BRINGG

BREAKING THE 24 HOUR

DELIVERY BARRIER
Why Amazon is investing
$800,000,000 in one-day delivery,
and what retailers can do about it

A SPECIAL REPORT
Introduction On April 25, 2019, Amazon announced that it will be investing
$800M to facilitate a move from two-day to one-day shipping for
their Prime members. This news shook the industry.

Leading retail stock prices dropped. News outlets around the

world carried the story. Within hours, Walmart responded with a
tweet that implied that they were working on a similar offering,
only without a membership requirement.

In this report, we will break down the rationale behind Amazon’s

massive one-day delivery investment, and how retailers can not
only fight back, but leverage this opportunity in order to thrive in
this ever more competitive market.

BRINGG
What Does At a macro-economic level,
the retail sector generally
Amazon Know mirrors overall economic health;
That Others a strong economy typically results
in strong retail performance.
Don’t? However, eCommerce is growing
~6X faster than retail.
It’s all about
Why? In a word, convenience.
the experience. The easier it is for customers to get
the products they’re looking for, the
better the shopping experience, the
greater the rate of return customers.
BRINGG The delivery experience defines the customer experience
By now, Amazon has accumulated an
unmatched trove of customer data
which shows that customers with
access to faster shipping order far
more, and far more often. By doubling
the speed of Prime delivery, Amazon
is yet again fundamentally changing
the shopper experience.
Amazon hopes that this offer of near-
instant shopper gratification will not
only secure their competitive footing
and widen the appeal of Amazon
Prime, but also further their lead over
their omnichannel retail rivals.
 “Delivery is the key to the omnichannel
customer experience and the leading
indicator for sustainable retail growth.”

Guy Bloch
CEO, Bringg

BRINGG
A Look Heading into a tough earnings call in
February 2005,
"Amazon Prime takes the effort out
of ordering: no minimum purchase

Back Amazon announced a bold new

initiative: Amazon Prime.
and no consolidating orders," Jeff
Bezos, chief executive of Amazon,
said in a letter posted on the
“While it's an interesting idea...
Amazon’s First only those who order an awful lot
company's Web site. "Two-day
shipping becomes an everyday
Bet on Delivery and need it quickly are going to
experience rather than an
as Customer be interested.”
occasional indulgence."
Mike Masnick, TechDirt¹
Experience CNET3
A few months later:

“Amazon's groundwork paved the way

for competitors to follow, but (Scott)
Devitt says he thinks most retailers,
especially brick-and mortar shops,
have a lot of catching up to do:
Amazon is always one step ahead."
CBS News²

BRINGG Fourteen years later, Amazon’s market position and strategy remain consistent.
Why Amazon’s two-day shipping
innovation has now become
Now? the industry standard.
Over the 2018 holiday season,
both Target and Walmart introduced
Amazon Set free two day shipping, with no
membership fee or minimum
the Standard,
purchase value required.
Competition Amazon’s one-day delivery push is
Caught Up an innovative reaction to a growing
threat from omnichannel retailers.
BRINGG Omnichannel retailers are catching up with Amazon’s two-day promise.
By investing in improving their
delivery speed and customer
experience, omnichannel retailers
are narrowing the gap with Amazon.
Leading North American retailers
reported an average 16.6% increase
in eCommerce sales in 2018⁴, while
Amazon is showing signs of slowing
revenue growth⁵.
Now that two-day delivery is no
longer a unique selling point,
Amazon’s slowing growth rate is
driving their leadership to upgrade
and innovate.
Changing The delivery
experience defines
The Game the online shoppers’
customer experience
The Impact of Free
One Day Delivery We all remember the first time we
received a package in just two days
instead of two long weeks. It felt
magical. So did the first time we
received delivery status updates,
real-time tracking, and Amazon
Now’s same-day delivery. These
investments in their customer
experience have propelled
Amazon’s customer loyalty, growth
and revenues for over 25 years.
BRINGG Fourteen years later, Amazon’s position remains almost identical.
Amazon’s decades of data clearly
demonstrate that the delivery
experience defines the online
shoppers’ customer experience. By
doubling the speed of delivery,
Amazon is doubling their value to
shoppers, doubling the delight of
their customer experience, and
reshaping the way that shoppers
interact with them.
Amazon has proven that every dollar
invested in customer experience has
an incredible long-term yield. The
investor community has also come
around, driving share prices up with
each new customer experience
innovation. The market has spoken,
loudly and clearly.
 Companies like Amazon... recognize that
their customers are often more influenced
by their supply chain experience than
by other types of interactions.
Gartner ⁶

