Posted at 02.10.2018
Home delivery refers to deliveries of goods to the customers' homes (or another location of the customers' choice such as workplaces) rather than customers needing to collect the products in-person from a physical point of sale. In home delivery operations, therefore, the physical distribution of the products from the point of purchase to the customer needs to be organized and carried out by owner or specialized delivery companies rather than by the customer.
While delivery can be tough on some profit margins, operators are finding that offering home delivery service can address both their appetite for sales and the consumer's hunger for convenience. Delivery of good is an integral area of the customer's experience. Ultimately the product quality and value of the service will are likely involved in differentiating between those who succeed and those who fail. One more important factor in India is the fact that nobody wants to cover home delivery services, these services are always expected by consumers as "free"
Home deliveries are a major logistical challenge, they are simply far more expensive if deliveries are created for small orders, both economically and time wise. In a world where fuel costs fluctuates enormously, and consumers demand more and more value from each penny that they spend, home delivery needs to evolve from where it presently is. Home delivery service is also considered as the 'last mile logistics'. The business enterprise units involved in managing a home delivery service is very similar to a logistics service like transportation, product handling, manpower management, routing and scheduling. Home delivery services although playing an essential role in customer experience, hasn't been determined as a major vertical that should be given special emphasis and for that reason evolvement of home deliver services in negligible over past a long time in India. If we leave aside some examples in food category and retail category, no major investment has been designed to build up home delivery models in India, which could be more efficient and add value to customer life.
There are no fixed standards established on which home delivery service could be measured. There were few attempts even by the best players in retailing to create a benchmark for home delivery. Every business does what they can do best according to their means and resources available. Rarely do you find retailers/shopkeepers having dedicated staff or infrastructure for home delivery. It really is done by the standard staff when they are free from their routine work.
Outside India, home delivery model has evolved; now customers have a choice between morning and afternoon for delivery, the delivery routes are assembled, edited and printed 12 hours before the vehicles left the centre. Customers can also pay yet another payment for a delivery in just a two- or four hour slot. Slotting or giving the specialized service on some cost reduces the pressure on scale dependence for optimal usage of home delivery fleet and manpower.
Recently, range of companies have realized the importance of offering home delivery services and subsequently invested heavily in home delivery channel of service. One of the latest example is of McDonald's which recently launched its free home delivery services called McDelivery to help expand increase its penetration in India.
Bigger players in food industry have deployed Information technology to increase their processes like Interactive Voice Response (IVR) systems that have options for inserting the order, tracking the order status, lodging the complaints and knowing the promotional offers. They run call centres to manage the flood of orders. Although, these services feature a cost, they also provide chance to service more customers. Some food chains like Domino's earn more from your home delivery than in-person visits of the clients. That's the reason, probably, home delivery has become a necessity for a fast food chain to penetrate in market.
On the other hand, although, online shopping is becoming big in India, it's been successful to make sales only in certain sectors like books, gifts, electronic etc. With the launch of 24-hours shopping channels like Home shop18 and Star CJ live, people are receiving in to the habit of shopping for without actually feeling and touching the product. In both these cases, Online and TV shopping, home delivery is the channel used to make products reach to consumers. Using special case scenarios, the industry has adapted the home delivery model completely to cater to certain section of customers like jewellery and saree shopping.
Home delivery service is currently provided in food category by players like Domino's, Pizza hut, big restaurants etc. In retail sector, home delivery services are provided by players present in consumer durables, furniture and big retail shops (like Apna bazaar, rajmandir etc. ).
