STUDY: A monster opportunity – Delivering the Vampire Economy

We live in a 24-hour economy, with many of us now shopping online late at night. This year ParcelHero predicts we are likely to see the first 24-hour home deliveries, as retailers finally catch up with new consumer behaviour. The first retailer to launch late night deliveries is set to make a killing in the vampire economy, says ParcelHero’s Head of Consumer Research, David Jinks MILT.

Delivering the Vampire Economy

late night delivery driver

Red eyes full of desire, licking lips in anticipation. Yes, we’ve all experienced that late-night urge to order a delicious pizza or bid on that item we’ve always lusted after. One in three of us admit to shopping late at night a lot more than we did five years ago. And many businesses are also working 24 hours. Yet retailers and delivery companies have been slow to respond to the fast-growing demand for night time deliveries.

Night-time online browsing and purchasing has been dubbed by retail analysts the ‘vampire economy’. And there’s certainly a killing to be made by the first retailer that fully embraces this market. ParcelHero believes 2018 will be the year the Vampire economy takes flight.

The new witching hour is not midnight, but 10.18pm. That’s the peak time for nocturnal purchases, according to Barclaycard, which processes many of these night-time credit card transactions. Most popular night-time purchases are clothes, jewellery and shoes: 40% of night-time consumers have bought these items, while 24% of us spend the hours of darkness buying presents. And night-time shoppers don’t hold back on their spending: 20% book their holidays after dark, spending an average of £103.

Of course, takeaway food stores already do deliver into the night – something taken advantage of by pizza companies, as 22% of consumers regularly order up an evening pizza. But what about other items? One in five consumers want pharmacy items delivered to them in the small hours, for example.

Amazon has already glimpsed the potential for later deliveries and has launched a free Same-Day Evening Delivery service for Amazon Prime members; while non-Prime members can stump up £6.99 for the Get it Today Evening Delivery service to get their hands on an item the same night. But the service so far only delivers until 10pm.

This really isn’t addressing the potential of this new market. It seems many of us these days are only just beginning to wake up around 10pm, such is the radically different pattern of many working lives. So how long before Amazon and others truly wake up to the new demand of people logging on late or working the ‘graveyard shift’?

Barclays’ research found that while online purchasing and browsing peaks between 10pm and midnight, one in ten consumers are still busy buying things between midnight and 3am.

Make no mistake, night time deliveries can be done, given the right incentives. As one example, on Tuesday, November 7, 2017, the Xbox One X was launched, and such was the excitement surrounding the arrival of the new console that Argos upped the ante on its Fastrack Service – delivering the games to lucky shoppers at exactly one minute past midnight.

Gimmick this might have been, but it shows the basic infrastructure is in place for small hours deliveries.

One obvious difficulty with the concept of 24-hour deliveries is finding the drivers willing to work such unsocial hours. But, in the era of the gig economy, many people are choosing to work the hours that suit their lives; and the opportunity to earn a higher rate for nigh time work is one that a number of delivery drivers would seize.

And already the logistics network infrastructure needed for night time deliveries is largely in place. Most couriers, including ParcelHero’s quality partners, offer standard overnight courier delivery. That means parcels are driven through the night to be at a location distribution centre ready for final delivery from 8am. There’s no reason why some of these journeys can’t link up with the ‘last mile’ delivery to customers, rather than then be held waiting in the warehouse.

In the era of increasing instant gratification we have already grown used to two-hour – and even one-hour – delivery times. The Amazon Prime Now service is already popular with impatient shoppers – while Tesco also offers one-hour grocery deliveries with no minimum order for £4.99 as part of its Tesco Now service.

Again, both services end at 10pm; but the demand is there for significantly later deliveries.

 

Why night-time’s the right time

Online retailers are in a great position to make the most of this new Vampire economy shopping trend and offer a full service outside of traditional shopping hours.

Night-time shoppers now spend over two hours browsing each week. Tracking browse and transaction data is the first step to singling out night-time shoppers and establishing when and what they are browsing. Segmenting data based on the time customers are browsing enables retailers to send a targeted marketing email at the right time.

Customer data can also be invaluable in capturing the vampire economy.  Is the shopper always shopping at a specific time? Their behaviour might be easily determined by analytics. For example: they always shop at a time that they know a site will have been updated.

Modern families now watch TV and shop online at the same time. This new way of watching has led to what’s being called ‘T-commerce’. That means people are likely to order kitchen utensils during a Nigella or The Great British Bake-off show, and even look online to find Mary Berry’s outfit!

eBay launched a “Watch with eBay,” App in the US that showed products related to the show customers were watching. eBay planned to be able to sell viewers products that appear in a show, such as a dress worn by one of the main characters, or a watch used by another. The ultimate ‘couch commerce’ App, ‘Watch with eBay’ was never launched in the UK, but it does point to the potential of peoples’ evening viewing inspiring purchases of must-have items. And in a society increasingly used to instant gratification these may well be items that people want right now – and are prepared to pay significantly more to have delivered that night.

