, how much a customer purchases per order is similarly important. And that’s why average order value (AOV) is a critical metric to improve in e-commerce.

So, what exactly is Average Order Value (AOV)? 

AOV is an important metric that helps e-commerce businesses understand the average dollar amount spent each time a customer places an order on a website or mobile app. It’s determined by dividing the total revenue by the number of orders.

Why is it an important metric to monitor for e-commerce businesses? 

AOV is an important metric for e-commerce businesses as it represents an integral component of an online store’s top-line revenue and provides actionable insights into customer behavior.

By measuring AOV, e-commerce businesses can then use a variety of best practices to increase the number and/or value of items per order, driving meaningful improvements to overall e-commerce performance.

Now that we’ve established what AOV is and why optimizing (i.e. increasing) it should be a priority, here are several proven ways to boost your website’s average order value:

1. Deliver “Fast and Free” for orders that meet a minimum spend amount

Free shipping is a tried and true way to entice customers into purchasing. Why not spice it up and offer ‘fast and free’ delivery to boost both conversion rates and AOV?

Many businesses are hesitant to offer free shipping because they think of delivery/fulfillment as a cost, and it doesn’t always seem intuitive to “eat the cost” of shipping. But, that’s exactly why it can make a whole lot of sense to offer “fast and free” delivery, as studies have shown that shoppers don’t want to pay extra for shipping and that fast/reliable shipping is shoppers’ #1 overall consideration when shopping online. By offering “fast and free” delivery, your shoppers can be incentivized to buy at a higher rate and add more to their carts than they normally would, increasing both conversion rates and AOV.

Ujji, a substitute for coffee, offers free 2-hour and same-day delivery with Ohi in Los Angeles, New York City, San Francisco, and Chicago. 

Other brands such as Bathing Culture also offer free 2-hour shipping with Ohi on orders of $50 or more and have seen AOV increase as a result of this tactic.

How to determine the threshold for “fast and free” delivery

You can calculate your cart order minimum using a modal order value or the most common order values. For example, if the majority of your orders are under $35, you could offer free two-hour delivery on orders over $50. 

2. Pre & post-purchase upsells & cross-sells

Upselling and cross-selling are tried-and-tested behavioral marketing techniques for increasing average order value (AOV). 

Upselling is a technique e-commerce businesses use to persuade their customers into buying an upgrade of the product the customer has added to their cart. Typically, an e-commerce business can do it two ways: (1) offer an upsell pre-purchase, that is, recommend the upsell before customers add the product to their cart. Or, (2) make an offer post-purchase. Many businesses do this via post-purchase emails, which typically have low conversion rates. However, there’s a better way to approach this. Making an offer after checkout — by sandwiching it between checkout and your thank you page — increases the likelihood of your customers accepting it. By utilizing this approach, you mitigate the risk of cart abandonment while still enjoying much of the upside upsells offer. 

To optimize even further, you can create a one-click purchase experience for your online store. CartHook enables an easy way for online stores to create post-purchase offers in checkout. 

This way, customers are more likely to accept the offer as doing so requires only one click and does not require them to re-enter their payment and shipping info. 

In contrast, cross-selling encourages customers to shop for related or complementary products. Similar to a pre and post-purchase upsell, you can offer your customers a pre and post-purchase cross-sell. For instance, if your customer adds a Vitamin C serum to their cart, you can always offer an eye cream to go with it. 

Amazon is one of the industry’s biggest users of upsell/cross-sell tactics. Amazon features an entire carousel of related products or products that go well together once you’ve added items to the cart. 

3. Provide bundle deals and bulk options

Group relevant products (or items commonly purchased together) as “bundles.” If you want customers to purchase more items, try creating product bundles that cost less than if the same items were purchased individually. Small discounts can entice customers into buying the set. Here’s an example from Dollar shave club. 

4. Start a customer loyalty program

A loyalty program is a winning strategy to help build your brand and your share of your wallet. Loyalty programs not only boost customer retention (or loyalty), but they also encourage people to add more items to their carts (increasing AOV) because every additional item added gets them closer to the next reward or tier.

