Technology may be revolutionizing the way goods are bought and sold, but it is having just as powerful an effect on the way they are transported, from manufacturer to the storage facility to the customer's home. Giants like Amazon and Google have hit the headlines with the new systems and services they are developing, but businesses across the logistics and e-commerce industries are all having to think again about how supply chains will develop over the next few years. Customers are demanding more and better services from retailers, and they'll expect their purchases to reach them faster than ever.
Speed is vital
Consumers shop online for one reason more than any other: convenience. Not only can they browse for products they wouldn't necessarily find in local stores, but they avoid the effort of struggling around busy retail outlets and carrying their purchases home. With a few clicks of the mouse and some personal details exchanged, they get everything they have chosen sent directly to their door.
The only drawbacks are the time and costs involved in getting the product delivered, which are far from ideal when buying a last-minute party dress or birthday gift. Naturally, these are the areas in which customers are continually demanding quicker, cheaper service. For many consumers, paying substantially more for next-day delivery services is simply no longer good enough. Although UPS' Online Shopping Customer Experience Survey found that consumers are more patient than might have been expected when it comes to waiting for the right goods, some 44 per cent had abandoned a shopping cart because of the delivery time.
Businesses are already working on a wide range of new ways to deliver the goods, even faster, with some of the world's biggest names leading the charge. For example, last year Google gradually rolled out Google Shopping Express across the whole of the San Francisco Bay Area, allowing customers shopping with a number of specified retailers to benefit from same-day delivery. Although it is free to try for the first six months, each individual collection will eventually cost $4.99.
Amazon has been running a same-day grocery delivery service in Seattle, the company's home, for several years, but last year it began running AmazonFresh in a second city, with more expected to follow in the coming months and even years. A number of new companies are also hoping to break into this new territory, with businesses like Instacart launching in recent months.
24-hour delivery in China
Perhaps one of the most ambitious faster delivery services is being developed in China. Alibaba Group is working on the China Smart Logistics Network (CSN) with its partners – a huge network that will allow for deliveries between 2,000 of China's biggest cities within 24 hours. Investing some 300 billion yuan ($49.6 billion) into the project, it aims to have CSN up and running within somewhere from five to eight years.
Designed to cope with millions of deliveries between thousands of destinations over huge distances, it is clear that CSN will represent a step change both for individuals and businesses in China, facilitating business growth at the same time as satisfying the mounting needs of an increasingly demanding population.
Drones may change the landscape
Same-day delivery may be an expensive, yet plausible option which is already permeating the industry, but there are plenty of other developments around that will represent more fundamental changes to shipping and logistics looking further ahead. Perhaps one of the most controversial developments of 2013 was Amazon's Prime Air project – a new delivery system that will use drones to deliver packages to customers in as little as 30 minutes.
Responses were decidedly mixed when the company made its announcement, with some complaining that the system will not be practical for customers who live in specific types of housing such as apartments. But the potential for automated delivery at extremely short notice could have huge implications for the way retailers deliver their goods. The technology may not be available for several years yet – Amazon says it will take time to develop the drones and gain approval from the US Federal Aviation Authority – but businesses now know that these unmanned drones will eventually be a huge part of the way their goods reach consumers.
Shipping and logistics are likely to become even more complicated as the world becomes increasingly connected. But it seems inevitable that retailers will have to choose their service providers on their capacity to transport goods quickly and offer better service for consumers.