Challenges that Retailers Face When it Comes to Delivery

Frontrunners like Amazon are stepping up the game, with futuristic drone distribution making headlines, and same-day delivery becoming increasingly commonplace. Of course, other brands are keen to keep up with these developments. But are smaller retailers biting off more than they can chew in an attempt to keep up with the big players?

We surveyed 100 Directors of Operations from major European retailers to find out what challenges they’re facing. 73% of our respondents strongly agreed that retailers have been offering more delivery options than are practical or feasible. Promising more than they can offer is a surefire way for retailers to lose loyal customers, so e-commerce needs to have full perspective of the challenges ahead.

Van restrictions could be one barrier for delivery in the future. Limitations are coming into play for inner city deliveries, with some cities placing bans on van delivery during rush hour to decrease congestion.

For those delivering abroad, getting goods across the border poses many complications, especially in light of new regulations brought about by Brexit. Country taxes, shipping costs, packaging costs and limitations in last mile logistics all add to the challenge for international retailers. In addition, working with different carriers can lead to brand protection issues as it becomes increasingly difficult to provide the same level of service when working with multiple partners.

Free delivery is in high demand according to Directors of Operations. The rapidly changing delivery expectations of online shoppers mean that operating an effective supply chain and fulfilment operation presents a whole new set of challenges. Companies like Argos and Amazon are reacting by offering fast track and same-day delivery, while Screwfix has targeted the trend for click-and-collect with their ‘click-and-collect within an hour’ option. These are the disruptors, pushing retailers to ensure their delivery options offer the level of convenience and speed that their customers want without crippling their margins.

Flexibility was the second most important demand- customers want to be able to change their mind or amend a mistake. It follows that supply chains need to be flexible enough to make adjustments to individual orders, but on a wider scale they also need to accommodate to varying levels of demand during peak periods, and to coincide with the array of delivery speeds available i.e. same day and next day.

Meeting customer demand without compromising excessively on margins has been a difficult equation for retailers to balance, especially for those who truly value good customer service. But it’s crucial that brands don’t corner themselves into doing too much too soon. Acquiring a new customer can cost anything from five to twenty-five times more than retaining an existing customer (Harvard Business Review), so it’s critical that retailers focus on quality over quantity when evaluating their delivery options.

Brands are well aware that customer service is the cornerstone for a successful business, and while offering a wide range of delivery options is key brand differentiator, retailers must evaluate what is feasible and prioritise delivering what has been promised- even if it isn’t by drone.

Download the agenda to see how we’ll be tackling these challenges at eTail Fulfilment and Returns 2018.