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Each day TFO Canada publishes a sample of trade news on the Canadian import market along with any new, updated or changed regulations and legislations regarding international trade; countries in which TFO Canada offers services and on the export sectors which it promotes.

 

Why same-day delivery is catching on, even in logistically challenged Canada

Wednesday, May 25, 2016 > 09:49:06
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(The Globe and Mail)

North American millennials – those born roughly between the early 1980s to the mid-1990s – value speed. They want to communicate quickly, with sentence fragments and dropped vowels. They want to consume information quickly, favouring short online articles over books and watching quick how-to videos rather than reading instruction manuals. And they want their financial transactions to be speedy, too, using digital wallets and tap technology rather than fumbling with old fashioned paper money and coins.

These digital natives also value their ability to research products and purchase them online. According to a joint study released in February by the Wharton School at the University of Pennsylvania and global information firm NPD Group Inc., millennials spend more money online than members of Generation X. (Gen Xers, in turn, spend more than baby boomers.)

This combination – millennials’ need for speed and their predilection for shopping online, mostly on mobile devices but also on tablets and desktop computers – is having a huge influence on the retail world. Specifically, the speed at which goods are delivered to their end user, the online shopper, is increasing.

Whereas shoppers used to be content to track their package online for five business days before it arrived at their home, they now want their goods in mere hours.

Retailers who can’t keep up with this demand will suffer as millennials’ financial clout grows stronger and older shoppers catch up to the pace of this trend-setting cohort.

For proof that big retailers are on board, witness Amazon’s April announcement that the online behemoth has expanded its same-day delivery service to 27 metropolitan areas in the United States, up from the 16 cities that could take advantage of this service for the past year. Amazon has even floated the idea of using drones to drop packages on customers’ doorsteps in minutes.

This ability to deliver goods to customers within 24 hours is a wake-up call to traditional bricks-and-mortar stores. It’s being mimicked by Best Buy in 13 U.S. cities and by Google in a pilot project called Google Express, which will deliver products from partners such as Walgreens, Target and Costco.

It’s no wonder these major retailers are following the same-day delivery trend. There’s big money there, and it’s poised to get bigger.

BI Intelligence, the research arm of online publisher Business Insider, forecasts the market for same-day delivery in the United States to grow from $100-million (U.S.) in 2014 to more than $4-billion in 2018.

Canadians are known to be early adopters of technology and Canada is tied for third place for Internet penetration among G8 countries, with 88.5 per cent of households online. Our millennials are as tech savvy as their U.S. counterparts. But our population doesn’t even rival California’s, and our geography is bigger. Those two facts make it logistically much more difficult to deliver goods within 24 hours in Canada.

However, our most recent census showed 80 per cent of Canadians living in urban areas, and we’ve seen some successes there among businesses bold enough to attempt same-day delivery. Small businesses can get office supplies from Staples the next day if they order before 5 p.m., hungry office workers in big cities can have lunch delivered to their site, sometimes within minutes, by nimble startups, and students can have a top-quality mattress delivered – by bike courier – the same day they move into their new apartment and measure their space.

It sounds expensive, having delivery vehicles zigzagging around cities to meet consumers’ minute-by-minute demands. But the key is to reduce retail space, save costs on sales staff and ship directly from warehouses to homes.

Same-day delivery retailers also take advantage of their delivery fleets – be they cars, trucks or rickshaws – to advertise their innovative service.

Does every consumer need every product within hours of placing their order? Of course not. Someone who is planning to redecorate can order new blinds and wait two weeks for them to arrive. Someone who is planning for beach season can order towels now and have them in time for a trip to the shore.

But for those who don’t always plan ahead, don’t have space to store items before they’re needed or don’t have a car to go get them, same-day delivery is going to be a game-changer.


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