September 24, 2018

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Future of retail delivery & impact on logistics

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By Brian Bourke, vice president, marketing at SEKO Logistics.

Consumer attitudes are changing, consumer shopping behaviours are changing and technology is changing. And they’re all about to come together to change the face of retail delivery as we know it.

Which means the logistics world needs to be prepared.

Here are our top five predictions for the future of retail delivery: it will become cheaper and quicker for the consumer; become more local; be managed by voice control; boom with new technologies; and offer an omni-channel experience.

Let’s take a closer look at these top five predictions for the future of retail delivery

Cheaper and quicker

Consumers want free deliveries. A survey of over 1,000 UK consumers found that 94% were more likely to make an online purchase if there’s a free delivery offer, and most people expect free delivery with orders over £10.

If they had to pay, consumers said £2-£4 is a reasonable delivery fee, no matter the product retail value. But if the costs are too high, then 66.7% said they’d abandon the purchase altogether.

Consumers want their products quicker – PWC found that fast and reliable delivery (same-day and click-and-collect) matters to 29% of UK shoppers.

A different survey, by Trimble (referenced by Econsultancy), found that “even though a quarter of respondents said delivery costs were too high, 40% of shoppers were willing to pay for next-day delivery, and 22% would pay for delivery within a two-hour slot.”

What this means for logistics

Any retailers that have the profit margins to offer free delivery, should offer free delivery. Whether that’s for orders over a specific amount, like £10, for set time periods or if consumers buy two items or more, free shipping can help to convince consumers to complete purchases, and increase sales. And if offering free shipping isn’t an option, then testing a low delivery fee between £2 and £4 could prove to be an effective strategy.

Last-mile delivery makes offering quick deliveries difficult, because four things need to be in place: products need to be available locally; retailers need to have a real-time view of their inventories; finding and packing of the product needs to be speedy; and last-mile logistics providers need to be able to pick up and deliver orders ad hoc or multiple times throughout the day. If logistics retailers and logistics providers can work together to tick these four boxes, then McKinsey says: “Same-day delivery turns into a pure game of scale.”

Big e-commerce giants like Amazon offer repeat customers Amazon Prime, a delivery subscription service where consumers pay £79 a year or £7.99 a month for free one-day delivery, priority delivery, standard delivery, same-day delivery and more. Consumers are happy to pay in exchange for speedy deliver times.

Payment service providers like Klarna are offering a try-before-you-buy payment structure – offering customers an order now, pay after delivery solution. If you’re like asos and KNOMO, and you offer free delivery, this means consumers can order items (up to a certain amount) through Klarna, get them delivered for free and try the item on at home before committing. They can then decide to either pay for the item 30 days after shipment, or send it back, again for free.

More local

Thanks to the rise in mobile usage and the immediate internet access this has given consumers, searches for purchasing influencers like stock information, offers and opening times are becoming more focused on location.

Google says words like “near me”, “closest” and “nearby” are becoming more common in searches, with 30% of all mobile searches related to location. And, of those consumers searching locally on their smartphone, 76% visit a store within a day, and 28% of those searches lead to a purchase within a day (Think with Google).

What this means for logistics

Local searchers have high purchasing intent and logistics providers and retailers need to work together to make sure warehouses are well-stocked and close enough to stores to help deliver reserved items and orders, and to keep stores in constant supply.

Retailers like Argos offer ‘Check & Reserve’ to consumers looking for a particular item in their local store, and give them the option to reserve their item without payment, where they’ll then complete the purchase by the end of the next working day. They also offer Fast Track reservation online, for same-day, instore pick-up and delivery on 1,000s of items. If items are out of stock in the local store, then consumers can ask for an alert to let them know when the item is available for purchase at a local Argos – helping the retailer recapture the local buyer’s purchase intent. Logistics providers need to be set up to travel between branches to locate products and retrieve stock from warehouses that are located further away.

Voice control

Voice search will play a big part in the consumer purchase and logistics fulfilment journeys. Walker Sands polled over 1,600 consumers and found that 19% had already made a purchase using a voice-controlled device in the past 12 months. The poll results also suggested that voice search was more of a channel for millennials, with 37% saying “they always or often shop online via voice-controlled devices”, and 43% have made a purchase using voice in the past year.

What this means for logistics  

If consumers are making purchases via voice search, they’ll likely expect the rest of the purchase funnel to also offer a voice search option. Which means that logistics companies need to optimise their delivery updates and returns processing to integrate this technology. If a consumer wants to know where their order is, and they ask their voice assistant, logistics companies need to respond via voice.

Logistics companies will be able to use voice search to help them manage deliveries, plan delivery routes, schedule deliveries and assign delivery runs to drivers. This kind of automation could also help to cut back on logistics operational costs.

New technologies

Make-up retailers like L’Oréal are already using apps like Makeup Geniusto let consumers virtually try makeup before buying, and more brands, like Sephora and Charlotte Tilbury, are following suit.

Ted Baker has already experimented with a virtual reality digital concept store in Shoreditch, giving visitors a look at clothing items in closer detail and a chance to play games or watch films and interact with the Ted Baker surroundings.

Augmented and virtual reality make it easier to virtually do things, like try clothes for size and see how large consumer devices might look in the home. The sense of not being able to see or touch an object will become less of a problem, and that will help to reduce buyer hesitation. With an easier product journey and fewer obstacles, technological advancements will help to facilitate more online orders.

What this means for logistics

Logistics providers should also take advantage of augmented and virtual reality technology to help meet the increasing number of online orders, and transform the world of logistics.

Augmented reality can help logistics providers better plan warehouse layouts to make finding orders easier, and it can also help workers locate packages ready for shipping. Augmented reality can also help make final-mile delivery easier for drivers, helping to pack lorries and navigate to destinations (read more on augmented reality and how it’ll transform logistics in Supply Chain 24|7).

A more realistic view of how items of clothing, make up and jewellery will look for consumers should, in theory, offer a realistic and decisive shopping experience – helping to reduce the number of online orders being returned.

Logistics providers like SEKO are already researching and implementing new technologies into the process. We deploy 3D load optimisation software for inbound containers for optimised stock replenishment. We don’t see drones launching at scale in most major markets for final-mile deliveries, but we are actively researching drones for use within the warehouse for more optimal picking of low-turning SKUs on the highest out-of-reach shelves.

An omni-channel experience

Consumers are creating and managing orders and returns across channels, and retailers will need to offer a consistent customer experience at every touchpoint.

From chatbots to email, social media, phone and more, channels need to be working together and giving the same message to help generate orders and offer the best customer experience.

Retailers need to be working with logistics providers to make sure they’re offering the same message and the same customer experience to help generate more orders for their retail partner.

What this means for logistics

The omni-channel shopper needs an omni-channel logistics solution. By working with retailers and offering visibility across communication channels, and offering real-time fulfilment options to help their customers and decide on the best fulfilment location, logistics providers can be sure orders will arrive at the right place, at the right time.

And, because retailers will need to share information with logistics providers to offer an omni-channel experience, both parties will need to make sure they’re keeping customer data safe with a cryptocurrency technology such as blockchain.

Imagine a logistics world where “every time a product changes hands, the transaction could be documented, creating a permanent history of a product from manufacture to sale. This could dramatically reduce time delays, added costs, and human error that plague transactions today” (Supply Chain 24|7).

SEKO is already using technology solutions like interactive voice response (IVR) for automated outbound calls and delivery scheduling, and immediate proof of delivery via an app to respond to changing consumer behaviours.

This article was written by Brian Bourke, vice-president, marketing at SEKO Logistics

 

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