Fisher Funds: Broken promises can break a business

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I was about to have a rant last week about my food delivery arriving late when I checked myself - remembering it was not urgent.

I had plenty of food and, if I really needed something, I could pop to the shop and buy it.

The reason I was disappointed was the supplier had created unrealistic expectations. They would have been better to say delivery would be sometime on Sunday or even Monday. Instead they'd said my parcel would arrive between 1pm and 3pm Sunday; it didn't.

The whole notion of super fast delivery has become massive and I'm not sure why. While it is a pleasant surprise to buy something online and have it delivered within hours, not much is so urgent we can't wait a few days for it.

I remember reading about Amazon trialling taxis for deliveries, to speed up an already very fast delivery service. They've gone one step further, using aerial drones for package drop-offs.

Fast delivery has become an integral component of successful e-commerce - and it's the industry's own fault. They've made us care too much about speed and convenience of delivery.

The MetaPack 2016 Study of E-commerce report found consumers' online purchasing decisions are directly influenced by delivery and returns policy. More than 40 per cent of consumers said, following a negative delivery experience, they wouldn't return to that retailer within a month. More significantly, 38 per cent said they are likely to never shop with that retailer ever again.

The current focus on fast home delivery is like a re-run of the tech bubble of the late 90s.

Back then companies like Webvan, Pets.com and Kozmo.com were the poster children of the dot-com boom and bust. These companies were among many that tried (and failed) to create viable businesses around online ordering and speedy home delivery of groceries, meals, pet supplies and other household items.

Kozmo promised free one-hour delivery of videos, games, music, magazines, books, food and more. It was formed in 1998 and by 2001 was bankrupt.

Webvan was an online grocery business that delivered to homes within a 30-minute window of the consumer's choosing. It spent US$1 billion on a warehouse and fleet of delivery trucks and, at its peak in 2000, had sales of US$178 million. Unfortunately it had expenses of US$525 million and folded after three years.

Now, 17 years later, a slew of companies are trying to jump on the fast home delivery bandwagon.

In today's time-poor world, we have become accustomed to paying for someone to do the running around for us.

In the US, restaurant/food delivery and home services now account for the biggest number of start-up companies. At least 20 companies offer services for the home, from flower delivery to a laundry service, with at least another dozen firms focusing on food and beverage delivery.

Could today's fast home delivery services go the same way as the dot-com delivery start-ups?

If they don't manage consumer expectations then, to my mind, they absolutely could.

If you claim speedy delivery as a key differentiator, you'd better make sure you can deliver on time. If you've made free delivery part of your competitive offering, don't expect to be able to start charging for it later, even when it becomes hard or expensive to meet consumer expectations.

Or you can just manage expectations and reassure your customers that quality is worth waiting for.