The document discusses the growing demand for on-demand and instant delivery services from retailers. It notes that customers have grown accustomed to quick delivery through companies like Amazon Prime and expect the same from other retailers. Retailers can adopt an on-demand model where they offer premium delivery within hours using their existing brick-and-mortar stores as local fulfillment centers. While customers want fast delivery, they often don't want to pay more for it. Retailers must find ways to offer on-demand delivery profitably to better meet customer expectations.

1. On Demand for Retail
Be Like Your Local Flower Shop
Issue: March 2018

3. Be more like a flower shop! Have you ever
ordered flowers not because of a Hallmark
holiday (like Mother’s Day or Secretaries Day),
but because of an event that was triggered
– a funeral, job promotion or a birth of a
new baby.
When it comes to last minute or on the spot
orders, you’ll generally find that the prices
are at a premium. You get what you need fast
but at a higher price point. If you're a flower
shop, it gives you an opportunity to use
existing inventory that's on hand. As a
customer with time constraints, your
selection is limited.

4. You can apply this pricing methodology to ecommerce by
providing your customers with a product and premium
instant delivery services. When you need something fast,
you're always willing to pay more on the spot. Why is it that
more retailers don't offer on-demand/Uberization services to
their customers?
ON DEMAND RETAIL DELIVERY
AS A DIFFRENCIATOR
This scenario also applies to last minute travel arrangements,
such as buying a ticket for a connecting flight, car rental even
airport parking. The closer it gets to the time of departure, the
higher the price continues to spike!

5. The food services industry has
adapted this model and Amazon
Prime customers are familiar with
this affordable convenience.
The need for on-demand, retail
delivery will be a differentiator and
in the future an expected service norm.

7. Brick & Mortar will have
an Advantage
Based on a article written by McKinsey and Company in 2017,
they believe that brick-and-mortar stores have an advantage
in on-demand delivery models in urban markets.
The on-demand delivery model for retail, flips the traditional
logistics paradigm – instead of orders being sent from a
warehouse and logistics site (traditional hub-and-spoke
national model) the retailer would use a crowd sourcing model.

8. Retailers such as Macy’s and Bloomingdale’s
have already piloted this concept – as of 2014,
they offered on-demand delivery services to
17 cities.
Instant
Gratification
Same day delivery closes the loop on the
“last mile”. Customers are able to get the
products they want instantly. Buying
something and taking it home, provides
instant gratification, instead of ordering
something online and receiving many
days later.
Customers between the ages of 16 to 27
year olds have grown up in an on-demand
economy. Many up to 25% would even
abandon their carts if retailers didn’t offer
a same day delivery option.

11. BACK-TO-SCHOOL
This model works especially well for large ticket
items such as home furnishings. In the Fall of 2017,
the Swedish home furnishing giant IKEA, purchased
an on-demand platform, TaskRabbit, to help their
customers get their furniture home and assemble it.
Target purchased Shipt for $550 million in December
2017.
If you’ve ever picked up a furniture kit from a big box
store, you’ll know how difficult it is. First you need to
have the right vehicle to transport the large kit(s) and
if you have an engineering degree, you might be able
to sort through the do-it-yourself instructions!
For retailers such as home improvement stores like Lowe’s
and Home Depot, in their high traffic locations, they’ll offer
a rent-a-van service. This service helps customers solve the
last mile in getting their over-sized purchases home.
The rent-a-van model is an added revenue stream for the
retailer – it's based on a first-come-first-serve basis and
you're also restricted with how long you can use the
vehicle for.
Alternatively, you can opt for delivery. But as a consumer
you don’t get to choose your times. You’re dependant on
the schedule and the route of the logistics company.

