Retail

Retail

Opinions expressed on this blog reflect the writer’s views and not the position of the Capgemini Group

“Sorry we missed you”...are you really? Failed deliveries and what can be done to manage costs.

Having stepped out for 10 minutes to grab a coffee, I return home to find a small red card sitting on my doormat. Typical! My delivery was the reason I had arranged to work from home today for...and I’ve just missed it. How could this happen to me... again? Murphy’s Law rings so true too often “if anything can go wrong, it will”. Murphy must have worked for a delivery company in a previous life!

Does this sound familiar to you as a customer? I bet it does…

Failed deliveries are painful

Most of us can think of days when we made arrangements for a delivery, and the one time we step into the shower, to the neighbour’s or a close-by shop, we return to a “Sorry we missed you” card. We cross our fingers and hope for “we left it with your neighbours”, but alas not! We begrudgingly accept we have to re-arrange (delivery) or visit a depot somewhere on the outskirts of a town we’ve never been to. We then curse ourselves and the delivery firm for “why does this always happen to me?”

Missed deliveries are a pain point for both customers and retailers. Whilst they are an inconvenience to the customer, they add cost to a retail business. According to IMRG, the cost of failing, when it comes to online delivery, totalled almost £¾billion in 2014 alone. The bad news is that this will only increase as the digitally savvy customer demands more convenience and takes further command of what they order, when they order and how and where they want it (delivered).

What can retailers do to reduce cost of failed deliveries?

Start by understanding level of operational maturity, and revisit customer strategy.

Ask what is important to customers, and what is important to the business. Where is the commonality between the two? Will customers pay for a more flexible delivery service? Can the retailer absorb some of those additional costs? Are the cost and delivery options for different product types in line with value of the product? Is there a fit between brand and customer expectations?

The challenge for most retailers is that delivery is mostly outsourced. The delegation of the last mile and doorstep experience are between your choice of delivery partner – how aligned is the retailer brand to the service offered by the courier? The level of perceived service provided by your courier is a direct reflection on the retailer brand. Is this something you can really afford to come purely down to cheapest provider?

Once clear on price vs. service, own network vs. outsource, and what’s important to the customer vs. business, there are a number of steps to reduce the cost of failed delivery:

1.    Extend your delivery options and drive adoption

In 2013, online orders generated just over one billion deliveries. By 2018, this number is expected to grow by 28.8% to 1.35 billion, yet retailers are losing £3 to £5 per home delivery.

Consider offering further options - Click & Collect, Collect+, or nominated day/ time delivery slot. These could be an effective way of reducing failed delivery and thus associated costs. Drive customer adoption to more economical options - award with loyalty points, differential delivery charging at quieter times of day. By putting the customer in control of when and where they want to receive their order will help improve successful delivery rates; a win-win for both.

2.    Leverage technology and digitally savvy customer mind-set

Smartphone penetration in the UK has grown 50% to nearly 80% in the last four years. Customers are now continuously connected and reachable, as well as more adept and expectant on tracking their own deliveries. Offering this facility through email or SMS is not new, but can go a long way to mitigate failure. Reminders can be sent the night before and shortly before actual delivery. Prevention alongside cure can be effective.

With an appetite to invest in more advanced technologies, like Strategic Order Orchestration, retailers can create the foundation for sourcing orders in a more cost effective way, securing cross-channel inventory visibility and fulfilment at the point of customer order – improving delivery success.

Real-time communication is vital throughout the supply chain to maximise on-time delivery probability. Customers want a predictable service – neither late nor early is acceptable.

3.    Innovate, innovate, innovate

There is no single ‘silver bullet’ to fully address the cost challenge of failed deliveries and some companies, like Amazon, are leading the way with innovation.

After trying lockers and drones, Amazon is reportedly planning to trial ‘home access’ deliveries with smart lock vendors. Here drivers are given one-off access to a customer’s home (e.g. garage or hallway) to leave the package. With reward comes risk, and there are countless security risks to overcome - who bears the risk if the driver does not lock the door properly? What if the customer reports a theft and blames the driver?

Could there be an alternative? A half-way house where the driver carries a drone that drops the parcel into the customer’s garden? This could potentially circumvent aviation policy in relation to the commercial use of drones, without the security risks of home access codes.

Technology advances are coming thick and fast, and customers are becoming more expectant, demanding and willing to new things. However, speed isn’t always what’s needed (dependent on the customer demographic) – predictability is.

So…

There is still no silver bullet to an ‘on time, in full’ delivery. However, predictability for customers is essential, and clear visibility throughout the end-to-end supply chain is critical. Retailers need to promise and deliver on their promise, sound in the knowledge they can. Technology can help, however, the smart retailer will understand the different needs of its different customers and through an efficient and visible operation, have varied delivery options and foresee issues before they occur and resolve them before they impact the customer; and be quick to recover if the customer falters. 

About the author

Rakhi Govil
Rakhi Govil
Rakhi is a Senior Retail Consultant with Capgemini Consulting. As trusted business advisor with large scale, multi-vendor transformation design & delivery experience, strong business value driven approach, and adept at aligning cross-function stakeholders, she specialises in multi-channel fulfilment, supply chain, ecommerce and digital.

Leave a comment

Your email address will not be published. Required fields are marked *.