THE BLOG
11/22/2016 06:08 pm ET Updated Nov 23, 2017

Coming to a warehouse near you: The "Same Day Delivery" revolution

Just a few years ago, ordering online meant three to five-day delivery. Then "next day" delivery was the great new thing, but for a fee. Now, you can order online on Sunday morning and have it delivered to your doorstep that same afternoon -- for free.

What has made quick delivery possible? Changes in the concept of the traditional warehouse as well as increased local warehouse locations.

Fast shipping is the new competitive offering for most retailers today, whether strictly an online store or brick and mortar.

Over the past 12 months, according to a 2016 study conducted by Walker Sands, half of all online shoppers have used one-day shipping, and 85 percent have used two-day shipping. Growth for buyer's show that one in 10 has used same-day shipping over in the past year. And two-thirds of online shoppers who buy multiple products online, pick up their order at their local store.

Changes in warehouse usability

Same-day delivery works to close the deal more quickly by implanting fresh warehouse tactics to fuel warehouse e-commerce success. For retailers to stay competitive, they need to re-think their fulfillment options and offer their customers multiple shipping and delivery alternatives. Frequent online shoppers will choose the company that gives the most options.

High tech warehouse

The traditional warehouse was large buildings located out in rural areas where real estate is cheap. Today, all that has changed. Now warehouses are built along shipping routes and outfitted with new, robotic pick and pack technology.

Along with this new warehouse option, retailers' strategies are changing dramatically and becoming a more critical piece of the e-commerce landscape -- from how the geographic location of each warehouse is chosen to how products are documented and loaded into the warehouse inventory.
Using new technologies offers retailer's competitive logistics and the ability to offer shipping options to that keep their customers happy.

Fulfillment centers take several configurations, these days. In some circumstances, a retailer may utilize a standard store as a local fulfillment center based on the location.

Amazon has been scouting real estate all over the U.S. and has built 70 million square feet of fulfillment center space nationwide. Along with the expanded warehouse space, it has launched a new service, "Get it Today" in 12 markets around the country that operate seven days a week.

"The trend is to locate DCs much closer to consumers and operate a lot more of them," according to Garrick Brown, research director at Cassidy Turley, a commercial real estate firm based in St. Louis.

The brick-and-mortar hybrid

Brick-and-mortar stores need to re-invent their business model if they are going to stay relevant. Midrange stores, such as Target, are extending its brick-and-mortar roots by converting some of its storefront space as an alternative warehouse to increase sales and adapt to new consumer needs. In the fourth quarter of 2015, Target fulfilled 30 percent of its online orders from stores which was a record number of Internet customers who picked up their orders at the retail store.

It was evident to Target that fulfilling orders from its retail stores was proof for this angle in that Target's success in fulfilling orders efficiently. Other retailers are still working out their strategy for inventory on the shelf or in the local warehouse.

With these results, more retailers are shifting to using their brick-and -mortar stores as fulfillment centers, thereby becoming a neighborhood warehouse.

"While we've added capacity across our entire direct-to-guest network, our fourth-quarter experience demonstrated the power of relying on our stores to fill digital demand," said John Mulligan, Target's chief operating office, in a Wall Street Journal article.

Same day delivery

To stay competitive, department stores are competing with Amazon to offer same day delivery using new startup companies Deliv and on-line apparel startup, Everlane that is using Postmates to deliver its clothing.

Deliv is working with several retailers and major mall companies including General Growth Properties and Simon Property. The malls want to make same-day delivery commonplace and inexpensive.

To allow for an even balance between brick and mortar fulfillment centers and the traditional store, retailers need to move quickly to create a channel to fulfill its supply chain by using their store infrastructures as a national network of fulfillment centers.