Poor Home Delivery Performance: A Wakeup Call for Retailers
While retailers and logistics organizations have been grappling with home delivery challenges for years, the ripple effect of the pandemic-driven global supply chain disruptions, coupled with the ever-widening appeal of e-commerce, has created a “make-or-break” situation for e-commerce retailers. Indeed, a new study by Descartes and SAPIO Research of 8,000 North American and European consumers examined perceptions of online buying and home delivery, and found that home delivery performance is faltering — and consumers aren't happy.
The e-commerce consumer survey revealed that nearly three-quarters (73 percent) of consumers experienced delivery problems in the last three months: e.g., deliveries arrived much later than expected (26 percent); consumers received their delivery at a different time than expected (22 percent) or were unhappy with the offered delivery time (22 percent); and, worst of all, the delivery never arrived for an unfortunate 16 percent of consumers.
Poor quality delivery service impacts the critical last mile of the buyer journey, with implications beyond the disgruntled or frustrated customer. The ripple effect of not meeting consumers’ home delivery expectations takes a bite out of the top and bottom line — from loss of customers due to trust and reputational damage, to increased costs of new customer acquisition.
In fact, of the consumers who experienced delivery challenges, nearly a quarter lost trust in both the delivery company (24 percent) and the retailer (21 percent), while almost one-quarter of survey respondents were deterred from purchasing from the retailer again. E-commerce vendors were also impacted by the reputation of the delivery companies they deployed, with 18 percent of consumers citing they would avoid retailers that used a problem delivery company.
It's Not All Bad News
The pandemic shifted the economic fundamentals of consumer buying behavior, with Americans cutting back on experience-based spending (e.g., travel, events) in lieu of material-based purchases — with an emphasis on online shopping — such as exercise equipment, clothing and groceries. Indeed, the data showed that online purchases increased from 35 percent of total purchases pre-pandemic to 46 percent in early 2022, with 48 percent of respondents indicating they will make more e-commerce purchases and deliveries in the future (up from 13 percent pre-pandemic).
Consumers have become used to the convenience of online shopping (54 percent of respondents), with 46 percent noting that the online order process has become easier. In fact, 44 percent of consumers said they now favor online shopping because they enjoy not having to pick up their order, while others (38 percent) are still wary of COVID-19 safety. Regardless of the motivation, the continuing surge in e-commerce purchasing is great news for online retailers that are able to optimize their delivery processes to meet consumer expectations.
Home Delivery: Opportunity for Differentiation
To begin rectifying some of the home delivery pain points for consumers, retailers must better understand their customer base — what drives buying habits and how to cater to the needs of different demographics with varying delivery preferences and concerns. For example, since environmental concerns influence buyer behavior — 85 percent of respondents aged 18-24 and 75 percent of 25-34-year-olds consider the environment when placing an order — retailers can improve profits by implementing systems and technology that minimize the carbon footprint of the delivery process (e.g., routing efficiencies or combining orders into a single delivery).
By deploying technology that creates efficiencies across the delivery lifecycle — e.g., dynamic delivery appointment scheduling, delivery route planning and continuous route optimization, GPS-enabled real-time mobile tracking and proof-of-delivery, and delivery status notifications — retailers can better address scheduling issues and delivery delays and minimize the environmental impact of home delivery. At the same time, technology can help e-commerce vendors keep the delivery promise, which is a critical factor in creating a differentiated customer experience, while helping to re-establish trust in the logistics and e-commerce industries.
Chris Jones is executive vice president of Industry & Services at Descartes, a provider of on-demand, software-as-a-service solutions focused on improving the productivity, performance and security of logistics-intensive businesses.