Home Delivery Performance: Ticking Time Bomb or Market Opportunity?

Delivery has always been part of the order fulfillment process, but it’s only been in recent years that it has emerged from a cost center, back-end process to become a competitive differentiator and a key driver of customer experience. Even if everything goes perfect in the sales process, a poor delivery experience can quickly taint customer satisfaction. How do consumers feel about home delivery today? Why does delivery performance matter for retailers and delivery companies? What are delivery personas and how can retailers use them to improve customer loyalty and revenue? Those are some of the questions I discussed with Chris Jones, Executive Vice President, Industry and Services at Descartes Systems Group, on a recent episode of Talking Logistics

Are Consumers Satisfied?

Descartes recently published its Second Annual Ecommerce and Home Delivery Consumer Sentiment Study. So, we began our discussion with the basic question: Are customers satisfied with home delivery performance?

Chris indicates that overall it’s a mixed bag. Although the satisfaction score improved a couple of points from the previous survey, two-thirds of respondents reported having had a delivery problem within the previous three months. “That’s not a great sign, it shows there is a lot of room for improvement,” he says.

Likewise, the survey shows a slight decline in e-commerce use (coupled with home delivery) by the respondents, but they expect to increase usage in the future because e-commerce retailers have made it easy and convenient to do so. “Interestingly, the biggest increase in e-commerce use was among older shoppers, which suggests the increased usage is not going away,” comments Chris.

The Consequences of Poor Delivery Performance

If delivery problems occur, what consequences does this have for retailers or delivery companies? Chris notes the survey probed for whether the customer will lose trust or stop buying from the retailer, or stop using the delivery company if they have a choice. Worse yet, will they tell their friends or post about their negative experiences online? “These are nightmares for retailers,” Chris states. “This has long-term consequences for revenue and profitability for retailers, as well as impacts their brand image.”

Delivery Personas

The Descartes survey addressed the concept of delivery personas. What are they and how should retailers use them to improve delivery?

Chris compares delivery personas to the buying personas retailers have long used to segment their customer base to better target and serve the varying buying patterns of different customers. “There are delivery behaviors. Customers do not think and act monolithically when it comes to delivery. We wanted to test that.”

Chris indicates Descartes breaks delivery personas into five categories:

  • Cost – will take the lowest-cost option regardless of delivery speed.
  • Parcel – prefer quick delivery but not in a specific timeframe.
  • Precision – usually for larger goods like furniture or appliances – they want it on a specific timetable.
  • Time-sensitive – where both speed and precision are critical and they are willing to pay a premium to get it.
  • Sustainability – a growing number of people who want their deliveries to be as environmentally friendly as possible, even if it may be slower or more costly.

The survey asked respondents probing questions to identify not only how many fit each category, but also their response to these options. Chris says by offering these delivery options, retailers can reduce delivery costs, increase customer satisfaction, and drive revenue growth (“We’re talking millions of dollars here”). They also contribute to sustainability through practices such as grouping orders and using more eco-friendly delivery options. “We’ve seen 20% less miles per delivery by doing this.”

An interesting finding of the research is that delivery cost is the overwhelming top choice among customers for delivery option, with speed coming in third behind precision. This calls into question the push in the industry to build out delivery networks for same-day or next-day deliveries for all customers. Using personas to understand their customer base could impact how they design their delivery networks. “Giving customers choices will increase satisfaction and revenue, and reduce costs,” Chris says.

Defining Success

What characteristics will define home delivery success for retailers and other companies moving forward? Chris has some interesting and surprising perspectives on this, so I recommend you watch the full episode for all the details, as well as download the report. Then keep the conversation going by posting a comment and sharing your perspective.