Home Delivery: What Can We Learn from Europe?
Home delivery strategy, tactics and performance is one of the most hotly-debated areas of logistics. The pandemic has increased the importance of home delivery, but also decreased the quality of home delivery performance. As logistics professionals, we can dive into the data to understand how we are performing operationally and rationalize the results against all of the last-mile challenges every retailer has been facing, but what do consumers actually think? We decided to survey over 5,000 consumers across Europe to gauge their sentiments around home delivery. If you think that being better than most when it comes to delivery performance is an “OK” strategy, the survey results are clear: consumers don’t agree. These two charts paint a picture of how consumers are thinking and acting.
There are a lot more delivery failures than may have been anticipated, as 72% of the respondents had issues with 1 or more deliveries over three months this past summer. If we extrapolate that, over a year, there is a less than 1% chance that a consumer will have had an event free delivery year. It is easy to see why consumers are feeling fatigued when it comes to home delivery performance.
Figure 1: Consumer Delivery Experiences in the Last 3 Months
Consumers are pretty patient but, at some point in time, they just say “never again.” Of the 78% surveyed that had a delivery issue, 22% did not order from the same retailer again and 18% told their friends to do the same. Given how hard it is to gain a customer, these numbers can be catastrophic for retailers with middle-of-the-pack home delivery performance. If we view this from the perspective of how often delivery issues occur and consumer fatigue, a retailer’s next miss could easily be the last one from that hard won or even formerly loyal customer.
Figure 2: Consumer Reaction as a Result of a Delivery Issue
The research demonstrates why it is so important to treat home delivery with the same level of importance as getting the consumer to buy in the first place. Retailers need to take a proactive approach to managing the home delivery process. Visibility and measurement are important to understand what is happening, but they are not enough. Delivery promise dates need to be based upon an accurate understanding of delivery capacity or service levels with proven delivery performance track records. This applies to fleets as well as to common and parcel carriers.
There is, however, a silver lining to this story in that retailers can grow market share through superior home delivery performance. We’re seeing leading retailers gain better control of home delivery performance by simultaneously using a number of delivery methods to create more effective and reliable delivery capacity. This approach determines what combination of fleet, common carrier, parcel carriers and gig economy workers should serve what kinds of customers in selected geographies. In essence, these retailers are “cherry picking” delivery modes to better serve their customers. Key to this strategy is the ability to orchestrate deliveries across different modes, actively manage delivery execution and, when there are issues, immediately communicate with the customer.
After the holidays, we will be conducting home delivery consumer sentiment research in North America. It will be interesting to see consumer sentiment here; however, other than “Blamed Brexit,” I suspect that we will see similar results. What is your organization doing to deliver superior home delivery performance? Let me know.
As Executive Vice President, Marketing and Services, Chris Jones (CJones@descartes.com) is primarily responsible for Descartes marketing activities and implementation of Descartes’ solutions. Chris has over 30 years of experience in the supply chain market, including the last 10 years as a part of the Descartes leadership team. Prior to Descartes, he has held a variety of senior management positions in other organizations including: Senior Vice President at The Aberdeen Group’s Value Chain Research division, Executive Vice President of Marketing and Corporate Development for SynQuest and Vice President and Research Director for Enterprise Resource Planning Solutions at The Gartner Group and Associate Director Operations & Technology for Kraft Foods.