In Chapter 2, we describe how companies can achieve competitive advantage (see pages 36-39) through differentiation, cost, or response (speed). For years, Amazon.com set the pace for competition on speed with its investment in next-day and same-day delivery.
But retailers this holiday season, reports The Wall Street Journal (Nov. 10, 2022), are focusing on delivering packages to customers on specific dates, rather than competing on speed of delivery. The shift marks an easing in a race for delivery speed in e-commerce in recent years that has pushed goods to shoppers’ homes at an ever-faster pace while narrowing retailers’ profit margins on sales.
With inflation-conscious consumers now dialing back their online shopping, many retailers are focused on restraining the high costs of fulfillment and “last-mile delivery”.
Amazon now gives its Prime members the option to pick a specific delivery date. Other retailers and logistics operators are now following suit. The idea is to offer “an anticipated delivery time” … whether that is 2 days or that is 3 days.
Saks shows shoppers what day they can expect any given item to arrive based on factors such as their ZIP Code. The feature refines the retailer’s previous 3- to 5-day shipping window. The choice makes clear to consumers that faster delivery carries a higher cost.
Chinese giant online apparel retailer Shein, known for its low-price and trendy clothing, says that rapid sales growth and superfast delivery don’t have to go hand-in-hand, even in fast fashion. Online shoppers are now more willing to wait for certain deliveries, having gotten used to pandemic supply-chain disruptions. Shein focuses on the front end of its supply chain, which includes manufacturing and shipping out of Guangzhou, China. It has significant business in the U.S. even though its website says it takes 10 to 15 days for American customers to get orders. .
Shein plans to expand its North American business by opening three distribution centers in the U.S., but even those will only speed up delivery by 3 or 4 days. The most important factor for consumers has become the visibility of it all and being able to know when to expect a delivery, as opposed to the assurance that it’ll be a superfast delivery. “Sometimes they want it really, really fast, or they want it really, really scheduled,” said a UPS exec.
Classroom discussion questions:
- How is speedy delivery an OM issue?
- Are your students willing to wait longer for an “anticipated” delivery time?