Posted by Jeff A. Mueller, Client Executive on 11.14.17
It’s no secret that online shoppers have become accustomed to getting their orders fast. The latest Holiday Outlook survey by PWC indicates that nearly 40 percent of online shoppers take two-day delivery for granted, and next-day and same-day deliveries are quickly becoming a draw for consumers – especially if they are free.
With speed driving the market, innovation and change in retail logistics is moving as fast as the imagination. Uber and Lyft now offer package delivery services. Amazon launched its Key service that includes a security camera and a door lock you can access from an app on your phone to let the delivery person into your home to secure your packages, and they are looking at technology to enable delivery right to your car’s trunk. Pickup lockers are appearing in high-density areas. Rapid delivery fulfillment centers are popping up in urban centers. And then there’s the drones, self-driving vehicles, and robots being developed and tested. It’s starting to feel like The Jetsons out there! Expect that the future will hold other technologies no one has even thought of yet.
Rapid home delivery is the next frontier and retailers need to find a way to get on board – perhaps not to the extent of app-driven security cameras and delivery drones, but by finding ways to meet customer expectations for speed and convenience without breaking the bottom line. Not even Amazon has mastered that yet, with $7 billion in shipping losses in 2016.
What should a retailer do?
Understand your customers. Are they willing to wait for a few days to get free delivery? Will they pay for faster arrival of their order? Is a “buy online/pick up in store” option attractive? Learning what your customers want will help you prioritize initiatives.
Leverage what you have. Do you have a store network that can help with last-mile deliveries in higher density areas? Can some of your suppliers ship directly to your customers? Review your current carrier program and see if there are ways to consolidate shipments or better utilize those trucks to obtain faster service and better rates. Maximize your current assets and then look to fill any gaps.
Test market new offerings. You don’t have to roll out permanent free 2-day delivery to your entire customer base. Try it as a special promotion for a limited time in a key market to gain an understanding of costs and ROI. You may find a benefit in upgrading service level options for your urban markets, for example, but may not need to match those options for more remote customers. And you want to be sure that your new offering is sustainable and meets expectations – no review is better than a negative review.
Get creative. Are there regional or local delivery providers in key markets that you could tap into? Think everything from couriers to Uber to bike delivery. If you don’t have a store footprint, would it make sense to drop a pop-up store/pick up center into an empty storefront or a shopping mall?
Don’t forget about returns. Research of consumer buying habits has shown that return policies can have a significant impact on purchasing. According to the National Retail Federation’s Annual October Holiday Consumer Survey, 36% of holiday shoppers say a retailer’s return policy is one of the most important factors in their decision on where to buy.
When speed is the future, retailers cannot afford to stand still. There are too many choices on the market today, and if a retailer can’t deliver one way or another, customers will readily order from someone else who can.
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