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Same Day Delivery ' "New Delivery Model for 2013 and Beyond"

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SOURCE: Dan@AirFreight.com

The Big Box stores have embraced the concept of pushing down the hub-and-spoke distribution model by providing a hub (Distribution Center, or "DC") designed to serve approximately 100-125 local retail outlets. Amazon strategically placed DC’s in states where tax laws did not require the electronic retailer to collect state tax on items sold; giving Amazon a price advantage over brick and mortar stores.

Long Beach, California (PRWEB) February 23, 2013

SameDayDelivery.com recognizes that the traditional delivery logistics based on large pre-determined national distribution points that “pushed” product to the local market has changed. E-commerce and the end user’s desire to have product provided directly to their current location, in a time frame they determine and at a cost that is attractive, has begun to control the order flow.

Given the almost unlimited points of end user consumption, the dependence on the national hub-and-spoke distribution model, originally designed in the mid-1960s, has become more expensive and less responsive.

The Big Box stores have embraced the concept of pushing down the hub-and-spoke distribution model by providing a hub (Distribution Center, or "DC") designed to serve approximately 100-125 local retail outlets. Amazon strategically placed DC’s in states where tax laws did not require the electronic retailer to collect state tax on items sold; giving Amazon a price advantage over brick and mortar stores.

However, in 2012, Amazon has begun to push down their hub-and-spoke model by expanding their local presence through a growing number of DC's. Despite the negative impact this strategy has on Amazon’s tax advantage, the increase in a more localized presence has lowered warehousing and labor costs while enabling them to test same day delivery in 10 U.S. markets.

SameDayDelivery.com is addressing the need to provide flexible same day delivery service by pushing the “hub” of the traditional “hub-and-spoke” distribution logistics directly down to the local market, allowing for cost-effective, same-day delivery. For those potential customers that already have brick and mortar locations in a SameDayDelivery.com market, SameDayDelivery.com will provide last mile delivery logistics.

For customers that currently focus on next day delivery by consolidating their inventory in warehouses close to next day delivery national hubs, this new, flexible same-day delivery paradigm will save money on warehousing costs, labor and overnight transportation costs associated with the traditional national hub-and-spoke model for next day delivery. These savings will offset the possible costs of increased inventory while allowing a significantly more robust and flexible same-day delivery network at next-day prices. Features such as delivery time windows, signatures and the pick-up of a warrantied item when the new item is delivered will be offered to provide a strategic advantage to SameDayDelivery.com customers.

Current Assumed Model

Advantages

  •     Leverage large scale pick and pack technology
  •     Centralized control
  •     Minimize inventory
  •     Existing hub infrastructure

Disadvantages

  •     Expensive next-day delivery
  •     Dependent on premium location (next to national distribution hub) which translates into higher warehouse and personel costs
  •     Inflexible

Same-Day Delivery Model

Advantages

  •     Items are prepositioned in local market for same day and time-specific delivery
  •     Ability to have delivery and pick-up done at the same time
  •     Low cost of local DC warehouse space and labor
  •     Flexibility
  •     Reverse logistics capabilites
Disadvantages
  •     Possibly higher inventory needs
  •     Possibly higher supplier to local DC shipping cost because of decreased volume
  •     Must keep inventory moving quickly

Same-Day Regional “Consolidation Hubs” could be used to optimize inventory if increased inventory becomes a problem. Also, inter-local hub distribution via expediting could deal with inventory issues.

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