Sephora’s Beauty Insider is one of the best examples of tiered, point-based loyalty programs. Members can win one point for every dollar spent in the store and work their way up the ranks from “insider” to “VIB” to “rouge.”

5. Create limited-time promotions

Limited-time offers work wonders on online shoppers because they create a compelling case for prospects to make a purchase by instilling a sense of urgency.

Understanding this, e-commerce marketers often leverage consumers’ fear of missing out (FOMO), or scarcity marketing, to capture the attention of consumers, get them to load up on products they perceive as rare, driving up AOV. Black Friday and Cyber Monday sales work so phenomenally because they stir up FOMO to dramatic effect (e.g. early-morning lines that span several city blocks).

Olipop launched its limited-edition holiday flavor just a while back!

6. Build trust with social proof 

89% of consumers worldwide check out reviews before buying a product. (Trustpilot, 2020)

Many customers have grown wary of marketing and instead only give credence to honest, real-life experiences from actual customers.

Social proof – reviews and feedback – has a significant impact on your potential customer’s buying decisions. If your products have received awesome reviews, make sure to showcase them on your store’s website. Doing a great job with customer reviews and social proof can give buyers the confidence they need to skip the obligatory test order (with one unit) — and instead load up their cart, increasing your AOV.

7. Establish a customer-first, flexible return policy

With the intense competition many brands are seeing in the e-commerce space, it’s more important than ever to be as accommodating to your customers as possible. Having a flexible refund policy can help mitigate any serious misgivings potential customers may have about purchasing from you while increasing AOV (by reducing the common fear shoppers have of getting stuck with unwanted merchandise).

Once you’ve set up your customer-friendly return policy, the next step is to ensure that you make it known to your customers. Your purchase confirmation emails, social media accounts, and website banners are some of the best touchpoints to highlight your (AOV-boosting) return policy.

 Untuckit displays its return policy very prominently (in its global header).  

AOV is important, but it’s not the only growth lever

While it’s true that increasing AOV is one of the best ways to boost revenue and profit, it is just one of many important KPI for your online store. It’s crucial that you track and optimize this metric alongside other equally important metrics such as conversion rate, repeat purchase rate, and customer lifetime value (CLV), if you want to maximize the ROI of your growth/marketing efforts. 

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.

From Fast to Instant Delivery: Why Same-day Delivery is no Longer Good Enough in E-commerce Fulfillment

woman in white long sleeve shirt and blue denim jeans riding on black city bike during
James Hsu
Insights

With the global pandemic as a backdrop in 2020, same-day delivery became a major differentiator for e-commerce brands and has remained a priority through 2021.

But with many more marketplaces now offering same-day and some expanding 2-hour delivery coverage, will same-day delivery continue to be a differentiator?

New ROI data from Ohi shows a clear advantage for brands that offer sub 2-hour delivery, or “instant delivery.” Read on to understand how an ongoing fulfillment arms race has led us to this modern reality.

The pandemic has accelerated the shift to e-commerce by 5 years (US Retail Index, IBM)

Worldwide lockdowns (in 2020, primarily), slowing economic activity, and changing customer behavior have done a number on traditional retail. 

As a result, department store sales in 2020 declined by 25% in Q1 and a nearly implausible 75% in Q2. According to IBM’s retail index, more people began shopping online and with more frequency in 2020, accelerating the ongoing shift to e-commerce by more than five years. 

The expansion of e-commerce is here to stay, and things are only going to get more competitive. 

Marketplaces and Big Retail leverage same-day shipping as differentiator

The nation’s biggest retailers — Amazon, Walmart and Target, for starters — have seen the shift towards e-commerce coming from a mile away. Consequently, they’ve prioritized faster e-commerce fulfillment to unlevel the playing field.

In Q4 of 2020, for instance, Target increased its same-day e-commerce fulfillment by 273% over the previous quarter.

It’s a sound strategy. Smaller retail companies and D2C brands lack the logistics platform to offer same-day delivery, without the help of an instant commerce provider like Ohi.

And Amazon is no stranger to the strategy of using delivery speed as a competitive advantage.

Having once succeeded in shifting consumer perceptions of Prime “2-day delivery” from a “nice-to-have” to a “must-have,” Amazon is poised to do it again with Prime same-day delivery.

