How can SME retailers conquer the last mile?
By John Gallemore, CEO, THG Ingenuity
The last 18 months have seen extraordinary growth in online shopping, as the world adjusted to home working alongside periods of lockdown and isolation.
Indeed, THG data shows that sales increased by 42% in 2020, with a 73% uplift in new customers year-on-year.
For many retailers, it’s been challenging - in some cases impossible - to keep pace with major market players and pureplay ecommerce brands. It’s especially true for businesses that have traditionally relied on bricks and mortar as their primary sales channel.
Although the reasons for this are multifaceted, a contributing factor has been an inability to provide adequate and robust final mile delivery.
And, given that the growing trend for online shopping looks set to continue, it’s essential that retailers overcome this issue to conquer the final mile and flourish in future.
Why is the final mile so important?
Seamless delivery and great customer experience are fundamentally linked. So, it’s important to get the entire customer journey right - from first click to final mile - and not stop short once the order is passed to a delivery partner.
We have also seen an increase in expectation when it comes to speed of delivery. Indeed, our insight shows significant improvement in both customer lifetime value (CLV) and retention when offering next day versus two to three day delivery.
When we entered the US market, for example, building a distribution centre network that allowed us to offer cost effective next-day delivery options improved CLV by 28%.
Delivery beyond three days, however, will degrade these metrics. Clearly, therefore, ensuring sure the right tiers of delivery speed and service are available is vital - and not just for customer satisfaction in the immediate term.
The impact of online takeaway delivery services is also notable in the sector, with consumers now able to watch as their rider collects from the restaurant and delivers to the door.
Familiarisation with this type of service and interface means regular shipment tracking is now seen as a reasonable expectation for most online purchases, not just a novel add-on.
How can retailers exceed customer expectation?
Communication is vital - shoppers need to know when their order will arrive with accuracy. But, because they also expect it quickly, there’s a limited window for retailers to provide that information in a timely way.
A customer who places a Lookfantastic order at 11pm, to be delivered next day, will receive numerous emails including an order receipt, estimated delivery slot time and confirmation of delivery, all within a few hours.
It’s complex but getting it right pays dividends when it comes to customer engagement; in 2020, the brand saw a far higher unique email open rate than the e-commerce average.
Customers now also expect their communications to be served by the brand that they have ordered the items from, rather than the courier delivering them.
These bespoke updates from the retailer, rather than generic emails from third-party couriers which can vary in quality, provide the opportunity for brands to own the journey, engage with customers at every touchpoint and put them at ease.
Additionally, branded tracking emails send customers back to the retailer’s site – which improves customer experience and increases website visits. We know that as customers wait for their order to be delivered, they are particularly engaged.
Lookfantastic delivery update emails, for instance, have an open rate of 64% - with recipients all being directed back to the retail site. This is a significant increase on open and click rates seen from traditional marketing emails sent when customers are at less engaged points.
Exceeding customer expectation can be a pain point for retailers that have to rely on various, often disjointed, third-party suppliers to implement their delivery processes.
Conversely, integration through an end-to-end platform allows for oversight of the entire customer journey and a more seamless operation across the board.
Looking ahead
More than ever, the last 18 months have proven that it’s impossible to predict what’s coming around the corner.
So, it’s essential for retailers to stay ahead of the curve and continue to innovate when it comes to final mile delivery. Of course, remaining agile can be difficult if the brand is limited by resource, technology or expertise.
We know that alongside speed and efficiency, consumers are becoming increasingly conscious of sustainability.
We recently developed a more environmentally friendly delivery service in response to this, working alongside Royal Mail and other couriers for final mile deliveries on bike, foot or electric vehicle. This is already seeing strong uptake levels of up to 30%.
What’s more, as people begin to transition back to a blend of office working, we expect to see an increase in the participation of non-home delivery services – such as lockers and pickup points - with deliveries fitting around changing lifestyles.
At the same time, an expected hybrid of office and home working will mean an increase in nominated day deliveries, where customers opt to schedule their delivery for when they know they will be at home to receive it.
Ultimately, we know that flexibility and the ability to rapidly adapt to shifting conditions will be non-negotiable – so the brands that recognise and act on this now will be best equipped for future success.
