The COVID-19 pandemic has undoubtedly accelerated shifts in consumer behavior and expectations, and not many have been as dramatic as the explosive rise of ecommerce. Perhaps one of the biggest pain points brands have struggled with in ecommerce over the past two years is meeting consumers’ increased demand for immediacy. While two-day delivery was enough to satisfy eager shoppers pre-pandemic, next-day/same-day is now table stakes and brands that offer even faster delivery, meaning within hours or even minutes, are poised to reap rewards that include higher conversion and repeat purchase rates. But offering reliable instant commerce to customers isn’t easy.
The issue? Traditional logistics networks weren’t built to handle such breakneck delivery speeds, and retailers are left trying to meet consumers’ expectations while facing ever-rising environmental impacts due to emissions-heavy overnight air shipping, cardboard overuse and even more delivery trucks clogging up city streets and spewing exhaust.
While many conclude that faster delivery is wholly unsustainable, next-generation logistics networks are being built for speed as well as sustainability. By leveraging these new networks, brands can drive value through instant commerce while operating in a more environmentally conscious way.
Brands are Playing Catchup with Amazon, the Fast Delivery Pioneer
Consumers’ expectations of quick delivery have been building since Amazon launched its two-day delivery promise with Prime membership way back in 2005. At the time, Amazon held an incredible competitive advantage and, as other retailers have struggled for years to catch up, Amazon has just kept going.
In 2014, the company launched Prime Now one-hour delivery for daily essentials in selected areas of Manhattan, rolling out the offering to several more cities throughout 2015. The following year, Amazon introduced free same-day delivery to 27 major metro areas. The company continued to invest in the infrastructure needed to expand and improve its fast delivery prior to the start of the global pandemic, and its foresight allowed it to recover quickly from early COVID-19 logistics challenges and then capitalize on the subsequent increased demand for ecommerce and fast delivery.
As competing retailers aim to match Amazon’s speed and the industry behemoth itself continues to invest in air freight to stay on top, consumers and businesses are increasingly concerned about the environmental consequences of fast deliveries. According to the World Economic Forum (WEF), “demand for urban last-mile delivery is expected to grow 78% by 2030, leading to 36% more delivery vehicles in 100 cities around the world. Deliveries will cause related emissions to rise by nearly one-third and add 11 minutes to each passenger’s commute.”
Brands hoping to stay competitive by resorting to unsustainable delivery methods will contribute to this increased pollution and congestion, not to mention lose out on reaching and converting consumers who purposefully seek out environmentally conscious brands. In 2021, Forrester Research found that “68% of highly empowered consumers plan to step up their efforts to identify brands that reduce environmental impact,” and that “consumers’ sensitivity to the environment exerts a stronger influence on purchase decisions across multiple categories of buying.” To best compete with the Amazons of the world, brands need to offer instant commerce with minimal environmental impact.
Microfulfillment Center Networks and Data Intelligence are Key to More Sustainable Local Delivery
When combined with technology that’s specifically designed to enable instant commerce, microfulfillment centers — smaller, non-traditional warehouses located hyperlocal to customers — are a crucial part of sustainable instant commerce models. They allow brands to use data intelligence to forward position inventory closer to consumers, eliminating the need for expedited air shipping and allowing goods to be transported by bike or foot, so that fewer delivery trucks are needed.
When vehicles are needed for delivery, instant commerce companies that are sustainability leaders can use a mix of carbon-minimizing business practices and carbon offsetting to achieve carbon-neutral order fulfillment. A study by Accenture finds that “the last-mile supply chain made possible by local fulfillment centers could lower last-mile emissions between 17% and 26% through 2025.” Because microfulfillment centers enable point-to-point delivery, they eliminate the need to have goods handled by an additional sorting facility; this in turn mitigates the need for wasteful cardboard packaging.
Instant commerce is here to stay and is only getting faster, but by looking to a handful of new startups that are building the next generation of logistics networks through microwarehousing innovation and data analytics, retailers can enable the speed their consumers want while operating sustainably.
Ben Jones is founder and CEO of Ohi, a leading instant commerce solution for direct-to-consumer and enterprise brands looking to grow their business by enabling powerful post-purchase experiences. He has been featured in The Wall Street Journal, Forbes, Business Insider and other publications and regularly speaks about instant commerce at prestigious industry conferences. Jones is a member of the Young Entrepreneur Council and holds a BA and an MA from The University of Cambridge and an MBA from the Stanford University Graduate School of Business.