Consumer online shopping behavior has changed for good, and retailers need to take note. While e-commerce demand overall has increased, consumers are now far more sophisticated, demanding and have different expectations of their delivery experience. Indeed, when it comes to what constitutes a good experience, one size does not fit all. Expectations vary greatly, influenced by product value and age group – and they extend across the entire buying experience, from purchase through delivery to unboxing and returns.
Fulfilment, delivery capability and performance are a critical part of the brand experience and are under greater consumer scrutiny than ever before. Retailers need to address fast emerging delivery personas, embrace millennials’ concerns regarding the environment and at the same time the over 55s’ desire for convenience. Retailers are aware of the impact on delivery performance created by driver shortages, but how many are considering the long-term implications for brand value and future customer loyalty?
Avoid complacency – delivery is not satisfactory
With e-commerce now a fundamental driver of overall retail sales, it is vital to identify and address any issues or concerns that may prevent consumer purchase. In January 2022, Descartes commissioned research to understand consumers’ online purchasing across Europe and North America to learn how the quality of the experience affects consumer perception.
Retailers should be extremely concerned to discover that negative delivery factors were cited by one in five respondents, with three in four citing at least one delivery problem in the prior three-month period. The primary complaint was that deliveries were not environmentally friendly (20%), deliveries were not reliable (19%), bad delivery experience (19%) and dissatisfaction with the delivery experience (16%). The younger generation, in particular, is far more concerned about the environmental impact of deliveries – cited by 26% of 18- to 24-year-olds, compared to 11% of those aged over 65.
So, what is going wrong? Why are retailer delivery models failing to meet expectations and satisfy customers? It is impossible to ignore the combination of dramatically increased delivery volumes and shortage of drivers across all modes of transportation. The pandemic caused more people to buy online, while at the same time chasing drivers from the transportation industry, leaving retailers scrambling to find ways to get their goods to consumers and do it with consistently high service.
Yet while delivery options become ever more challenging for retailers, customer expectations of the experience continue to rise. The more online purchases consumers make, the more chance they have of being exposed to the full gamut of delivery experience. And there is no doubt that some companies are really pushing the boundaries of the entire online experience, from a beautiful presentation that provides an exciting unboxing moment, through great tracking, with continuous, accurate updates and simple returns processes. These companies have raised the bar – and set new consumer expectations.
Challenge conventional thinking – understand delivery personas
Innovative thinking is required to safeguard profitability. Common thinking is that all consumers want their goods delivered as quickly as possible. Nothing could be further from the truth. Some consumers are happy to have all their orders delivered on a certain day if it helps the environment – which may also be the lowest cost option if that is a brand value the retailer wants to emphasise. Others may be happier paying extra for a specific time slot delivery; this is particularly the case for the over 55s, for whom the convenience of home delivery is a significant factor – and they may have the financial capital to afford the extra cost. This is why it is critical to understand the delivery personas of their customer base.
Indeed, there is one factor that could derail the continued growth of online sales – consumer perception about the environmental impact of home delivery. Almost a quarter (24%) of all consumers will think twice about ordering groceries online due to the environmental impact, and 20% about ordering restaurant food.
Overall, 65% of consumers will consider the environment when making an order. However, this rises to 85% of those aged 18-24, and 75% of 25- to 34-year-olds, demonstrating very clearly the expectations of younger individuals.
In addition, customers are open to new ways of receiving goods. Almost two thirds (64%) are interested in combining orders into a single delivery at the end of the week (rising to 70% of 18-24s), while 63% would be interested in combining all their orders over a period for a single delivery when there are multiple deliveries in their area. Almost half (48%) would pay for faster delivery (57% in urban areas) and 45% would be prepared to pay for a more convenient time (55% in urban areas), providing retailers with a chance to use delivery as an incremental revenue stream, significantly reducing or, in some cases, offsetting the high cost of home delivery.
For retailers, consumers’ growing green expectations are not just one more pressure in an already challenging market – this is a real opportunity. Many retailers have sustainability strategies – but how well is that message shared with customers? Does it incorporate the delivery model? Is that embedded into the routine e-commerce offer?
Conclusion
Overall, e-commerce and home delivery is a positive story, but with clear warnings for retailers. Complacency with current home delivery performance is not an option for success. Yes, home delivery is an expensive proposition, but with the right strategies and superior execution it is a competitive differentiator and revenue generator for retailers – even for the most mundane products. The ability to understand the delivery personas of customers and tailor delivery options to meet them is the key to a happier customer and better top and bottom line.
The delivery capacity crunch, combined with increased complexity and concern over environmental impact, means retailers must rethink their delivery strategies. This requires a unifying technology strategy that helps to ensure consistent execution and delivery visibility for the customer. Retailers should consider this as an opportunity to engage consumers, while simultaneously helping the environment and reducing the cost of home delivery.