One-Hour Delivery in Retail

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The race is on for CIOs to deliver products to the door of their customers practically before they even think of buying them. It started with Amazon promising same-day delivery of products in major metropolitan areas. It continued with Walmart taking advantage of its large network of brick and mortar stores, and incredible supply chain, to offer the same thing across most of the country. Now, Ebay is raising the stakes by offering one-hour delivery in San Francisco and New York City.

If all of this seems a bit excessive, remember that the battle here is bigger than just who can get a product to the door the fastest. It's about the constant battle between traditional retail and e-commerce. Because of the low overhead and favorable tax rules, e-commerce vendors often experience an advantage in price. For brick and mortar retail to survive, they have to offer an experience that is better than online shopping.

The biggest threat to retailers is scan and scram (also called showrooming), where consumers go to the brick and mortar store to touch a product, but then order it online. The biggest advantage to brick and mortar stores is the “I can have it in my hot little hands right now” impulse. Consumers are constantly asking themselves if the small savings is worth waiting the shipping time.

Store pickup was one way to marry e-commerce with brick and mortar presence, but same-day delivery has trumped it. Likewise, one-hour delivery, if economically feasible, makes same-day delivery look snail-like. Retailers are in real trouble if the “I can have it now” advantage is taken from them.

Right now, Ebay’s attempt is relatively low-tech. It has a group of young people in cars who receive orders through smartphones. They drive to the store, purchase it like anyone else would, and take the product to the customer. Ultimately, it's unlikely something like that could scale, but eBay knows that and has plans -- as it builds a customer base -- to include partnerships with retailers to pull product before the courier arrives.

The key, of course, isn’t the exact method, but the race itself, and the fact that CIOs are smack in the middle of it. Shortening the supply chain, and connecting it from the warehouse to the customer’s house, is going to require some technical wizardry -- and working with the CMO.

If you’re still counting on the post office and three-day shipping, here are some things your CIO can do to get into the fray:

Get tight with your customers -- Whether you’re brick and mortar or online, if you can’t figure out what your customer needs, you can’t get it to them fast enough. If you and your CMO use data mining to put the right products in the right locations (store and warehouse), you’ve won half the battle.

Showrooming is shopping -- Most CMOs are trained to think of the buying decision and the sale as a joint process. The customer looks at the product, and then takes it up front to pay. For a decade, the advantage of brick and mortar was that the customer had to go home to make the online purchase, and CIOs had to think of it that way. Now, with mobile devices, consumers can buy the device in the store from someone else, so CIOs and CMOs both have to think of the process as an in-store experience -- even if it isn’t your store.

Short delivery times mean more mobile -- Whether you’re using a smartphone to communicate with a courier, or you’re relying on UPS or Fedex the way Amazon and Walmart are, your supply chain is increasingly gaining contact points. Managing them all is going to require some planning.

Whether Ebay, or anyone else, can make one-hour delivery work is definitely beside the point right now. The space between brick and mortar and online is continually collapsing, and CIOs on either side of the battle need to make sure they’re not left behind.