Customer loyalty heavily dependent on ‘last mile’ service

This article is brought to you by Retail Technology Review: Customer loyalty heavily dependent on ‘last mile’ service.

Consumers are choosing who they shop with depending on the ‘last mile’ service provided, new research has revealed. Long delivery times top the list of frustrations for consumers (50%), followed closely by paying for returns (42%) and limited stock availability (38%).

Over a third (35%) of respondents claimed they would rather buy elsewhere than wait a long time for a delivery, highlighting the importance of getting stock in and out of the warehouse quickly and effectively. Respondents primarily thought that more time slots (45%) would improve delivery times, as well as holding more stock (37%) and increasing warehouse staff numbers (36%).

The survey, conducted by Opinipoll on behalf of Breathe Technologies, surveyed the opinions of over 1,500 consumers to identify the most common pain points around the online shopping process. It found that returns are also a deal breaker for shoppers, as 91% consider a retailer’s returns policy before making a purchase, and almost three quarters (73%) claim that paying for returns would discourage them from buying from a retailer. 

The research also revealed high consumer expectations around refunds, as almost one fifth (18%) of respondents said they expect to receive a refund from a returned order within 24 hours, and a further 32% within 48 hours. Despite government guidelines stating that businesses should make refunds within 14 days of receiving goods back, just 4% thought it would be acceptable for refunds to take more than five days. This makes it critical for retailers to ensure returned goods are processed quickly.

Claire Umney, managing director at Breathe Technologies commented, “Our survey found that most consumers just buy from a small number of retailers, providing only a small window of opportunity to attract and retain loyal customers. Covid-19 has undoubtedly caused challenges and complications for the retail sector, but in order to remain competitive and profitable, and capitalise on the increase in online spending, focusing on this last mile is key. 

“Retail operations should be led by consumer expectations; they need to be agile and have flexibility to scale with demand. Smart warehouse technology and software will provide faster and more efficient services, enabling retailers to forecast product demand, move goods at speed whilst ensuring accuracy, and manage last mile delivery through, for example, integration with carriers. Intelligent automation like this will provide a real-time view and ultimately better control over what’s happening within the warehouse.”

However, consumers would be willing to compromise their high last mile and reverse logistics expectations for a greener service. 32% of respondents said they would be happy to pay for delivery or incur a longer delivery time if their parcel arrived in a combined delivery with other orders, suggesting that retailers could consider working together to meet consumer sustainability expectations and the new realities of online shopping. Free delivery and returns aside, the most popular service consumers would like to see from online retailers is less packaging (44%), followed by paper-based packaging (39%). In fact, 28% said they would be prepared to pay for greener packaging. 

Despite calls for greater efficiencies in the warehouse, the research highlighted widespread issues with order errors. Almost half (47%) of respondents said they had received an online order in error, or a product they didn’t order, and almost three quarters (74%) of these said they had received one to three parcels in error in the past year. Taking the cost of picking, packing, delivery and returns per order into consideration, this could equate to a cost of £951m* to internet retailers.

If this remains unaddressed, the cost of order errors to retailers could soar exponentially over the coming year as the increase in online spending through the pandemic shows no sign of slowing. 64% of respondents said they had increased the amount they buy online since the beginning of the pandemic. Over half (51%) intend to spend the same amount online next year, including 40% of those whose online spending increased this year.

Umney adds: “The global pandemic highlights just how quickly the retail landscape can shift and businesses must adapt now to future-proof their operations with robust physical and digital automation. Consumer expectations are sky high and to manage these increasingly complex distribution requirements, retailers need end-to-end systems that maximise logistics efficiencies and minimise environmental impact. Put the right systems in place, and not only will you ensure your supply chain, distribution and logistics can cope with increased volumes, you’ll be delivering on your promises and so building your own loyal customer base.”

Breathe Technologies provides expert technology solutions to retail, e-commerce, distribution, and manufacturing workplaces. Its clients include QVC, Pets at Home, Amazon, Yodel, Ultimate Products, WHSmith, Unilever, and Johnson & Johnson. 

*Calculation is based on:

• 47% of survey respondents had received an order in error within the last year.
• This equates to 19.82 million people (in the UK aged 16-64 according to Ycharts).
• According to Warehouse Management, 3rd edition pg. 183 and 207 the cost of an error (which includes variables such as cost of recovery of item, put away, repicking, repacking, labour handling, admin, delivery) is conservatively estimated at £48 p/incorrect order.
• With 19.82 million people receiving orders in error this equates to a cost of £951 million to the online ecommerce industry (based on the assumption of a single instance of an order error).