12. By 2020, 15% of deliveries
will most likely be done by
on-demand or instant
delivery services.
Many retailers haven’t embraced on-demand services as a main stream delivery model yet.
As of today, only a small handful of people are willing to pay a premium for same day service.
Customer wants fast delivery service but they don't want to pay for it. How can you make
the on-demand model more enticing?
“…for customers to see the value in a premium delivery service, they need to be rewarded.
Right now customers are very transactional. Once retailers add a loyalty program and wrap
it with technology that can provide an instant delivery service, then it will be a game changer.”
Gerard Maynard, Co-found & COO, GiftJeenie.
The demographic of an on-demand user is generally between the ages of 18 - 34 (millennial),
followed by those between the ages of 35-54 and 55 plus. You would think that it was targeted
towards high income households – these households only make up 22% of the marketshare.
Males use the service more than females – 55% to 45% and majority of the users are Caucasians.
You would also think that the on-demand, instant delivery model was dominated by the
transportation companies. It turns out that out of a $57.6 billion dollar on-demand economy,
$35.5 billion of those dollars were driven by online marketplaces like eBay and Etsy – not the
Ubers or the Lyfts of the world.

14. NEW DAD
For anyone who’s been a parent,
(especially for your first one) you
only want the best for baby!
You do all the research, buy all
safest products and have your
home sterilized from top to bottom.
Then the baby comes and everything
you thought you knew now goes into
the dirty diaper basket. You’re sleep
deprived, hungry, thirsty, covered in
puke, living in a house full of baby stuff
and you can’t seem to find anything.
On top of that, you’ve also running
out of diapers!

15. Data from National Technology Readiness
Survey.
On Demand
Demographic
• 55% of Users are Male
• 63% Caucasian
• Millennials Ages 18 - 34
• Avg. Income $50K
• Online Marketplaces
Driving the Most Spend

16. Customers expect on-demand delivery options especially in large,
urban city centres. Until now, retailers have always had difficulty
with solving the last mile journey. Not too long ago, if a customer
was to purchase an item online and it was shipped to them within
the week, that was considered fast.
Fast forward and if that is the only shipping option available today,
your customers will go somewhere else – resulting in higher abandon
cart rates. According to MarketingProfs, 23% of all abandon carts are
due to shipping either because of cost or time being an issue!

17. How do Retailers Offer
Instant Delivery Without
Loosing Profits?
On average, in a urban area, shipping will run the gamut between
$5 to $15 dollars. When you’re margins are already thin that means
you end up loosing out on every transaction.
For companies like goPuff, they operate everything centrally from
their from warehouses. Each warehouse is dedicated to service a
specific location – carrying inventory and cutting out the middleman.
By housing their own inventory and using their own delivery staff,
they reduce courier costs, control their service level times and ultimately
providing top notch customer experience.

19. For other retailers that don’t want to have the delivery
done in-house, partnering with 3rd party, local, gig-economy
courier services is key. Some may be apprehensive of using
3rd parties to deliver their goods – fear that the quality of the
service may be inconsistent.
The gig-economy is growing and the motivators to provide
top tier services is very different from a regular delivery
business with full time employees and benefits.

20. According to Intuit, The On-Demand
Economy Worker Study, it's estimated
to grow from 3.9 million Americans
working in this sector in 2016 to 9.2
million Americans in 2021.
Gig Economy to Grow by
Almost 3X by 2021 in the U.S.
The key drivers for this growth is for
individuals to gain financial stability
– be able to supplement their income
through flex work hours. 96% of the
people surveyed view gig work as a
viable and strategic career path.
Those who opt into this career path
understand that service is a top priority,
to reach their financial goals.

21. Current expectations for same day delivery
is high! In some cases even a delivery
window of 1 - 3 hours. Moving forward
consumers will also expect deliveries
7 days a week which includes Sundays.
Another alternative to meet the challenges
of delivering the last mile, is through the
use of secondary hubs. Based on a report
by CBRE, How Millennials are Driving
Change in the Industry, for U.S. based
retailers who have space in poorly
performing secondary shopping centres,
use it as your on-demand delivery hub.

