When it comes to the last mile, the pandemic is finishing what Amazon started. Whether it’s same-day, two-day, or choose-your-day, customers have come to expect dependable home delivery. And with the pandemic, those expectations have only increased.
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More and more customers have turned to online shopping during the pandemic, for everything from home furnishings to electronics to groceries. We’re also seeing that return to in-store spending is going to be slow at best. Customers are learning how convenient it is to shop from their own home and then receive an order at their doorstep only a day or two later – in some cases within the hour. This is causing a significant change in the behaviors of shoppers. Baby Boomers alone control nearly 70% of disposable income and studies show 47% are planning to increase their online buying.
These sweeping changes across consumer spending are presenting opportunities and threats to brands’ typical loyal customer bases. And while creating outstanding digital customer experiences has been a focus, we’re seeing that the delivery experience is becoming more of a deciding factor for consumers than ever before.
Connection Between Shipping and Customer Loyalty
A recent study from Lasership showed that 84% of consumers would be unlikely to buy from a retailer after just one negative shipping experience.
Consumer satisfaction with shipping has dropped during the pandemic, starting at 80% and decreasing to 67%.
In this guide, we’ll discuss how this new environment demands delightful shipping & delivery experiences for customers. Whether it’s home delivery or store pickup, you’ll learn our top tips on streamlining the delivery process by tackling the most challenging part of a product’s journey: the last mile.
Last-Mile Delivery in a Post-COVID World
Accounting for 53% of shipping costs, the last mile continues to be the critical piece where efficiency and consistency are lacking. And these costs only continue to rise as skyrocketing home delivery demand is overwhelming traditional last mile carriers and resulting in surcharges.
What is Last Mile?
Last mile delivery refers to the last phase of goods arriving at their final destination — usually an item going from the distribution center to a physical store location or direct to a customer’s home. Key goals for last mile delivery include expediency and cost-efficiency.
Before the pandemic, stellar last mile delivery experience was a key differentiator for consumers when selecting retailers to purchase from, especially given the rise in online shopping. Now, it’s more important than ever when the traditional shopping model has all but disappeared.
To say the pandemic has permanently affected consumer behavior and expectations is an understatement. In the Roadie customer base alone, the ebbs and flows of shipping demand has been drastic across industries. From October 2019 to October 2020, there have been big gains and some losses, including:
- 10,518% increase in auto parts and supplies
- 1,882% increase in food and grocery
- 972% increase in other retail orders
- 748% increase in healthcare-related deliveries
- 626% increase in home and garden supplies
- 41% decrease in airline luggage
In the past year, retailers who were already offering curbside pickup and BOPIS were seeing significant success in engaging with customers, despite the complete loss of foot traffic due to pandemic-related downturn. From there, it was also easy for these retailers to layer on BODFS to give customers what they want: options and speed. Retailers are starting to see the impact of using their physical store locations as smaller distribution centers to get products to customers faster than ever before.
Last-Mile Delivery’s Biggest Challenges
Whether you’re needing to balance inventory across stores and distribution centers or looking to offer contactless home delivery to customers, last-mile carries a significant number of challenges. Many of these stem from customer expectations with delivery, including:
- Full visibility into the delivery process
- Same day delivery
- Next day delivery
- Delivery hour notification
- Returns
- Delivery slot selection
- Rescheduling
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With all these challenges in mind, how can retailers gain the advantage and make their last-mile programs a differentiator?
Give Customers More Options
One of the first ways to differentiate your retail operations from competitors is to give some of the decisions back in the hands of customers. The race to win the last mile isn’t just about speed; it’s about giving customers a full menu of delivery options to fit their preferences at the point of purchase, each and every time.
- Offer a full menu of delivery options, including same-day, next-day and scheduled. You won’t have to predict how fast a customer needs an order, and they’re guaranteed to get the service they need.
- Incentivize deferred options: Instead of defaulting all customers to next-day as the standard shipping option, suggest 2-3 delivery options that are less expensive by adding promotions or savings on a future purchase.
- Enable “Choose Your Day” shipping: A Capgemini study found that 73% of shoppers feel that receiving delivery during a convenient time slot is more important than receiving it quickly. This can also help you have more time to plan, balance inventory and consolidate multi-item orders.
The Power of “Forward Stocking”
Companies are deploying smaller pop-up warehouses in closer proximity to dense urban areas, setting goods closer to the end customer. Pushing goods closer to the consumer’s home can reduce transportation costs, provide more flexibility, and still meet urgent delivery needs.
The model of smaller transportation hubs is a proven strategy that has empowered Amazon to set the tone for consumer expectations with delivery. But not every retailer has the endlessly deep pockets of Amazon to scale up warehouse space. If retailers can deploy a BODFS model and partially convert stores into fulfillment centers, they can still shorten delivery windows and exceed customer expectations while leveraging their existing footprints.
Customer & Delivery Communication
It’s no secret that consumers want more transparency in the delivery process. Engaging with a last-mile partner that can integrate with your existing fulfillment systems to show shipping and delivery status can help you dramatically improve client communication and satisfaction, without incurring heavy costs that accompany custom solutions.
If your customers can check progress in real-time, it better supports your customer’s needs and reduces the demand on your support team. Time and geo-stamped photos at pickup and drop-off further ease customer’s worries, helping your business to achieve improved on-time rates and delivery accuracy.
Diversify Your Logistics Toolkit
It’s imperative for businesses to be smart about how they make shipping choices, which services they use, how they source and stock goods, and the mix of solutions they use to meet fulfillment needs. One bad experience with a last-mile provider could mean you lose repeat purchases from your customer.
Asset-heavy solutions, like hub and spoke networks, have been critical to enabling eCommerce. But with exploding demand, the fixed number of assets are forcing carriers to implement high surcharges. 2020 has seen traditional carriers implementing these surcharges and increased prices ahead of the holiday season, all while service levels decline.
Crowdsourcing offers a creative, yet practical, solution for retailers who need flexibility and scalability to meet this new demand. By using a crowdsourced model, it’s possible to tap into resources already on the road – nearby employees, customers, and commuters – when needed creating a “just-in-time” delivery service. The result is an asset-light logistics solution that better meets last-mile delivery needs for faster, more efficient delivery, allowing retailers to flex up and down as demand fluctuates. Choose a crowdsourced delivery provider that can play well with your supply chain infrastructure, can flex to meet a variety of sizes, distances, and volumes, and has coverage in as many of your delivery zones as possible.
Choose a Last-Mile Partner That Delivers
Roadie is committed to helping retailers solve the challenges of the last mile, our Home Depot case study is evidence of it. With the nation’s largest local same-day delivery network, we’re helping leading brands like The Home Depot, Tractor Supply and Advance Auto Parts add home delivery in 20,000 zip codes across the U.S. Getting started is easy. We can launch new customers in as few as two weeks, allowing them to tap into our crowdsourced community of 200,000+ drivers.
