It never ceases to amaze me that some web based retailers can deliver merchandise the next day and do it for FREE! Of course, not all retailers do this and some who do limit it to promotional products and/or orders in excess of a specific dollar amount. Never the less, retailer’s who offer, and in some cases guarantee, next day deliveries have no way of knowing how many orders they will receive on any given day. It just brings a smile to my face to know that today’s order fulfillment logistics systems can pick and ship customer orders so quickly.
To get a clear vision of who’s paying for this “free” expedited service – look in the mirror! I’m guessing that even those among us who still prefer to shop from brick & mortar stores are paying a little extra every time we make a purchase. Most likely, it has become a built-in cost of doing business - similar to the cost associated with accepting credit card purchases.
Holste Says... |
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| Based on the amount of sales promotions and incentives we all receive encouraging us to purchase on-line, it probably cost retailers less to process internet orders from a order fulfillment center than it does to sell direct to customers from neighborhood stores. |
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Several of the large retailers have order fulfillment centers strategically located throughout the USA. Those facilities are equipped with up-to-date automated logistics systems and networking technologies providing them with the flexibility to ship from the available inventory of any in-network DC or store.
Based on the amount of sales promotions and incentives we all receive encouraging us to purchase on-line, it probably cost retailers less to process internet orders from a order fulfillment center than it does to sell direct to customers from neighborhood stores.
However, from an operational prospective, there are several issues with providing expedited delivery:
- Schedule staffing to meet a work plan,
- Leveling order fulfillment activity over an 8-hour shift,
- Setting and maintaining an order cutoff time,
- Minimizing overtime and extended work shifts.
These are a few of the on-going cost factors that are being absorbed in DCs with expedited deliver and that are consequently being passed along through the supply chain.
Still, it could be that the real cost of expedited delivery is the impact it has on workforce turnover. Most employees working in retail are prepared to work unexpected overtime every once in a while. But, when the end of every day is a mystery, it disrupts their lives, keeps them from being able to pick up their kids from school or childcare on time and their families from being able to plan on them. DC workforce turnover is an imbedded cost of doing business that is becoming an even bigger factor as a result of expedited delivery.
Final Thoughts
No doubt retailers will continue to offer free next day delivery, but at an ever increasing cost to themselves and the supply chain in general. As for putting the next day delivery “Genie” back in the bottle - “Forget About It!”
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