Gearing Up for Peak Season: Critical Last-Mile Delivery
Despite inflation chatter dominating economic discussions, U.S. container imports in August 2022 (the most recent data) were 2,529,042 twenty-foot equivalent units (TEUs), which is up 18 percent from pre-pandemic August 2019. This is the first month since August 2020 that there has not been record imports vs. the previous year.
With the holiday shopping season fast approaching, retailers are bracing for the logistical and customer service challenges that accompany peak season volumes. Retailers face added complexity in the wake of COVID-19 as they struggle with inventory issues, staff shortages, elevated gasoline and diesel prices, and ongoing supply chain disruptions. At the same time, customer expectations for fast, convenient and on-time delivery — and real-time delivery communication — continue to grow.
Delivery Performance Faltering
In the face of peak season order volumes, last-mile delivery has become a trigger point for defining the customer experience. Unfortunately, as consumers head into the holiday shopping season, many are frustrated and taking action against poor performers.
A recent study of 8,000 North American and European consumers found that nearly three-quarters (73 percent) of consumers experienced delivery problems in the October–December 2021 holiday shopping period. The top three issues (see Figure 1) were related to timeliness: deliveries were late (26 percent); deliveries didn't arrive when promised (22 percent); and time windows for deliveries were too long and inconvenient (22 percent). Plus, a disgruntled 16 percent didn’t receive their delivery.
Figure 1. Consumer Delivery Problems (Oct. 2021–Dec. 2021); Source: Descartes and SAPIO Research
This poor delivery performance can be catastrophic for retailers during peak season, especially with many online vendors relying on high sales volumes during the holidays to buoy revenues. Nearly one-quarter (23 percent) of the study respondents refused to order from poorly performing retailers again; nearly a quarter lost trust in both the delivery company (24 percent) and the retailer (21 percent). Additionally, 17 percent of consumers indicated they advised friends and family to avoid the retailer. E-commerce vendors that accept mediocre delivery quality will likely experience hits to their holiday sales tallies as consumers turn to competitors that find ways to up their delivery game.
Keeping Pace With Peak Season Demands
Meeting the delivery performance expectations of holiday shoppers begins well before the product is loaded onto the truck — with visibility into the warehouse. From an inventory management (and customer trust) perspective, retailers must ensure the products presented online accurately reflect available inventory. Furthermore, consumers should be able to choose from various delivery options at the point of sale (POS).
On the home delivery front, delivery speed is a factor in purchase decisions but, notably, consumers place more value on retailers keeping their delivery promise. To meet delivery expectations and keep customers happy (and returning for post-holiday purchases), e-commerce retailers must find ways to boost last-mile efficiency, productivity and reliability.
Home Delivery as Competitive Differentiator
While critical to an optimized customer experience, final mile delivery is a complex part of the fulfillment process. By implementing technology that creates efficiencies across the delivery lifecycle — from dynamic delivery appointment scheduling, delivery route planning, and continuous route optimization to GPS-enabled real-time mobile tracking, mobile proof-of-delivery, and delivery status notifications — retailers can give consumers more delivery choices, improve delivery reliability, and keep customers informed of delivery status. Indeed, gearing up with the right technology tools can help e-commerce retailers keep their delivery promise — a critical factor in building customer loyalty and driving repeat business — by ensuring customers get the products they want, delivered to their door, at the expected times.
Johannes Panzer is the head of industry solutions for e-commerce at Descartes, a logistics technology platform.
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