What’s so fun about a game of “catchup”?

With the biggest retail marketplaces squarely behind the proliferation of same-day delivery, the trend has gained momentum industry-wide. 

A 2021 global consumer insights survey conducted by PWC showed “fast/reliable delivery” as consumers’ #1 overall consideration when shopping online (ranked top three by 41% of respondents), beating out eleven others, including “in-stock availability of items I want (35%),” “ability to quickly and conveniently navigate the website to find products I’m interested in (30%),” “availability of online customer reviews (26%),” and “a good return policy (31%).” 

As Amazon, Walmart, Target, and others work to increase their same-day delivery capabilities, the next crop of retailers and D2C brands are working furiously to stay close. 

Bed Bath & Beyond and Abercrombie & Fitch both have both added same-day shipping for online orders in many key product categories. Beauty brands Sephora and The Body Shop have similarly debuted same-day delivery as a means of staying competitive with the Amazons of this world.

But, if Amazon and other large retailers are already making same-day delivery pervasive, is offering same-day delivery enough to truly win?

As same-day delivery becomes more commonplace, it’s inevitable that forward-looking retailers and e-commerce-focused brands will be considering the next step up in delivery speed.

A new threshold to reach

“No one needed two-day delivery of anything when Amazon introduced Prime, but as soon as people could get everything delivered within two days, they wanted everything in two days,” said Ben Jones, CEO of Ohi. “It’s the same phenomenon again with sub 2-hour or ‘instant delivery,’ only we’re seeing it play out much faster due to the pandemic and the dramatic shift in consumer preferences it’s brought about.”

Many of the leading marketplace and large retail companies are looking beyond same-day shipping and pushing the envelope once more with sub 2-hour delivery.

Walmart already offers express delivery in two hours or less. Uber Eats, Instacart, and other instant delivery services are moving to provide sub 2-hour delivery in an increasingly diverse number of product categories. Amazon’s Prime Now service was merged into Amazon’s main app earlier in 2021, bringing two-hour delivery to the masses (on that marketplace).

Why Instant Delivery?

As the e-commerce market shifts towards instant commerce, the ROI of instant delivery (sub 2-hour) has become hard to ignore. 

Ohi is an instant commerce platform that provides sub 2-hour, same-day, and next-day delivery for D2C-focused brands via its micro-fulfillment network and proprietary smart warehousing and inventory system.

In an analysis of several of its large partner brands that offer both 2-hour delivery and same-day delivery, Ohi found that orders delivered with same-day delivery were associated with up to 30% higher repeat purchase rates than standard UPS/FedEx. But 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 were similar for observed customer lifetime value (CLV). Customers who initially ordered with Ohi same-day had 23% higher CLV compared to those whose orders were fulfilled through UPS/FedEx. CLV for 2-hour delivery was up to 16% higher than same-day delivery and 43% higher than standard UPS/FedEx.

Ohi’s initial ROI analysis shows a clear benefit for brands to be ahead of the delivery speed curve, even without taking into account instant delivery’s impact on customer acquisition (i.e. getting new customers to try).

It’s not just about the dollars and cents, though, as attractive as that angle might be to e-commerce teams.

Instant delivery can also become a key part of a brand’s sustainability ethos. When inventory is kept hyperlocal to customers, as it is for Ohi, packaging and last-mile transport can become eco-friendly. 

For example, many Ohi brands are now choosing to have their products delivered in custom-branded, eco-friendly/reusable totes, forgoing the cardboard boxes and packing materials needed for longer distance deliveries.

In densely populated urban areas like New York City, Ohi is able to provide instant delivery via e-bikes/bikes, further reducing their clients’ carbon footprint.

“We’re seeing multiple trends converging and creating a strong impetus for brands to adopt instant commerce. As compelling as the ROI already is, we continue to see the gap between instant and traditional e-commerce fulfillment expanding,” said Jones. “At Ohi, we’re positioning our client brands to thrive in a dynamic market.”

Ultimately, a brand’s motivation to enable instant commerce typically boils down to customer satisfaction. When customers can order directly from the brands they love, receive their orders within two hours, and know it’s all happening sustainably, it’s a big win for all parties involved.

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.