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On-demand delivery: Keeping up with the ‘instant gratification’ market

Standard delivery of three to five business days is becoming a thing of the past as retailers and ‘pure-play e-tailers’ are rolling out new options to satisfy consumers’ growing appetite for speedy delivery.

​Amazon has recently launched one of these on-demand services, named Amazon Flex, which mimics Uber’s model of independent contractors using a mobile app to choose their shifts and make deliveries. This allows them to deliver goods in the elusive ‘one hour’ window.

In a world of instant gratification, companies such as Google, Uber and new player Etsy, among others, are beginning to offer various services allowing customers to receive their orders quickly – from same-day to “on-demand,” meaning as little as an hour.

Same-day and same-hour delivery have the potential to open an entirely new retail segment to Amazon—the instant gratification market,” Gene Munster, a Piper Jaffray analyst tells the WSJ. “Traditional retailers have historically enjoyed in-store pickup as a competitive advantage over Amazon—that advantage is slowly going away.”

The new service would give Amazon more control over the delivery experience, including proprietary mobile routing and tracking software, and help contain shipping costs that grew 31 percent last year, according to the Wall Street Journal.

But can retail supply chains evolve to keep up with growing consumer demand levels? According to JLL research, they can if they analyze operating costs versus service delivery levels, which becomes a delicate balancing act when strategizing last mile delivery.

Staying ahead in the marketplace

“These days, service delivery factors are really what are shaping retail real estate decisions,” says Kris Bjorson, International Director and Head of the Retail / E-commerce Distribution (ReD) group at JLL. “Even the most minor incremental improvements can lead to big advantages in today’s ultra-competitive environment.”

And the environment is competitive. ‘Omni-channel’ retailers are pushing brick-and-mortar stores to adapt their strategies to match the shift. Retailers must expand their offerings to keep up with e-tailers. Kohl’s and Target, among others, have all taken notice of this trend, announcing last month that they will begin to offer various accelerated delivery methods that better serve their customers. Walgreens announced it will work closely with on-demand startup, Postmates, to keep a robust catalog of the most popular items current, permitting a convenient selection process for customers, according to TechCrunch.

Retailers need to maintain a start-up mentality that allows them to stay nimble and flexible with delivery options. Having the ability to conceive and implement new strategies quickly is essential.

“Times are changing quickly, and retailers recognize the need to adjust their e-commerce strategies to reflect that change,” says Bjorson. “There are challenges in figuring out the optimal expedited delivery method – including operating costs, distance to delivery and varying wage rates – but when done accurately, it can make all the difference.”

This article originally appeared on Real Views, JLL's news site that features stories exploring the world of real estate and its impact on the wider business world. Visit the Real Views site to subscribe for our weekly email of top stories, delivered direct to your inbox.