Cary Breese is the CEO and co-founder of NowRx, a digital retail pharmacy.
We have entered a whole new era of e-commerce that is all about speed and convenience. Business leaders are forced to prioritize delivery capabilities and push for faster delivery services.
“Fast / reliable delivery” was the top online shopping attribute among the more than 8,500 consumers surveyed for PwC’s June 2021 Global Consumer Insights Pulse Survey.
Now that consumers get used to same day (and same hour) delivery service models, customer expectations for delivery options will only increase.
According to a recent report from the SensorTower mobile app intelligence platform, the top grocery delivery apps saw continuous growth in January and February 2021, with installs up 14% year over year. Despite increasing user growth, DoorDash, Uber Eats and GrubHub remain unprofitable. So how can executives develop fast delivery models that meet consumer expectations – and still make money?
If your delivery service results in a poor customer experience, just because you offer faster delivery, you are less likely to retain customers.
The challenge: delivery apps need more than speed to increase profitability
In order to stay competitive, delivery apps are rethinking their services and expanding their offerings.
“Amazon supports next day delivery,” Raj Beri, Uber’s global director for groceries and emerging industries, said in May. “We’ll start trading in the next hour.”
But speeding up the delivery process won’t necessarily increase sales. More importantly, if your delivery service results in a bad customer experience, just because you offer faster delivery, you will gain less customer loyalty.
The biggest challenge for delivery apps or any e-commerce company that wants to add delivery services as part of their offering is to create a foundation that enables not only speed and convenience for the customer, but all aspects of the customer experience. When delivering food, for example, the company responsible for the delivery must ensure that the food is handled safely and remains free from contamination. The temperature – whether hot or cold – must be maintained throughout the delivery process and the order itself must be correct.
The solution: same-day delivery is based on mature technology platforms
The “uberization” of everything, combined with dramatically increased consumer expectations, requires much more than a delivery app and fleet of drivers for businesses to be profitable. In order to keep the promise of same-day delivery, a lot has to happen between the order and the customer’s arrival without any errors. The more complex the product delivered, the more difficult the delivery process becomes.
To enable same-day delivery services while achieving profitability, a delivery app must consider the technology required to meet customer expectations. It’s about much more than just designing an app and growing user numbers. A really successful same-day delivery model that offers an exceptional customer experience is based on a sophisticated software platform that can manage different aspects of the customer journey at the same time and makes them appear seamless from the customer’s point of view.
Profitable delivery services are based on automated systems powered by artificial intelligence and robotics systems. Technology has to come first, before the app and before user growth. Every other delivery business model puts the cart in front of the horse.
Domino’s Pizza is a brand that has perfected the delivery process and vastly improved the overall customer experience by making technology the core of their business model. The key moment came when the brand defined itself as an e-commerce company selling pizza. It was dedicated to data applications and implemented a robotic technology platform that enabled electronic delivery systems that made the delivery process faster and more efficient. In April, Domino’s began rolling out a robot car delivery service through Nuro to select customers in Houston.
GrubHub is also taking steps to incorporate robotic functionality into its deployment process. According to recent reports, the company announced it would add self-propelled units that use drone-like robots to provide food to students. The program, which will roll out in a limited number of U.S. colleges this fall, aims to reduce delivery times and hopefully reduce costs as well.
This focus on technology is critical in the world of delivery apps, or for any business being forced to compete in the emerging next-hour commerce category. The key to building a successful, profitable business model lies in investing in technology platforms that can connect all components of the customer journey, from opening an app and clicking on a product to purchasing the product and scheduling delivery and beyond.
Same day delivery: Where to from here
In a world where everyone wants to open an app on their phone and have everything they need delivered within an hour, it is tempting for executives to focus on the deployment app itself, whether they’re developing their own or doing it cooperate with another company. However, the focus on the app is a myopic take on same-day delivery models.
Instead, executives need to use a wide-angle lens and consider every single aspect of their customer journey: How do customers interact with their business? How do customers search and find the products they offer? What does it take to complete an order and what conditions must be met for the order to be delivered? And what happens after the order is placed to make sure it went smoothly and to the customer’s satisfaction?
Some companies have been successful at working with delivery apps, but doing so carries the risk of leaving your brand reputation in the hands of another company who is the front line agent for customers. Other companies are adding delivery service options to their current e-commerce model and relying on third-party software that can be integrated into an existing technology stack. Unfortunately, this has limitations and is impractical for multi-component regulated companies.
The only way to ensure a seamless customer experience in addition to same-day delivery services is to build a proprietary software platform that puts the technology at the heart of your business that enables you to automate critical processes and your delivery faster and more convenient to make model. It also enables the integration of robotic systems that can accelerate orders, include artificial intelligence protocols that can accelerate business growth, and scale your delivery model as your business expands.
Successful in the new era of e-commerce
“Delivery in the next hour” is a catchy slogan that will become increasingly popular with consumers, but whether it will help increase profitability remains to be seen. As the CEO of a company that has built a profitable business model with same-day delivery services, I am skeptical that the promise of delivery in the next hour will lead to more revenue if the technology that powers the delivery systems is automation, artificial intelligence and robotics.
It’s true that companies will be forced to compete for same day delivery. But another truth that has emerged since the pandemic is that this new era of e-commerce comes with increased customer expectations that cannot be met by speed alone. Customer satisfaction doesn’t just depend on the time it takes to get an order from an app to the customer’s door.
To be successful in the delivery services market, entrepreneurs need to ask themselves a number of questions: What parts of their business are needed to complete a same-day delivery order? Is the ordering process intuitive? Can order and delivery be monitored by the customer? Is the order correct when it arrives? Does it meet the customer’s expectations?
Most importantly, is your business built on a technology platform that can support the entire customer journey and delivery model, from product discovery and purchase to same-day delivery and beyond? The companies that answered yes to these questions are the ones I expect to thrive in the post-pandemic world.