Balancing the Books on Delivery – the Right Approach for Retailers

By Dan Ennor, Commercial Director at Global Freight Solutions

A clear and well-prepared delivery strategy can be the stepping stone for retail growth; gaining and retaining customers to help drive revenue. Every facet of delivery, from checkout to doorstep influences the likelihood of that customer purchasing from that retailer again. Poorly executed delivery costs UK retailers up to £1.2 billion in avoidable costs each year, according to IMRG’s latest estimates, which emphasises the importance of choosing the right delivery approach.

So, what aspects of delivery should retailers be investing in as a priority? Where should they be focussing their efforts in order to maximise their return?

Are retailers looking at customer experience incorrectly?

There has been a trend in recent years for retailers to flock towards ‘next day or no cost’ delivery but operational and commercial common sense tells us that there is no such thing as ‘free delivery’ for retailers. The online supply chain has a finite capacity for an ‘everything tomorrow’ approach and retailers need to consider this before jumping to ‘free delivery’ as a first port of call.

There is a real danger of retailers over-promising and under-delivering when the average shopper doesn’t necessarily want a premium delivery option all the time. Every shopper is different, and every delivery may have different requirements depending on what it contains, and why and when it has been ordered. All of this should be taken into account as part of a robust delivery strategy.

Your last-minute shoppers will always want ‘fast and free’ but what most shoppers really want is a clearly communicated delivery offer that follows through on what is promised. Perhaps retailers should instead be looking at offering a broader range of delivery options and the chance to specify when or where the delivery will arrive. Customers wants convenience, so retailers need to offer the widest range of delivery options they can to appease them. This is emphasised by the latest research into consumer delivery from IMRG and Global Freight Solutions, which outlines that in 2018, 41 percent of consumers indicated they had abandoned their cart due to insufficient delivery options.

The Brexit effect

As the deadline for Brexit gets ever closer and remains uncertain, its impact on delivery looms larger.

Up until now, it has provided opportunities for online selling into Europe with a weaker pound making UK retailers a more attractive proposition to EU shoppers. Since the referendum decision at the end of June 2016, we have seen the proportion of UK cross-border volume going to Euro destinations, increase.

However, this may all be about to change. With so much uncertainty surrounding Brexit, there will be a lot to learn about dealing with the EU in the coming months and years, so common sense suggests contingency plans must be made, which should legislate for:

• Longer cross-border delivery lead times
• Reviewing all HS code classification to ensure products attract the correct duties and taxes
• Making changes to customer messaging, in order to manage expectations
• Implementing growth strategies in non-EU markets (eBay, Etsy, Alibaba)
• Enabling transparent delivery and duty cost information at point of checkout
• Implement paperless trading (PLT) services for non-UK destinations to speed customs clearance and reduce transit times

The retail industry is anticipating longer and more complex duty and tax processes, and higher delivery costs with longer delivery lead times into EU markets. Retailers will need to reach out to carrier management experts to navigate this new territory and ensure it doesn’t hamper their business.

Delivering for the right price

The dilemma for retailers is working out how to provide a delivery offering that gives a more specific and sustainable customer experience with better control of costs in both the UK and cross-border environments. That isn’t easy without support.

To make this possible, a multi-carrier approach is required, enabling access to a range of delivery services, using order characteristics and specific customer requirements to offer the right solution from a sensible set of options relevant to the destination country.

So, for ecommerce brands, what are the fundamentals their delivery strategy needs to offer? What is essential in order for their business to be successful?

• Delivery to a designated address
  • A standard ‘free’ or at low cost option
  • An express option at a small premium
  • A timed/specified day option at a higher premium (weekend or evening delivery)
• At least one click & collect option (if available):
  • Free in-store collection
  • Third-party (pick-up point/locker) at a lower cost than the standard designated address delivery

These solutions are all readily available to retailers, it’s often just a case of pulling them together. But when you are busy running a business, it can be difficult to make the time.

What’s holding retailers back from delivering?

Even if businesses want to offer that ‘Amazon-style’ delivery of both choice and convenience, in order to compete with the likes of Amazon Prime, they are often being hampered by their own internal constraints. For example, the cost and complexity of integrating more delivery options and carriers into their systems may prove a stumbling block. Moreover, the effort in managing multiple carriers at once, particularly for an SME, may be far too big a task. That’s before considering the expertise needed on knowing which services to offer or how to access them.

An affordable delivery strategy

The concept of ‘free delivery’ seems to have deeply engrained itself into the minds of consumers and retailers alike, but many retailers seem so desperate to offer it, they don’t stop to think about whether or not they should first. Provided delivery is well-communicated and well-executed, retailers can remain competitive.

The reality is, not every retailer is going to have the same resources and scope to carry out the delivery approach of the big brands, so it doesn’t make sense to blindly follow them. Retailers need to be devising delivery strategies within the context of their customers, capabilities, and commercial plan. A great delivery offering does not have to break the bank.

Retailers need not be restricted by what they can do in-house either. Enterprise carrier management experts can be of great assistance in these situations when taking it all on alone seems overwhelming or unachievable. These managed service experts can help retailers scale their business cost-effectively through delivery, so that they’re not being wasteful. Convenient delivery options that are supported by clear communication is the way forward for retailers.