Importance of E-Proximity: An E-commerce Race to the Customer.


A new trend is taking over the way E-Retailers are doing business. Nowadays, 24-hour delivery services are simply not fast enough as on-demand; same day delivery services are exponentially growing across Europe, US and Asia. Tech titans such as Amazon and Google and eBay aim to offer customers door-to-door delivery within the hour of their convenience.

This on-demand service boom in the E-retail industry was catalyzed by the transformational change in strategy by e-commerce leader, Amazon. The firm decided to shift away from placing warehouse in cheap, remote locations but rather build its centers next to heavily populated metropolitan centers. This strategy enabled it to offer same day delivery at the cheapest price, or even for free. Firms such as Google and eBay have soon followed Amazons footsteps.

Traditional, brick -and-click stores possessed a major advantage in this respect as corporations such as Sears and Walmart, “have inventory within five miles of 95 percent of the American population,” (Michael Hart, 2014). This places such physical stores at a major advantage than their online-competitors whom possess their warehouses in remote, state-based distribution centers.

The new trend in same-day delivery has raised an initial skepticism among consumers. The ability to deliver items as cheap as pens or accessories to the customers door within a few hours at a mere price of $5 seems illogical from a business perspective. Considering transportation costs, search costs and transportation costs, there is a clear loss on the side of the company. The raised skepticism is in fact for good reason, yet for a reason highly beneficial for the consumers.

The availability of information strategy is quickly changing consumer behavior and the means in which companies shape their strategy. Nowadays, the cost of communicating with customers is substantially lower due to the increased availability of information. Online search mechanisms have increased product and price informedness and enabled customers to easily switch between competitors. This has increased the need for differentiation and resonance marketing where products and services are delivered in aim of a favorable response from the targeted consumer. Thus E-retailers are swiftly eliminating their rigid schedules, to offer a more adaptive, hyperdifferntiated services that fit the customer’s busy lives better than ever before.

Therefore, tech giants such as Amazon, Google and eBay offer these express delivery services not in aim of making money, but rather as to collect information on its millions of potential consumers. Through collecting information by means of search engines, customer queries and registrations, companies can exploit big data and analytics and can thereafter gain further consumer insights to more accurately predict future trends.

References

Crook, J. (2014). WunWun Slashes Pricing To Compete With Other On-Demand Delivery Services | TechCrunch. TechCrunch. Retrieved 21 October 2014, from http://techcrunch.com/2014/07/15/wunwun-slashes-pricing-to-compete-with-other-on-demand-delivery-services/?ncid=rss&utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+Techcrunch+%28TechCrunch%29

Econsultancy,. (2014). Q&A: Tom Allason on e-commerce delivery startup Shutl. Retrieved 21 October 2014, from https://econsultancy.com/blog/5092-tom-allason-on-e-commerce-delivery-startup-shutl#i.rnotnqrzgfaxx1

The Verge,. (2013). Door-to-door war: how Amazon ignited a boom in same-day delivery services. Retrieved 21 October 2014, from http://www.theverge.com/2013/10/10/4824014/the-dream-of-the-90s-is-alive-in-america-why-on-demand-delivery

Li, T., Kauffman, R.J., van Heck, E., Vervest, P., and Dellaert, B. 2014. Consumer Informedness and Firm Information Strategy. Information Systems Research 25(2) 345-363.

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