BRINGG
Rethinking Retail in 2019 is evolving and in
many ways transforming. Those that
Retail ignored the eCommerce disruption
have famously failed. Those that
have adapted to the new
Delivering Superior
omnichannel dynamic have thrived.
Experiences
The most important factor in
determining the success of
omnichannel retail is not the
deployment of a particular
technology or tactic, but a change in
mindset. Strong, forward-thinking
leadership is required to make the
shift in strategy from an exclusive
focus on quarterly and annual sales
figures, to a primary focus on
customer value and long-term
customer relationships.
BRINGG Retail strategy must shift towards a customer experience-centric model.
In parallel, forward-thinking retailers
are changing their perspective from
technology as a tactic, to platform-
based strategies that enable
continued innovation and rapid
evolution.
In today’s market, retail success
requires both rich experiences that
differentiate the shopping
experience, and more convenient
omnichannel offerings that compete
head-to-head with the leading
eCommerce players. In other words,
retail success now hinges on the
customer experience in general, and
the delivery experience in particular.
The Retailers have a unique advantage
that pure-play eCommerce
Omnichannel competitors cannot match: their
Retail local presence. With substantial
inventory and knowledgeable staff
Imperative just a short distance away from
most of their shoppers, retailers are
uniquely positioned to offer faster,
Leveraging Retail to
more convenient shopping and
Bridge the Last Mile services than their eCommerce
competitors.
BRINGG Retailers are ideally suited to meet rising customer demands for faster delivery.
Today’s shoppers expect rapid,
flawless delivery at competitive
prices and will move on to another
retailer when these expectations are
not met. This means that retailers
have no choice but to bridge this
last-mile gap to offer faster and
better priced delivery than any
online competitor.
The challenge is to build and deploy
the infrastructure necessary to fulfill
their online orders rapidly,
efficiently, and at the right price
points.
 Most large retailers are only a few miles
away from offering same-day delivery in
major metropolitan areas.

Lior Sion
CTO, Bringg

BRINGG
Embracing Amazon’s next day 89% 55%
delivery may not be
Change exciting for long.
of shoppers now
define fast delivery
of shoppers move
to a competitor when
as same day⁷ delivery isn’t fast enough⁸
One Day Delivery
Will Not Be the 61%
Final Milestone of shoppers say
same-day delivery would
increase their loyalty⁸

Amazon’s lead 60% 73%

position is strong, of North American of households shop
households with Amazon primarily through
but not ironclad. Prime membership⁹ omnichannel retailers⁹

BRINGG Amazon’s push for speed presents retailers with a substantial opportunity.
The New Most retailers fulfill online orders
from either dedicated fulfillment
Retail Delivery centers or regional warehouses,
Experience where it takes an average of 1.6 days
to get a package out the door. This
setup allows retailers to streamline
The Need for Speed
operations and thereby lower
shipping costs, and is ideal for a
dedicated package carrier with a
pre-set pickup schedule.
Over the last two years, the average
click-to-door delivery time dropped
17% to just over four days from click-
to-delivery. However, these gains
came largely through increased
usage of premium shipping¹⁰.
BRINGG By integrating retail and delivery offerings, retailers can beat Amazon at their own game.
Competitively priced same-day and
next-day delivery generally require a
more agile, hyper-local approach.
Customers within a given radius of a
retail location or fulfillment center
should have the option to select
same-day or even one-hour
delivery, complete with a branded
real-time delivery tracking
experience. In addition to their
standard parcel carriers that are
increasingly offering same-day
delivery from retail, many retailers
are engaging dedicated local fleets,
either in-house or through
innovative crowdsourced providers
to offer particularly fast, lower-cost
delivery.
The New Many retailers maintain strong
relationships with dedicated parcel
Many parcel delivery providers have
not yet adapted to the
Retail Delivery carriers. These carriers excel at decentralized, rapid,

Experience offering strong geographic reach,

multi-modal transit
(planes, trucks and vans) as well as
Managing Costs
complimentary supply chain and
logistics services.
Their economies of scale allow them,
and retailers in turn, to offer
particularly well-priced delivery
options.
short distance deliver-from-store
model. As a result, many retailers are
now finding exceptional value in
new, local delivery offerings from
forward-looking parcel carriers, as
well as alternative local couriers
and crowdsourced fleets.

