Milkman Home deliveries

Price and Predictability or Speed? Make the Right Choice and You'll Win Your Customer's Satisfaction

by Milkman

from our contributor David Sevalié

It seems that in home deliveries a gap exists between what online shoppers consider a satisfactory service and what retailers are striving to offer. Recent researches cast light on the real needs of consumers and reveal the path to win shopper trust and loyalty.

Online retail is a steady growing market, seemingly unaffected by global and local economic difficulties. At the same time it is an extremely competitive battleground where retailers and their logistics partners strain to get shopper preference meet their customer needs … or what they think are their customer needs. But is it really so?
If we have a look at recent talk from retailers surrounding home delivery, we find these main issues: same day deliveries, extended delivery time by night, drone use for rapid deliveries… It is clear that some home delivery retailers (Wal-Mart, Nordstrom, eBay, and Amazon) have done their choice, focusing on speed as a key driver for premium service.

Is speed the key to premium services?

Let’s now listen to shopper opinions as they show through data collected from a couple of recent reports on online shopping.

According to a recent JDA/Centiro report (UK) issued at the beginning of June, 46% of respondents (nearly a half!) said that they had chosen retailers that offered multiple delivery options over those who only offered one option. The importance of flexibility is even greater if we consider that being able to change the delivery date or time slot after an order was shipped is a plus for a significant proportion of respondents. Moreover, “a third (33%) of respondents said they would be likely to pick a retailer specifically on the basis they can offer a particular slot for delivery (at an extra cost), over one which offers just free delivery.”

Choices matter

Extra-cost for customized service and free delivery introduce us to one of the most critical issue: delivery costs. In fact, correctly pricing your delivery is a key selling point. JDA research make clear that “cost (50%) and convenience (25%) remain most important to those who had ever shopped online”.

Delivery cost being such a key purchase discriminating factor is confirmed by a number of researches. I would like to quote here the UPS Pulse of the Online Shopper (Europe Study), issued in March 2015, that dramatically enlighten the importance of shipping costs: for the second year in row, the top reason (57% of respondents) for shopper to abandon his cart is that “shipping costs have made the purchase cost more than expected” (interesting enough, the same UPS report about US market show a similar percentage 56%, making delivery cost a key issue for global shopper).

And what about speed? Looking at JDA report, speed is third (after cost and convenience) in the importance rank for those who had ever shopped online with 18% of preferences.

Money matters too

In this perspective UPS Pulse data show the same trend: 4 days is the average time shoppers are willing to wait for delivery (only 5% answered 1 day) and 67% of consumers say they will wait an additional 1-3 days or more to receive free shipping.

In conclusion, it seems that most online shoppers consider convenience, predictability and flexibility to be of the utmost importance in home delivery service, although speed also plays a significant role in their buying decision process. But how can retailers correctly leverage all these factors in order to offer the premium service that consumers expect? The first step is a careful target segmentation by customer, product and “buying moment”: this allows retailers to correctly prioritize their efforts in improving their service and avoid possible dispersion of investment. In this way retailers will be able to gain consumer preference and trust, reducing cart abandonment, avoiding shopper to flee to competitors and at the same time increasing consumer satisfaction and consequently purchase frequency.

#Future of Last Mile