The rising expectations of today’s empowered customers – who now have near-unlimited access to products, pricing information and delivery options – is creating operational challenges for many retail businesses. To stay competitive in such an environment, many retailers are innovating newer business models that offer convenience and speed that help them compete for customers on delivery timeframes.
Pure-play e-tailers and brick-and-mortar leaders alike are seeking any means possible to improve delivery times and shorten the distance between fulfillment centers and their customers, and this trend has only been heightened through the rise of Quick-Commerce.
Today, many retailers are repurposing and pivoting towards business models of ultrafast delivery. This unique business model includes quick order fulfillment processes established to cater for selective SKUs delivered via Dark Stores (mini fulfillment centers). When Dark Stores are situated closest to the customer, it allows retailers to offer varied merchandise from groceries, pharmacy, liquor, clothing and more, with a short (quick) delivery cycle reduced from a few days to a few minutes.
What enables Quick-Commerce today?
According to the United Nations, 54% of the world’s population currently live in urban areas — a demographic expected to grow to 68% by 2050. And with the rise in prominence and spending power of the Gen Z demographic, also known as iGeneration or post-millennials, who are the first truly digitally native generation; retailers are having to rethink their business models to meet the needs of this hyper-connected generation of buyers who demand convenience and instant gratification.
With regional Distribution Centers facing the challenge of supporting same-day deliveries, today many retailers are establishing smaller facilities in closer proximity to these high-population centers to significantly improve last-mile (or last-hour) delivery. Beyond the push for businesses to establish fulfillment processes closer to customers, rapid delivery options have also matured. For example, in Australia, multichannel commerce platform leader Shippit recently announced a strategic partnership with Uber to leverage its delivery driver network to enable rapid and on-demand delivery for local businesses. The partnership will enable one-hour (or less) shipping for retail goods in Australia, a process that was previously only possible for grocery deliveries.
“There is a great appetite in the market for the consumer to get what they want, when they want it, and not have that just restricted to food delivery. Our retailers can now offer same hour delivery on a nationwide basis, not just limited to certain metro locations,” recently commented Shippit co-founder Hango-Zada.
In Southeast Asia, Grab further expanded its Quick-Commerce offering with the online grocery service GrabMart. Recognising that different users have different delivery timing expectations, GrabMart offers on-demand deliveries. This gives users the flexibility to choose between swift or slow delivery times which best align with their shopping and consumption needs.
Micro-fulfillment to pick goods closer to consumers
In order to successfully adapt to a Quick-Commerce model, retailers need to fulfill orders closer to consumers. Under a Dark Store model, retailers can expand their fulfillment capabilities relatively quickly by leveraging last mile delivery hubs and implementing high-density automation technologies in urban facilities.
Dark Stores typically occupy spaces around 2,000 sq. ft. This compact footprint offers the flexibility to be located within a small, standalone facility or integrated with (or bolted onto) a retail store, sometimes called Grey Stores. Not only does this shorten the distance for last-mile or last-hour delivery, but it also supports in-store pickup for retailers offering alternative fulfillment models. Dark Stores can maintain an inventory of 2,000-3,000 SKUs with the automated efficiencies to enable accurate, high-velocity fulfillment.
Rethinking store inventory and operating Dark Stores
Importantly, to facilitate a successful Quick-Commerce ultrafast delivery process, retailers also need to reimagine their entire store and distribution network making best use of all available inventory. Brands need to rethink what the actual function of a store is and what it has the potential to do. Today, retail brick-and-mortar stores are not simply a showroom for customers to browse products and assess goods for purchase, they also serve as rapid fulfilment hubs for online orders.
Modern order sourcing solutions allow retailers to use inventory available across their entire network for Quick-Commerce orders, wherever it is located. Advanced solutions allow retailers to use the ‘pool’ of physical stores in large urban areas to meet ever shorter delivery windows, whilst also favouring stock in a warehouse for less immediate orders. This process of identifying and picking inventory from the location closets to the customer helps shorten delivery windows and meet customer demands.
Not only can retailers use existing and functional retail stores to fulfill Quick-Commerce orders, but some are turning unprofitable physical locations into new profit centres by closing these to the public and converting the space to Dark Stores which is setup to rapidly execute online orders only.
Mobile technologies can drive delivery efficiency and accuracy
To stay competitive and meet increasing consumer expectations around ever shorter delivery windows, many retailers are accelerating their transitions to automation and mobile technologies.
An area of automation that is widely used by retailers to increase the productivity and efficiency of their associates, is enterprise mobile devices. Enterprise mobile devices and scanners, along with voice guided picking technologies are increasingly integral to the efficient operation of a Quick-Commerce operations, to support key workflows, assure optimal productivity, end-to-end visibility, and speed.
Moving beyond the four walls of a Distribution Centre or Dark Store, mobile technologies benefit Quick-Commerce last-mile delivery operations through upgraded routing, reducing downtime, enhancing driver safety and improved delivery tracking capabilities for customers. With workers constantly on the move, they need their enterprise-grade operational technologies to be as mobile and agile as they are. At the same time, it is important to ensure manageability, traceability, security, and control.
Enterprise mobile devices deliver real-time, end-to-end supply chain visibility into drivers, vehicles, and inventory. Enterprise mobility also allows for tracking assets; both where they are and what they are doing. This in turn can improve productivity by offering visibility into break downs along the supply chain, and helping your team solve any issues quickly, proactively, remotely, and securely. By having end-to-end visibility, retailers can have a more streamlined process with open communication among different stages of the supply chain, improving efficiency, accuracy, and timeliness of the Quick-Commerce delivery process.
Shorten the window between ordering and receiving goods
Rapidly evolving market conditions and increased consumer demands are dictating retailers’ need to improve their fulfillment and delivery processes, shortening the window between “click-to-tick”; customer ordering to receiving their goods at their doorstep.
As retailers try to prepare for ever-increasing fulfillment demands, their ability to successfully execute Quick-Commerce deliveries will be a key to survival in this hypercompetitive marketplace. Thus, those retail leaders who move towards automated technologies and processes succeed in harnessing their whole network inventory. They pick, pack and ship goods from the Dark Store closest to their consumer and are better positioned to not only survive but thrive in today’s volatile retail landscape.
For more information on how your retail business can meet the needs of rising consumer expectations and improve your delivery processes through automated technologies, please visit: https://sps.honeywell.com/au/en/products/productivity
Vikas Wadhwa is retail leader for Asia Pacific at Honeywell.