BRINGG When deployed strategically, hyper-local deliveries are offer significantly lower cost than traditional shipping.
The New Retail The environmental impact of last-
Customer mile delivery is significant. Rakuten
Delivery Intelligence reports that the average
domestic package travels just over
Experience 1,000 miles before arriving at its
destination. This concern becomes
Minimizing particularly acute when one
Environmental considers that this same item is
Impact often available at a retail just a few
miles away from the customer.
BRINGG Hyper-local delivery is significantly better for the environment.
By embracing hyper-local deliveries,
omnichannel retailers can
dramatically cut back on their
delivery program’s carbon footprint,
something that is sure to be
appreciated by both customers and
the press. In addition to dramatically
shorter delivery routes, hyper-local
delivery from retail also allows
retailers to take advantage of
alternative delivery solutions, such
as bicycle and scooter-based
delivery providers in dense, urban
environments.
 It is clear that we are in the early stages of
a seismic shift in e-commerce fulfillment
which will change the nature of retail itself.

Ken Cassar
VP, Rakuten Intelligence

BRINGG
The Bottom Amazon’s relentless focus on the Your brand and your future rest on
customer experience has raised the your ability to not only compete, but
Line bar for the entire industry. They to excel. This requires a change in
taught customers to expect mindset, as well as a new set of
It’s All About cheaper, faster, better delivery technologies. Though there is no
experiences, and in-so-doing, one-size-fits-all playbook, one truth
the Customer
reshaped their own business and stands abundantly clear: with
the entire industry. This is the true unlimited supply, customer demand
Amazon Effect. will go to the business that values
them most. It’s all about the
In the Age of Amazon, retailers are customer.
presented with a fundamental
challenge which is also an
unparalleled opportunity. Can you
compete with Amazon’s speed and
convenience? Can you offer a
comparable customer experience in
order to retain them?

BRINGG
BRINGG
THE DELIVERY
ORCHESTRATION PLATFORM
FOR THE ENTERPRISE

Make your retail

impact, today.
Deep Experience, ● Synchronized retail and delivery operations
Intelligent automated dispatch
Rapid Deployment, ●
● Seamlessly integrated delivery providers
Full Customization ● Robust data reporting, machine learning
and business insights

Schedule Your Consultation Today

 Sources
1. Masnick, Mike. "Amazon Tries To Build Loyalty Through Shipping Club." Techdirt. February 2, 2005.
https://www.techdirt.com/articles/20050202/1324236.shtml.
2. Vries, Lloyd. "Amazon: E-Commerce Success Story." CBS News. July 05, 2005. https://www.cbsnews.com/news/amazon-e-commerce-success-
story/.
3. Kawamoto, Dawn. "Amazon Unveils Flat-fee Shipping." CNET. February 02, 2005. https://www.cnet.com/news/amazon-unveils-flat-fee-
shipping/.
4. Davis, Don, and Fareeha Ali. “It's Not Just Amazon: Many Top Retailers Are Growing Their Online Sales.” Digital Commerce 360, 18 Apr. 2019,
www.digitalcommerce360.com/article/top-1000-online-retailers/.
5. Vena, Danny. “Amazon Drops a Bombshell -- and It Could Be a Game Changer.” The Motley Fool, 29 Apr. 2019,
www.fool.com/investing/2019/04/29/amazon-drops-a-bombshell-and-it-could-be-a-game-ch.aspx.
6. Thompson, Ed, et al. The Gartner Customer Experience Management Maturity Model for IT Leaders. Gartner Inc, 2019, The Gartner Customer
Experience Management Maturity Model for IT Leaders, www.gartner.com/document/3903390.
7. O'Brien, Mike, and Mike O'Brien. “Same Day Delivery An Opportunity Area for Retailers vs. Amazon.” Multichannel Merchant, Multichannel
Merchant, 8 Feb. 2017, multichannelmerchant.com/news/same-day-delivery-opportunity-area-retailers-vs-amazon/.
8. The Last-Mile Delivery Challenge: Giving Retail and Consumer Product Customers a Superior Delivery Experience without Impacting
Profitability. Capgemini Research Institute, January 10, 2019 www.capgemini.com/wp-content/uploads/2019/01/Report-Digital-–-Last-Mile-
Delivery-Challenge1.pdf.
9. Girard, Greg, et al. Winning Over Shoppers in the Digital Age: A Guide for Retailers and CPG Companies. IDC, 2018, Winning Over Shoppers in
the Digital Age: A Guide for Retailers and CPG Companies. Sponsored by DXC
10. Cassar, Ken. Forward Deployed Inventory: the Future of e-Commerce?Rakuten Intelligence, Inc., 0AD, Forward
Deployed Inventory: the Future of e-Commerce?