The Emotional Irrational and Uneconomic Consumer
One of the highlights for Localz this year was to host our Leaders Lunch held at the Fox Classic Car Museum. We were delighted to be joined by leaders from Telstra, GS1, NBN Co, Zebra Technologies, PocketMobile, GRA, Ohm Power and Melbourne City Council. At our table, everyone came with a rationale of serving the Individual Economy, or the 'IConomy’.
The IConomy is us - you and I - consumers who are connected. We recognised that now the end consumer is increasingly emotional, irrational, uneconomic and in control. Lindsay Fox, the founder of the impressive Fox Classic Car Museum venue, is now a household name in delivery and trucking. He was able to fulfil his customers' demands with just one truck. Today, we all want flexible, fast and affordable same-day delivery.
Indeed it was a fitting setting to discuss fulfilment and how today’s consumers are rapidly changing. We don’t want to sit in and wait all day for a delivery and we are unapologetically emotional, irrational and fickle. The surging IConomy demands precise delivery windows and continuous verification right up until the moment that our delivery is in our hands. Companies like Uber have set the bar and it’s this real-time experience and transparency that we crave.
Australian retailers are under increased pressure to let go of their old processes, operations and logical order which were set up to optimise business efficiencies rather than deliver to the demands of the new discerning consumer. As eCommerce takes off in Australia, with half of the population already buying regularly online, we debated what approaches are best to meet the challenges this change brings with it.
What we kept coming back to was the gap; the huge gap between what consumers expect and what they are getting. Research has revealed that 65% of Australians have been disappointed in a company because of the delivery service they use, and 11% say that they are disappointed regularly. So we asked why - why are local business so slow to adapt to the IConomy?
The guilty offender was revealed and it is not what you think. It seems that the perspective taken is often around company vs company, retailers and carriers all wanting to own the transaction and the customer relationship; rather than a more holistic view of an entire supply chain consisting of different players where the mutual goal is the delivery of goods or services to the end consumer.
Movement was discussed as a vital element. If a package is passing through different pairs of hands, we need to be able to track it – and we can’t do that yet. Consumers are driving an urgency to fix what are still some very manual, inefficient processes.
We want to know when goods are coming, and then to be able to change our mind. It’s all about continuous verification for the consumer.
Today’s currency is a perfect blend of speed, flexibility and convenience. At the table the feeling was obvious that there’s a fundamental misalignment between what logistics companies are delivering and what the consumer wants.
One of the experiences shared on the day was takeaway trauma. It goes like this: a customer orders a pizza, their initial feeling is one of elation because they have chosen their meal– and 90% of the time it’s exactly what they have chosen in the past. The customer uses their smartphone, choosing their pizza with their thumb, because no one uses the phone to talk on anymore. After the feeling of elation, anxiety sets in. It’s been ten minutes and their friends are telling them they should have used a different pizza company. Thirty minutes into the experience they’ve lost faith in the pizza company because its app won’t tell them where their pizza is – is it in the oven? is it on its way? or is it somewhere else? When it eventually arrives, the customer is disappointed because it didn’t arrive on time.
Takeaway trauma is a common experience with not only pizza, but most online deliveries. Australians are dedicated online shoppers, with user penetration set to surge. There will be an increase in expectations – with consumers demanding more and more control and visibility over their shopping experience.
Customers are buying an experience. They want cheaper and more convenient delivery, and that is what Amazon is providing.
At the table we were divided on the impact services like Amazon Prime will have on the retail sector. Many believe the behemoth doesn’t do enough to differentiate itself in Australia, and that consumers are unlikely to get on board. However, Woolworths CEO, Brad Banducci, calls it out as a new benchmark in terms of consumer expectations of delivery: “Amazon Prime is the key vehicle, we see them being successful with that in the US and we will simply need to be better at on-demand,” he said in line with the news of Woolworths-owned Endeavour Drinks Group’s 4.5% sales increase. “F18 was the year of pick-up for us.”
In the US, more than 50% of shopping journeys start with Amazon – and there’s no reason to believe Aussies won’t follow suit. While local businesses have historically been more focused on making the sale than making the delivery, our interesting and revealing discussion highlighted that what customers are really buying now is the delivery experience - not the website experience. We want cheaper and more convenient delivery to meet the increasing irrational, emotional and uneconomic reality of today.
We were lucky to have such an engaging discussion and left with an important truth. Whatever technology we put around consumers: it’s all about the human.