Is retailer fulfilment and delivery performance keeping up with sales growth?

In this guest article, logistics and supply chain specialist Descartes looks at the potential implications that driver shortages are causing retailers in a post-pandemic world.

It’s been over two years since the start of the pandemic, and one thing that we can deduce is that consumer shopping behaviour has changed for good. For retailers, the challenge with this shift is in identifying whether consumers’ appetite for even more ecommerce purchases will continue as the pandemic subsides.

While ecommerce demand has increased, the quality of the end-to-end buying experience has been mixed. Consumers are now far more sophisticated and demanding, and 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, even nationality, and they extend across the entire buying experience, from purchase through delivery to unboxing and returns.

Retailers, therefore, are needing to address new hurdles, including fast emerging delivery personas, millennials’ concerns regarding the environment, and 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?

Consumers accelerate online buying habits and regaining control

According to Descartes’ latest research, well over half (56%) of consumers have increased the number of online purchases with deliveries they made since the pandemic – and for women, that number is 60%. This sustained change in behaviour has transformed the online to in-store purchase ratio.

Because of this, one of the biggest challenges for retailers is retaining control over the experience, especially when compelled by shortages to rely on multiple delivery modes and companies. In the end, most consumers are immune to the retailer’s choice of delivery service, whether outsourced or executed with inhouse fleets. What they expect is a consistent delivery experience and retailers need to match the service of their delivery options with the expectations of their customers. This is why, for example, some luxury retailers have created their own micro-parcel delivery services in select markets for high-value clothing, jewellery, household and other items to ensure a high level of delivery service as part of their overall customer experience and brand value reinforcement strategies.

All retailers need to consider what customers now expect as standard, irrespective of product value, and then build on that delivery experience to meet specific needs. Certainly, current delivery status information is essential. However, the occasional status update is no longer good enough; individuals expect real-time tracking, exception alerting and accurate ETAs.

Best-in-class retailers are now using tracking communication to build greater customer engagement, adding product and service recommendations that are complementary to the current order to drive up cross- and up-selling opportunities.

Considering the environment

According to our research, almost a quarter (24%) of all consumers will think twice about ordering groceries online due to the environmental impact, and 20% restaurant food. For retailers, consumers’ growing green expectations is not just one more pressure in an already challenging market – this is a real opportunity.

For example, a growing number of retailers are offering their customers environmentally friendly delivery options. This is because some “green” options are not only beneficial to the environment, but also to the retailer’s bottom line because they drive delivery density which reduces the distance travelled to make deliveries, costs and carbon footprint at the same time.

Retailers and delivery companies are also beginning to explore the use of bike couriers and electric vehicles, especially within urban areas with congestion charges and clean air zones. With the ability to model parameters and assess the carbon footprint of the chosen delivery model, retailers can start to tell a positive green story to the consumer base – one that compares the carbon footprint of an efficient, optimised home delivery to the miles each customer would have to travel to buy and collect the goods from a local town or city.

Future-gazing is not without its challenges

The research shows that, overall, ecommerce and home delivery is a positive story, but with clear warnings for retailers. For example, home delivery performance has plateaued in the last two years, while consumer expectations for it have not. Regular delivery failures are fatiguing consumers and they are making future purchase choices based upon current retailer home delivery performance.

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.

Now is the time for home delivery performance to be placed on equal footing with retailers’ other critical strategies for growth and improved financial performance.