We’ve mentioned that there are many logical reasons for night-time deliveries, beyond sheer impatience! Items such as medicine orders from chemists may well be needed urgently during the night. There may also be strong reasons for grocery orders, etc to be required suddenly.

Night owl consumers are prepared to pay handsomely more for late night deliveries, so retailers really do need to wake up to the potential opportunities for increased sales and better margins.

 

Silent night

Night time deliveries make sense not just to consumers but also to stores themselves. By swapping day time deliveries to the night time, congestion and pollution can both be reduced. Quiet Deliveries were extensively trialled in London during the 2012 Olympic Games. Logistics companies and retailers combined efforts to ensure the roads were as uncongested as possible during the event, by delivering items to distribution centres just outside the Capital and then onwards into stores at night.

The trial, led by Transport for London (TfL), was highly successful, with virtually no complaints from residents about noise or inconvenience. Sadly, as soon as the Games ended, businesses reverted to their former practices and much of the advances made were lost. However, in recent months, the pressure to get traffic off urban streets during daylight hours has been increasing.

The European logistics company Geodis operates a daily ‘Out of Hours’ service across France to meet the needs of retailers in busy city centres. Last year it started in-night deliveries in the UK for a large fashion retailer with stores in Stirling, Glasgow, Edinburgh, Dundee and Aberdeen, drawing on the experience of its parent company in France.

The smooth running of the in-night deliveries in Scotland has resulted in the service being extended to 33 stores in England, stretching from London to Exeter in Devon.

Geodis is just one of several companies increasing night time operations. The Freight Transport Association is a strong supporter of out of hours deliveries. It says that evening deliveries result in:

  • reduced round trip journey times
  • reduced vehicle turnaround times at stores
  • reduced fuel consumption from less time spent stationary, idling in congestion
  • improved shift productivity from drivers and vehicles
  • increased product availability within store
  • less conflict between deliveries and customers on the shop floor

And the Government itself says Quiet Deliveries plans will result in reduced congestion, more reliable delivery schedules and reduced impact of carbon emissions. There may also be benefits in terms of greater availability of goods on shelves, as deliveries outside normal hours will allow retailers to maintain stock levels.

The secret to the success of night-time Quiet Deliveries is reducing the volume of both vehicles and the actual physical delivery process. It’s not just down to the racket of the vehicle itself. Obviously electric and hydrogen powered trucks are preferable to noisy diesel vehicles, but there are other significant ways to keep noise levels acceptable.

Noise levels can be reduced by introducing various improvements in technology but also relate to the way people manage the loading/ unloading process. Typically, Quiet Delivery best practice measures include:

  • Modern equipment such as quiet storage cages and racks
  • Modifications to loading bays, such as quieter gates and doors
  • Behaviour by staff to reduce noise, such as accurate handling of goods, hushed voices and limited use of horns

The experience of the truck manufacturer Scania is that deliveries between 10pm and 8am are acceptable in urban environments where there is a constant low level of noise; but that in quiet rural areas even hushed deliveries cause more disturbance to residents.

Night time urban deliveries to stores can certainly be successful though, if deliveries – rather than being loud enough to wake the dead, or even the undead – are kept as quiet as possible. Companies such as Brigade Electronics have even developed ‘hush hush’ reversing alarms that don’t bleep loudly or sound like someone is strangling a crow. The noise is also very targeted to only be heard by people near where the vehicle is working.

So, for those people sensibly spending their nights asleep, rather than shopping, there are also significant advantages, in terms of reduced congestion and pollution, to night time deliveries.

Zombie mailings

late night shopper

There is a dark side to night time deliveries, as many would-be vampire economy slayers are quick to point out.

Most obviously, there are issues surrounding the fear that retailers and their delivery agents might start to require staff to work regular night-time rotas. These concerns are very similar to the objections retailers faced when Sunday opening hours were first introduced in 1994.

There is also an issue around whether night-time shopping is good for everyone. The Money and Mental Health Policy Institute says e-commerce sites are targeting customers by emailing them with deals in the middle of the night when they are most likely to make impulse buys.

It says consumers have received promotional emails from major retailers including Amazon, EasyJet, Quidco and Lastminute.com between midnight and 5am in a bid to tempt them with offers and special deals.

Polly Mackenzie, director of the Money and Mental Health Policy Institute, says: ‘In the online environment, where the shops never close, consumers who struggle to control their spending find themselves at greater risk than ever before.”

 

Night visitors

These objections are certainly a concern, but for the majority of shoppers night-time deliveries could prove a vital life line, and certainly give increased delivery choices, reducing the number of days people are forced to take off, waiting in for a day time delivery, for example.

The vampire economy is evolving around our 24-hour work-life balance. If retail is the lifeblood of our economy then those vampire economy retailers who help to feed it at night will prosper. But consumers too will have significantly more choice in when and where they receive items.

It won’t be surprising if the likes of Amazon or Argos are soon delivering much later into the night. Instead of scaring us, soon the soft tap-tap on our door late at night will be an exciting event, heralding the arrival of an eagerly-awaited purchase.

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