22. Another way is to offer pop-up stores and
flash sales. You can offer flash sales on your
mobile commerce app. Push a flash sale,
targeting select postal codes you have
delivery coverage – it’ll give you an
opportunity to sell the aging inventory
you have on hand and increase your
customer satisfaction with instant delivery.
Larger department stores can offer space
for a short period of time to drive new customers
and expose customers to a new assortment of
items they’d would not carry regular on hand.
Offer these impulsive one-off sale moments
and mesh it with an on-demand delivery model
and your customers will be delighted.
On-demand delivery was traditionally scene in
high end luxury retail or in five star hotel
environments. But as consumer expectations
grow and their need to have things faster, it
really pushes the last mile to the max.
Will you be ready to meet your customer
expectations? If you don't already have an
on-demand offering, it's time you consider it!
How Can You Use On-Demand
Delivery to Drive More Sales?
Localization – know exactly all the events
taking place in your hood (music events,
festivals, food events, parade, etc). Run
local campaigns for customers staying
at local hotels, AirBnBs, etc. that are coming
for a particular event.
As visitors they want to see the sights and
get the most out of their time. Offer white
glove on-demand services – outside of
instant delivery, gift wrapping, suggestions
on items that are particular to this part of
the world.

23. TheAppLabb is a product innovation and development firm. Our goal to improve human
experiences through the use of innovative technologies and drive business results for our clients.
Email: info@theapplabb.com
PH: (464) 688 - 2786
Version: March 2018 - TheAppLabb ©
URL: http://wwwtheapplabb.com
PH: (416) 745 - 3164
Over 11 years of experience with 360+ global clients and over 500+ apps built, we offer strategic
consulting, UX and UI design, custom software development and out-of-the-box industry solutions
for several vertical markets.
Let us turn your ideas into reality.

24. PH: (416) 745 - 3164
References:
McKinsey and Company - How Will Same -Day and On-Demand Delivery Evolve in Urban Markets
https://www.mckinsey.com/industries/travel-transport-and-logistics/our-insights/how-will-same-day-and-on-demand-delivery-evolve-
in-urban-markets
ETRetail.com - Ikea to Buy On Demand Services Platform TaskRabbit
https://retail.economictimes.indiatimes.com/news/home-and-decor/furniture-and-decor/ikea-to-buy-on-demand-services-platform
-taskrabbit/60881036
Business Insider- AThe CrowdSourced Delivery Report
http://www.businessinsider.com/crowdsourced-delivery-report-2017-11
Fast Company- Target Just Bought On-Demand Delivery Startup Shipt for $550 Million
https://www.fastcompany.com/40507521/target-just-bought-on-demand-delivery-startup-shipt-for-550-million
McKinsey and Company - Parcel Delivery The Future of Lsst Mile
https://www.mckinsey.com/~/media/mckinsey/industries/travel%20transport%20and%20logistics/our%20insights/how%20customer
%20demands%20are%20reshaping%20last%20mile%20delivery/parcel_delivery_the_future_of_last_mile.ashx
Terje Sollie - "Classic Clothes Ecommerce Fashion"
Ralph Chang - "People Inside Brown Concrete Building in Daytime"
Hanny Naibaho - "City Street"
Raban Haaijik - "Parking Lot with VW Bug"
Maarten Deckers -“Flowers”
Yolanda Sun - "People Taking Photos"
Photo Credits:
um
Harvard Business Review - The On-Demand Ecomomy is Growing, & Not Jutst for the Young & Wealthy
https://hbr.org/2016/04/the-on-demand-economy-is-growing-and-not-just-for-the-young-and-wealthy
MarketingProfs - Why Consumers Abandon Ecommerce Shopping Carts
http://www.marketingprofs.com/charts/2016/31089/why-consumers-abandon-e-commerce-shopping-carts
Paste Magazine - Competition Runs Rampant in the On-Demand Economy
https://www.pastemagazine.com/articles/2017/03/competition-runs-rampant-in-the-on-demand-economy.html
Intuit - Dispatches from the New Economy: The On-Demand Economy Worker Study
https://intuittaxandfinancialcenter.com/wp-content/uploads/2017/06/Dispatches-from-the-New-Economy-Long-Form-Report.pdf
Digital Commerce 360 - Customers Won’t Wiat, So Retailer Can’t
https://www.digitalcommerce360.com/2017/08/31/why-fast-delivery-is-necessary/
CNBC - Macy’s is Turning to Pop-Up Stores to Spark Sales
https://www.cnbc.com/video/2018/02/06/macys-is-turning-to-pop-up-stores-to-spark-sales.html