C) Literature Review
The literature review yielded a number of articles and books that contain dealt with what complements home delivery operations, impact on customer relationship, and what sort of retailer may standardize its practices. Delivery can be explained as "how well the product or service is sent to the buyer". Delivery is the ultimate link in the chain of the full total Logistics function; that is, it is the point where in fact the logistic function finally meets the customer. The focus is on efficiency and effectiveness and it offers fleet routing, deciding on timing and locations of delivery, scheduling and vehicle planning, etc
Peter Drucker comments distribution as the 'last Dark Continent' for businesses yet to be conquered. It is inconceivable nowadays for a firm to operate without the aid of transportation. Transportation is one of the most essential and a significant sub-function of logistics that creates time and place utility in goods. The backbone of the whole supply chain is the transportation management which makes it possible to achieve the well known seven R's- the right product at the right place, at the right time, in the right quantity and the right condition, for the right customer at the right cost. According to Dr. T. A. S. Vijayaraghavan, Professor, Information Systems & Operations Management Area Coordinator, Center for Logistics and Transportation Management XLRI, Jamshedpur, India presently has one of the greatest road networks in the world (with over 2. 9 million km). The pace of growth in road traffic has been steady 10 percent since 1951 and may have gone higher had there been a penetrative and larger road network in country. In the book "FedEx Delivers", Madan Birla discloses that FedEx had started home delivery services within an internet boom era. Following the bust company has still relied on the system developed and it has given appropriate returns. FedEx Home Delivery service connects its customers to every residential address in the U. S. Why is this service special is its residential-only delivery network, the versatility to customize delivery to fit your recipient, and a money-back-guarantee. Indian retail market is highly unorganized therefore is the transport industry, there's been almost no data regarding this 'last mile' business. One of the most important factors which affect last mile logistics is surface transportation.
The fulfilment process for direct consumer orders can be characterized as consisting of three stages (Campbell and Savelsbergh 2005; Delaney-Klinger, Boyer, and Frohlich 2003): (1) order taking, (2) order fulfilment and (3) order delivery. All of the 3 stages are critical to providing excellent customer service at a cost the customer is willing to pay. The focus of your study will be on the ultimate stage - Order Delivery. The delivery of the ultimate product to the customer's door is logistically difficult and challenging due to lots of factors. It is also potentially very expensive (according to a report in USA, costs for a single delivery of groceries run anywhere between $10-$20/order according to Boyer, Frohlich, and Hult 2004). We need to find the costs structures that are prevalent in India and exactly how affordable it is to provide home delivery service in India.
Ping (1993) has defined retailing effectiveness as the degree to which business activities add value to the merchandise and the manner in which they can be purchased to customers for his or her personal and family use. Experience is an essential aspect that differentiates a highly effective retail store from the run-of-the-mill ones (Berry, 2001). Marketers have increasingly started realising the fact that the purchasing power of customers, consumer preferences, latent need fulfilment, and convenient buying are the most crucial reasons for enhancing the retailing effectiveness (Kreager, 2000). Of all these reasons, it has experience to be the 'convenient buying' that demands a unique approach in retailing (Saji, 2002). Elaborating on 'convenient buying', the word refers to the ultimate objective that the retailers should shoot for; making certain every customer enjoys the huge benefits that the retailer is able to provide to the best of his/her ability with respect to the target segment. The objective here is to make all products and services available so that the customer is not found wanting at any given point. Home delivery of goods further increases the consumer's experience of convenient buying.
Research on home delivery strategies is increasing, but almost all of the initial work has focused generally on comparing the profits from very different service models rather than optimization in the design or performance of an individual model. Punakivi (2000) studies the trade-off between the use of fixed routes and the use of optimally sequencing the deliveries on routes when all deliveries are known. Yrj¶l (2001) compares different approaches for picking the orders but also suggests values to use in evaluating the performance of any online grocer. Lin and Mahmassani (2002) summarize the delivery policies for many online grocers in the United States and use vehicle-routing software to evaluate the impact of many of these policies on the few realistic instances of the problem. A great deal of research has examined a need for collaboration between marketing and logistics professionals (Ellinger, Keller, and Hansen 2006; Flint and Mentzer 2000), in this case, challenge is to balance marketing's desire for short delivery windows that are appealing to customers against logistics' desire to have longer delivery windows which are more flexible and provide more efficient routes. This study will focus on finding best route optimization technique in Indian scenario. As of this moment, there is absolutely no particular technique being employed by Indian retailers.
Customers buy more from the outlets which not only gives them better service but also which customizes its service for them. Some of the critical factors affecting the home delivery service operations: Traffic congestion; Distribution infrastructure and technology
This study will identify the overall scenario of home delivery service market in India. Since home delivery is logistics of last mile there may be need to recognize existing issues of distribution of products. The study will approach various sources for enumerating relevant practices, challenges, and improvements in sphere of distribution.
