Collection vs delivery for customers and retailers
Collection and pick-up services are now a mandatory part of the mix for retailers. With fast delivery being the big conversation for the past few years, why are we seeing the rise in collection and what is driving the shift?
This week we have seen Amazon announce that they are partnering with Next in the UK to provide a collection option for customers. Large American retailers such as Target, Walmart, Home Depot and CVS have made big investments into their pick up options in the past year too, with Walmart launching their free pick up in a big way at the Superbowl.
In Australia, Woolworths and Dan Murphy’s have invested similarly, with Dan Murphy’s launching a free 30 min pick up service and Drive Through and Drive Up options in the past year.
Why do customers choose pick-up and collection over delivery?
Customers’ push for convenience is driving the need for retailers to provide good pick-up services. Despite the noise around the convenience of home delivery in recent years, the reality is that waiting at home for a delivery is actually not that convenient. This is in part due to the fact that delivery providers still for the most part deliver when people are not home - during the middle of the day. There is a huge disconnect between when a customer would like something delivered and when carriers are delivering.
The Evening Sweet Spot, Localz ICurve Research 2018
The reliability of delivery carriers to actually let people know when they are going to deliver, and then actually delivering when they say they will, is not something people trust. 7% of consumers feel uncomfortable using the toilet while waiting for a delivery. We do sometimes wonder if they are playing knock and run. (Google your favourite carrier and ‘knock and run’ and you will find hours of viewing pleasure).
This has driven more and more people to have things delivered to their workplace, which in turn has caused its own issues. Many workplaces have now banned personal deliveries for employees, as their reception areas were turning into personal mailrooms for staff.
Many people have realised that rather than order something to be delivered to their home when they are not there and then have to collect it on the weekend, they may as well just order it immediately for collection at a place convenient to them.
A convenient place is often not their home. Dan Murphy’s recognised that most of their pick-ups were on a Friday or Saturday night as people were grabbing a wine or six-pack of beer on their way out. Implementing a 30-min pick-up service made this easy for customers.
Convenience is a big one. Cost and security are also very important for consumers. Pick-up services are generally free, which means that it makes a lot more sense for smaller low price items. Customers also like being able to physically view the items and have them in their hands before signing the receipt. If they are in-store for a collection and their item is not correct or damaged, it is much faster and easier for them to fix this then and there rather than return a delivered item.
What’s interesting, is that retailers also prefer customers to collect.
Why do retailers prefer pick-up and collection services to delivery models?
It is estimated that as many as 50% of customers who come in-store for a collection purchase something else whilst in store. So there is a very obvious incentive for retailers to provide a great collection experience for their customers.
Customer experience is the other big one for retailers. In a collection process, the retailer owns the customer experience. However, retailers continue to be challenged by reliance on delivery carriers to provide the continued customer experience from store to door during a delivery.
In a collections scenario, this is a big advantage brick and mortar retailers have over online retailers. They can use their physical assets to great advantage by providing a great customer experience that is in keeping with their own brand.
In addition to thinking about their own brand experience, many retail brands today are part of a group of retail brands. They can leverage the physical locations of all brands across the group to provide more pick-up location options for customers. This gives even more convenience for customers as well as encouraging cross-sell opportunities with other group brands.
When retailers do a great job of this, they can then offer their physical sites out to third parties as a collection network, so that they can leverage these assets even further. This is what we are seeing with the partnership between Amazon and Next in the UK.
Next is a good example of a retailer who is using its network to great advantage. However, it is important to remember that retail is not just about High Street fashion. There are some big logistic advantages for retailers with large and bulky items in providing a pick-up service. Moving large items around for delivery services can be challenging and costly. If the customer collects this keeps the operations simpler for the retailer.
Simplicity and convenience is the winning ticket for customers, retailers, and delivery providers. Customers will choose what works best for them and we are seeing the fulfillment eco-system evolve to match that. Delivery services will continue to improve to match customer demands, while collection and pick-up services are now a permanent and important part of that eco-system.