Ten Tips for Retailers - Lessons from the Online Retail Delivery Report 2011

By Patrick Wall, MetaPack, CEO

At MetaPack we are always interested to get the early copy of Snow Valley’s Delivery Report. It has helped our understanding of shopper trends and is a great snapshot to see how the online delivery offering has been progressing over the year. Through our experience in the industry and the findings in the report, below are ten points which are driving the market.

1. The right delivery options for each customer and each product

A quality delivery service begins with the correct management of delivery options. Take care to only offer your customers the services that can be delivered to them, at the right time and for the appropriate products. For example, the Snow Valley report suggests that 9% of retailers now offer same day delivery. Here it is clear that the service offering has to be related to the location of the pick and pack store, supplier or warehouse, to where the product is going and what the product is (you can’t deliver an exercise bike, for example, with a motor-bike courier or small van).  This is an extreme example, but the same principles apply to many other premium services and many international deliveries.

2. Find the appropriate services

Regardless of the size of the product, there is a marked move towards using tracked services. In the report, 77% of retailers now allow the customer to log into their account and see some form of order status update. In fact, the overall trend on price and service is a continued movement to “premium services” with next day, in a range of £4 to £7, becoming the new standard. I think the move towards “immediacy” is a very interesting and fundamental change. Over the last three years, shoppers have changed their expectations. They have moved from “I’ll have it soon” to “I’ll have it now”. The online buying experience is drawing closer to the high street’s experience of immediate reward. With it there is more emphasis on fast, visible delivery services.

3. Keep customers proactively informed throughout the customer journey

In the report we can see that 98% of the sample orders were confirmed by e-mail, an increase on last year. Further, 79% of the retailers sent another e-mail to confirm that the goods had been dispatched. Unfortunately there was little evidence that retailers keep customers informed through the rest of the delivery journey. This is a failing that should be rectified since customers are far more tolerant of late deliveries if they are told of problems in advance and can rearrange their schedules to fit an amended delivery period. Certainly this is a process followed by John Lewis who won Snow Valley’s Golden Chariot award. A John Lewis online order will inform the customer if there is a carding event, as well as an address query or a delay caused by a misrouting or loss. The customer knows they are being looked after and can remain satisfied with service, despite the inconveniences.

4. Use text messaging

Only 1 in 20 retailers on the survey appear to be using text messages. Again this is a great shame and provides an opportunity for retailers who want to get a competitive advantage in their service offering. Status updates from carrier tracking systems can be used to trigger any type of automated customer communication and the text message has to be the most effective. It is more intrusive than an email and can be short and punchy. It is therefore ideal to quickly let shoppers know that their delivery is on schedule, to stay in-or get home! It can be used to say there is a problem, and call this number. And whereas there is an operator charge for the text message, enlightened retailers know that this is more than compensated for by fewer contact centre calls and greater customer loyalty.

5. Extend your cut-off times

The online buying experience is drawing closer to the high street’s experience of immediate reward. Therefore, not only do we see a considerable increase in the demand for next day delivery but also, as evidenced in this report, more flexible cut-off times. 59% of retailers that gave an order deadline had set it after 2pm, up from 50% last year. For most of the population it’s possible to order later and later and still get a next day delivery. In many ways this trend reflects increased trust in online delivery. If receipt of an order is important enough to pay a next day delivery premium, shoppers are increasingly putting their faith in online delivery to get their goods to them on time.

6. Monitor customer queries and reply at least before the same working day – if only to acknowledge receipt

This seems like a basic piece of housekeeping, but the report highlights that 16% of retailers failed to respond at all to a customer enquiry. Of those that did, less than half responded on the same day. For leading retailers this would be a total failure of core performance metrics. Total cost to serve analysis and customer profitability work clearly shows that it is better to respond quickly, particularly if it’s not good news. The alternative is not only to be overwhelmed by inbound calls; it is to lose repeat purchase from customers who are dissatisfied.

7. Be careful with free delivery

In the Snow valley report, it’s worth looking at the detail on delivery charges. Over the years there has been continued debate about “free delivery” and it has created a lot of pressure on carrier prices. The carrier market isn’t generally profitable as it is (and carriers need profit to invest in their peak capacity). In fact, when you look at free delivery in detail you will see that two sectors drive the “free” initiative: books and entertainment. These are special cases, low value and letter box deliverable. In these particular sectors free delivery is logical and low delivery costs obtainable. There is no good reason why free delivery in two sectors should put pressure on the rest of the market.

8. Develop outstanding areas of opportunity

Nearly 60% of retailers have yet to sell product overseas. Again the detail shows us that some sectors are more suited to this than others, but retailers who are still planning overseas sales are in danger of joining the laggards. Only 21% of the retailers could deliver to British Forces Post Office (BFPO) addresses. Collection from store has jumped ahead again this year and leading retailers are benefiting greatly, but at 19% there must still be many bricks and mortar retailers who can add this initiative. And again this year, the report shows that smaller retailers are moving at a slower pace than the largest retailers, so there is always that opportunity to catch up.

9. Use the right carriers

The differences between carrier capabilities are surprising. These differences are determined by the carrier’s level of automation (conveyors, sortation equipment, tracking technology); how they ship product between depots; how drivers are remunerated and what vehicles drivers use (if any). Their performance is also determined by which services they see as core, their culture and their ownership structure. Any one carrier would therefore find it difficult to be all things to all people. Our advice is to find out what you want to offer your customers and then talk to carriers about what they can do best

10. Have contingency

The delivery experience for shoppers continues to get better or more satisfying. However, this year we have to acknowledge that the industry suffered with some atrocious weather conditions, and that this had a knock on effect in terms of service and reliability. Those retailers who had already built contingency into their solution fared better, as carriers responded in different ways to the mounting pressure. If you are looking to broaden your carrier partner base, in order to look forward to a more stable peak in 2011, our advice is to do it now. As a result of the 2010 challenges, planning is starting early and the worst outcome would be to find that your options have closed down by leaving discussions too late.

Download the report