The study by Jha(2006) in his dissertation on "Home delivery service - in occurrence with the Indian retail boom" touched after home delivery aspects for the following retailers - Big Bazaar, Sales India, Style Spa and Pizza Hut. However, the amount of retailers covered was very less and local retailers weren't covered whatsoever. In such a study we can look in to the adoption of home delivery model by local retailers as well as changes executed by the bigger players in their model. This study also intends to check out the consumer perception about home delivery model from two different perspective of consumers - offline (offline model) and online (e-commerce). By bringing goods to the customer's door, home delivery is seen as the best and most convincing value-added service for consumers. While using trends that indicate an increase in e-commerce and TV shopping in India, home delivery services are set to grow exponentially.
Specifically to India, modern retail had entered India at a huge magnitude around 2005; it posed a significant threat to existence of local kirana stores also known as mom-and-pop stores. By now, everybody knows these local kirana stores have survived successfully, clearing the doubts over their existence. It'll be very interesting to look at the importance of home delivery service by local retailers as a point of differentiation and its own effectiveness for consumers which helped these stores to survive. The study will also go through the emerging sectors where home delivery will make a difference to the lives of people. Banking and Healthcare can have huge applications for home delivery model.
Research problem: To understand home delivery model in India, its impact and potential applications in new sectors
To find out the price structures and affordability of providing home delivery services in India
To understand the buyer perception about home delivery and value associated with it
To study home delivery model as alternate channel of retailing
To estimate the worthiness home delivery model can add if extended to new sectors
Sectors where home delivery happens to be being provided - Restaurants and eating outlets (Pizza chains like Domino's, Pizza Hut etc. ), local retail shops, durable shops (heavy electronics stores, furniture etc. )
Current distribution network and operational structure for home delivery model
Calculating the efficiency of presently followed system of home delivery
Reasons for preferring home delivery as a marketing tool over other marketing tools available
Change in the perception of home delivery when the term 'Free' is put into home delivery, also, finding potential of paid home delivery services
New sectors where home delivery could be implemented - Healthcare, Ticketing, Banking, Apparel, etc
Emergence of home delivery model as another channel of retailing and its own impact on the retailer's business
Efficiency of presently followed model and scope of improvement
Standards presently followed in Indian scenario and what should be the benchmarks
Importance of home delivery in other format of retailing like online and TV shopping, where home delivery as used as an integral part
The research objective as outlined above plainly indicates the need for a qualitative as well as quantitative research design as research objective demands description of consumer perception about home delivery. In addition qualitative research will be asked to estimate the cost structures of such services and value addition provided by such service if extended to new sectors like healthcare and banking.
Further, to work with or provide home delivery as something is more of a person decision, both from a consumer perspective as well as service provider (shop owner, restaurant etc) perspective. Therefore depth interview will be a suitable tool to measure the above. Therefore Churchill 1979 methodology is used.
Initially, we will conduct a second research to comprehend the home delivery sector, competitor analysis, challenges faced by the sector, how home delivery services are communicated to external world. It will also become homework for primary research.
Our primary research design will be two-fold because some of our information areas are psychological and subconscious in nature that could require qualitative research and other information areas are numerical in nature and would need a statistically significant number of responses to be valid.
Qualitative (using Depth Interviews to measure)
To delve deeper in to the reasons behind consumer preferences for opting for home delivery services
Feelings and feelings towards home delivery services
Attitude towards usefulness of home delivery services
To define basics for quantitative research that will follow
Quantitative (using Questionnaire to measure)
Preferences and rankings
To confirm and substantiate the findings from qualitative research on a more substantial scale
Depth Interviews will be conducted for
Questionnaire will be conducted for
The data collection tool will be questionnaire and personal interview. The info collected through questionnaire will be processed by using software tools like SPSS. The data collected through personal interviews will be content analyzed and research findings will be mined for consumer insights.
Our discussion above has clearly suggested the prospective group for this research will be young to middle aged customers who are aged between 15 to 45 year old as various previous researches have demonstrated that they are the primary users of home delivery services.
