The Challenges of Home Delivery
Home delivery forms a crucial part of many retailers' strategies across various sectors. However, it also poses possibly the largest threat to a retail brand. For numerous retailers, home delivery is an operationally challenging process.
Whether the retailer is purely online or a bricks and mortar establishment, home delivery is a critical juncture where high brand loyalty can be fostered or, conversely, your brand can be damaged. Home delivery is the point where your product meets your customer.
As a retailer handling home delivery, there are many aspects to consider, such as package tracking, customer experience at the doorstep during delivery, packaging, the environmental impact of the entire home delivery operation, increased costs, and not having complete control of your brand at all stages before your product reaches the end customer.
Home delivery is not a new concept for retailers; grocery retailers, for example, have been offering home delivery for years. Initially, retailers handled the entire process, from store or warehouse pick-up to doorstep delivery, often managed by the retailers’ own staff and later by their own distribution and delivery teams. Today, this service is typically outsourced to couriers or transport companies with their own websites, tracking systems and company values.
At present, home delivery is costly and labour intensive for retailers. Often consumers are reluctant to pay the real cost of delivery and retailers are pressured into reducing prices to stay competitive, losing their margins in the process.
Entrusting your brand to an entity that may not even understand your brand values entails high risk.
Retailers commonly engage third-party couriers for deliveries. These companies are striving to maintain their margins by keeping labour costs low and developing efficient delivery routes. Each courier company has its own app for tracking orders. At this point, the retailer has ceded all responsibility for their brand to the courier company. Whilst millions are invested in creating and fostering a brand with high popularity and awareness, it’s then handed over entirely to courier companies, which sometimes lack an understanding of the specific retail brand values.
Research by Cap Gemini states that 60% of consumers are hesitant to buy from companies they perceive to be unsustainable. While retailers can opt for electric vehicles or even bicycles for last-mile delivery and introduce sustainable packaging, this raises costs and requires more staff, as a bike simply can't match the efficiency of a larger van.
Striking a balance between robust sustainability, profitability, maintaining quality customer interactions, high customer satisfaction and providing high volume home delivery represents a daunting challenge.
Home Delivery versus Click & Collect — Pick up In-Store, from a Locker or Curbside
When comparing home delivery and Click & Collect options, the latter comes out on top as more customer-friendly, environmentally responsible, and profitable.
Setting up a Click & Collect system simplifies operations relative to home delivery. The retailer retains 100% control over customer interactions, can meet customers face-to-face, and has opportunities for cross-selling and upselling.
Current consumer demand favours fast doorstep delivery. However, if a retailer can manage an efficient Click & Collect system, products can be ready for collection at the store within 10 minutes. Home delivery can't compete with Click & Collect in terms of product readiness speed.
Home delivery services produce more returns than Click & Collect. For instance, when ordering clothes or shoes, customers often order additional sizes to ensure a good fit, then return the extras. This reversed logistics not only generates negative sustainability and economic impacts but also increases the workload at return centres, logistics centres or stores.
What's best - Home Delivery or Click & Collect?
I'm of the belief that a high-performing Click & Collect solution will be a stronger competitive proposition than home delivery when it comes to customer interaction and satisfaction, sustainability, profitability, and over the long term, retaining environmentally focussed customers and talents.
Keeping up with the evolving landscape of fulfilment strategies Inovretail (www.inovretail.com) has developed n AI-powered market-ready Click & Collect system called Seeplus. This end-to-end solution does much more than merely process Click & Collect transactions. It integrates with the retailer’s online store, interacts with the customer via store staff, offering cross selling or upselling opportunities, and gathers feedback from the customer after they leave the store. The feedback is then converted into a task list for store managers, indicating areas that call for improvement based on customer feedback.
Undeniably, Click & Collect — whether in-store, from a locker, or at the curbside — is far more customer-friendly, environmentally friendly, and highly profitable when leveraging the right technology. It's a win-win for retailers, tomorrow's consumers, and the environment.
Although Click & Collect offers numerous advantages, it may not fit every situation or customer preference. The choice between Click & Collect and home delivery depends on individual needs and circumstances. Some customers may prefer the convenience of having items delivered to their doorstep. However, Click & Collect remains a valuable option, offering several benefits, particularly for those who prioritise control, immediacy, sustainability, and saving on costs.
Trond Kongrød, CEO of Inovretail, November 2023