With the growing number of online-only retailers, multi-channel retailers face the challenge of fulfilling customers’ expectations, especially when it comes to last mile delivery. Customers no longer have the patience to wait home for deliveries. They abandon shopping carts the second they can’t select a convenient delivery time. So what can retailers do to improve last mile delivery and keep up with customers’ demands?
At Retail Week Live 2016, Anita Balchandani, Partner and Head of Retail at OC&C Strategy Consultants, pointed out the three major concerns that customers face when it comes to last mile deliveries:
1. Inconvenient delivery time
Being able to choose between limited time slots or having to pay extra money for a more convenient delivery time are the top reasons why customers would not order online. In a OC&C Consumer Survey [1], 29% of respondents abandoned baskets because they could not select a suitable time to attend the delivery and 23% were uncertain about the delivery timing. Retailers are tackling these problems by offering evening and weekend time slots, and the possibility for customers to track deliveries online. If customers know exactly where their delivery is, they can plan when to be home when the delivery arrives.
2. Trust
Customers are cautious when it comes to retailers picking the right items from the online order. Even though there are many retailers that have return policies, customers do not trust they will receive the correct product every time. Especially when customers have had a bad experience with expired groceries or damaged jeans in the past. Concerns also arise from receiving substitutes that customers do not like - brands that they would never purchase themselves for instance. Retailers need to inform customers when they are unable to fulfill an order and ask for the customers’ approval before sending out a substitute.
3. Price of delivery
Even though retailers now offer same day and next day deliveries, these options can be expensive. Where free delivery is available, it often has a high product price threshold. According to the OC&C Strategy Consultants Consumer Survey, more than half of the respondents claim that they abandon baskets, because of the high price of delivery. If customers can save money by visiting the store or personally collecting the order from the store, they will often choose that over an expensive deliver.
In a report from Barclays [2], it is predicted that online orders are expected to grow to 1.35 billion by 2018. This is a huge opportunity for the retailers who get it right. To do that, they have to consider giving customers the convenience they demand with cheaper same day delivery offers, free next day delivery and predictable attended delivery. With a significant growth of shoppers opting for next day delivery (50% growth between 2013 and 2015) and willingness to pay maximum of £4 for same day delivery, retailers need to adjust accordingly.
Amazon is an ideal example of how last mile delivery can be a game changer. The biggest online retailer informs customers when to expect a delivery, sends emails when an order is dispatched and when it will be delivered. Even more, Amazon Prime gives members the ability to have free next day delivery and cheap same day delivery. From the OC&C Strategy Consultants Consumer Survey, 82% of respondents say they purchase more frequently from Amazon after subscribing to Prime and 77% say they spend more overall with Amazon.
To really improve last mile delivery, retailers need to look at what is driving their customers to abandon shopping carts. Is it the price of the delivery or the inconvenient time slots? If they want to keep their customers happy and give them the service they want, then retailers need to provide predictable delivery slots, free next day delivery and an accessibly priced same day service. Getting last mile delivery right is crucial for every retailer’s success in the coming decade.
Find out more about Localz Last Mile delivery solution here.
[1] Source: Metapack, OC&C Consumer Survey conducted by FlyResearch, OC&C analysis
[2] Source: Barclays, The Last Mile Report