We will not prefer to research customers of 14 years and below because the decisions are guided more by the family (specifically parents') choice than their own. Further their behaviour generally and consumption behaviour in particular continues to be at the stage of development and therefore will require a report which is focussed on only this generation. We will conduct our research in a Tier-1 and a Tier-2 city where home delivery services are being used more. We've selected Delhi as our Tier-1 city while Ahmedabad as our Tier-2 city. We could keep our research restricted to Ahmedabad and Delhi only because of logistical and financial constraints.
Selection of respondents will be convenience based depending after two factors: family stage of the respondent (single, married, with kids) and the occupation of the respondent. Inside the first group of respondent aged 15 to 22 year, respondents will be mostly students who are single and dependent on parents for the money. In the next category of respondent aged 23 to 35 year, respondents will be mostly employed, not dependent on parents and may or may well not be married. In the 3rd group of respondent aged 36 to 45 year, respondents will be independent and having their loved ones with kids.
Many companies which may have started providing home delivery services have discovered that direct delivery poses a massive logistical challenge. Players are struggling to build direct delivery strategies that are profitable and can fulfill customer expectations.
Cost of an home delivery majorly depends upon 2 independent factors -
This factor is expected to correlate negatively with costs; i. e. , delivery in areas which have higher customer density should be less expensive
This is also likely to correlate negatively with costs; i. e. , longer customer windows to delivery timings correspond with lower delivery costs. In other words, a delivery to be made immediately in 30 minutes will cost more than a delivery to be produced in 2 hour time frame.
Hence there's a trade off between effective customer centric fast home delivery system and a cheap home delivery system. Every retailer can change between these two extreme positions and discover a fit based on the environment they are located into and audience they may be catering to.
If we start to see the trend from past few years, particularly in developed countries like USA, shopping-related driving has been growing at an extremely fast rate. A phenomenal improvement in the fuel economy of cars gets eclipsed by more miles travelled on the highway. The tremendous growth of big retailers, including Wal-Mart, Target, and Home Depot, over the last 15 years has been mirrored by an equally dramatic rise in how many miles people travel running errands. During the period 1990 and 2001 (the most recent year for which the U. S. Department of Transportation has data), the amount of miles that the common American household drove each year for shopping specifically, grew by more than 40 percent. As concern for the surroundings has grown over the past, politicians and activists have suggested that home delivery solutions might provide a way to lessen travel distances. Punakivi and Saranen (2001) have suggested that grouped deliveries could be more efficient from a travel distance/mile perspective compared to situation when consumers drive to the store by themselves
In case retailer is getting decent quantity of orders from customers on a daily basis, they keep permanent staff for home delivery services. Home delivery is majorly done through cheap mode of transport like bicycles and rickshaws which can be owned by the shopkeepers. The staff that gives the orders is not dedicated only for home delivery, generally they are really employees who apart from working in the shop also deliver products in their leisure time. You will discover time limits within which the products are delivered. This method is cheaper when compared to outsourcing. Outsourcing is mainly done when the amount of orders is less and keeping a dedicated staff or maintaining delivery vehicles is not financially viable. A deal is performed with the local courier delivery company, who delivers the products in 2-3 days.
From the observations in this research, maybe it's inferred that for home delivery in a tiny area, it is advantageous to have large number of smaller vehicles rather than having smaller volume of larger vehicles. First option increases the ability to meet desired delivery windows with maximum usage of carrying capacity. That is also helpful whenever there are several high-demand time periods, e. g. , early evening.
We have assumed fixed and assured orders for home delivery services, One of the primary challenges faced by companies is their need to forecast demand and accordingly commit delivery personnel prior to scheduling deliveries. Future research should look at forecasting the demand and how to manage the fluctuations popular. Demand also fluctuates widely each day and time.
In addition to delivery between the shop and consumer, there is certainly another major logistical component, picking and grouping of the orders at the Distribution Centre or retail store prior to delivery. That is a very important factor identifying overall delivery efficiency and really should be looked at in future research.
Another interesting area would be the study of new software that are being developed to learn the ways a new obtain an order delivery fits in with earlier scheduled deliveries and assigned a cost for accepting or denying that delivery request. Research on such dynamic and real time allocation approaches will be very beneficial in assisting consumer direct delivery companies to boost their efficiency.