If every retailer’s goal is to delight customers, it’s not happening in home delivery. In mid-January 2022, a study of 8,000 consumers in Europe and North America and their perception of online buying and home delivery showed that, while consumers are buying more, they’re not thrilled with today’s inconsistent delivery performance. What’s more, a significant number are ready to punish poor performing retailers. While there are challenges to improving home delivery performance, retailers who accept lower standards of service quality could experience top- and bottom-line hits as consumers turn to others who find ways to up their delivery game.
How Bad Is It — and What’s the Impact on Retailers?
The survey found that, over the October-December holiday period in 2021, 73% of the total respondents surveyed had a delivery problem. Here’s the breakdown by country:
Figure 1: Home Delivery Consumer Sentiment by Country
When asked to cite the nature of the problem, responses primarily fell into one of five main categories (see Figure 2). This very uneven delivery performance demonstrates that many retailers have yet to make meaningful inroads in this important part of the overall customer experience.
Figure 2: Delivery Problems Experienced by Consumers [Oct.-Dec. 2021]
While the scope of the delivery problem should be a wake-up call for retailers, what’s perhaps even more compelling is what customers are doing about it. According to the survey, poor delivery prevented 23% of these consumers from buying from the retailer again. Consumer frustration can quickly translate into negative effects for the retailer: consumers lose trust in the retailer and/or delivery company, they may not order from the retailer again, they may tell friends and family to also steer clear—and the potential for individuals to negatively influence many more people through social media make the consequences of poor delivery more damaging.
How Can B2C E-Commerce Tech Improve Home Delivery and Make Customers Happier?
If we examine the top five problems with delivery as cited in Figure 2, the good news is that there’s a big opportunity for retailers to create a much more positive delivery outcome for consumers. With the help of technology built specifically for business-to-consumer (B2C) e-commerce, each of these issues can be solved up front, prior to any customer engagement, resulting not only in happier customers when there is an order but in higher margins for the retailer as well. Additionally, happier customers correlate to higher ratings and more recommendations — table stakes for e-commerce success today.
1. Packages arriving much later than expected (26%): E-commerce companies often don’t have an automatic way to effectively prioritize orders for delivery. With oftentimes hundreds or thousands of orders that need to be processed, the complexities can quickly overwhelm paper-based practices and translate into late deliveries. Order prioritization is one area where technology can help: it can automatically take into account product types, delivery date, and/or time windows, delivery countries, sales channel requirements (e.g., Amazon Prime), carrier requirements, and rates to intelligently prioritize and effectively organize shipments for delivery.
Another area where paper bogs down fulfillment is in the warehouse, if retailers are still relying on printed pick tickets or delivery lists. These are typically handed out to warehouse teams who start collecting items from bins/racks/etc. without any technology-based guidance on a) walking the warehouse using the shortest path possible and b) picking accurately. In many cases, companies may try to find efficiencies by tackling fulfillment in batches: for example, 40 orders, 40 pick tickets, 40 shipping labels — all that paper needs to be manually sorted and managed on a batch-by-batch basis. Technology eliminates these types of highly time-consuming tasks, which are also prone to disruption and error, exacerbating already slow fulfillment practices and contributing to late deliveries.
2. Deliveries coming at a different time than expected (22%): As with late deliveries, deliveries arriving unpredictably underscores consumer frustration with delivery reliability. Without technology-driven delivery workflows, it can easily happen that retailers start processing and shipping orders but the date and time window for delivery is misaligned with the delivery promise made to the customer.
Communication is another important part of the reliability equation. With technology, retailers have the means to proactively inform customers when their original expectation cannot be met, and to reset expectations as required. During the delivery process, technology can automatically calculate ETA changes and notification engines use data from delivery appointment through physical delivery to keep customers informed, minimize failed deliveries, and allow customers to rate their experience. Customers are likely to be more forgiving when retailers take ownership of communicating delivery changes.
3. Delivery window offered was too long/too inconvenient (22%): While buying personas are well understood by retailers, it’s critical to understand that delivery personas also exist and that customers want choice in how their orders are delivered. Not every customer wants the fastest delivery, while many will pay a premium for a convenient time window. Success begins at the point of sale — with help from technology for dynamic delivery appointment scheduling. With these capabilities, retailers can present consumers with multiple delivery options simultaneously during the buying process and allow them to self-select their preferred choice. The technology can also make complex multimodal delivery decisions during the buying process, orchestrating and planning deliveries for the optimal mode. For example, a combination of fleet and gig economy delivery can be used to maximize the value of the fleet to deliver larger orders and gig economy drivers for smaller orders or deliveries to less dense geographies. Dynamic delivery appointment scheduling also eliminates unscheduled or infeasible deliveries because consumers are only presented with viable options.
4. Products that are out of stock when ordered (20%): It’s an attention-getting number: one-fifth of consumers surveyed experienced the disappointment of learning, after successfully placing an order, that the item was out-of-stock/oversold. The sale is lost, the customer is dissatisfied and it’s a lot of extra work for the retailer to inform customers. Technology can help eliminate this problem in two ways. One, it can massively help keep inventory in sync with sales channels with bidirectional, virtually real-time integration between warehouse inventory levels and e-commerce platforms and listing tools that serve different marketplaces. Two, barcode scanning technology ensures inventory accuracy — beginning with receiving when items first enter the warehouse. This is a critical step. Retailers need to be certain that quantities are correct, barcodes are on each item, barcodes are correct, etc. before goods are physically put into stock and made available for sale. If inventory accuracy is weak early on, retailers often “find” inventory later, in some cases even years later, and have to write it off. With barcode scanning and technology integrations, oversells/out of stocks are easily eliminated and delivery promises kept.
5. Package was damaged (20%): Damaged packaging is another challenge that technology can help retailers address. While some goods, like apparel, are easily handled in polybags, other goods like jewelry and watches or some types of home décor need to be packaged with an extra level of care. Technology can give guidance at the packing station and automate packaging execution for goods that need special handling, whether that’s a certain type of box, a specific size of box, the type of packaging inside the box, or even the shipping service or carrier required for delivery. This is where technology for warehouse management execution can be integrated seamlessly with parcel/LTL shipping solutions. It’s certainly possible to make packaging decisions manually on the fly; however, this is only practical up to a certain level of order volume, after which technology is the best bet to ensure goods are packed efficiently and arrive safely and in their intended condition.
Remember, the Last Mile Is the Last Word
The breadth of home delivery performance failures is clearly an area of opportunity for many retailers and their delivery services partners. The impact of delivery problems is not trivial and is likely more detrimental than many retailers realize.
Using B2C e-commerce technology, startups to global brands can greatly improve their control over the most common delivery problems that are frustrating consumers today. Technology is certainly an investment but optimizing delivery performance is an investment in elevating the customer experience, reducing warehouse and shipping costs, and driving ecommerce business growth.
Johannes Panzer is Head of Industry Solutions for Ecommerce at Descartes. With over 15 years of experience in ecommerce, Johannes is known as a domain expert in ecommerce fulfillment and logistics. He plays a central role in developing the go-to-market strategy and positioning for Descartes’ ecommerce solutions globally. Johannes has a background in marketing and is experienced in agile project management with several years leading the Descartes product management group in Germany.