Exceeding Consumer and Shipper Delivery Expectations Today
last-mile delivery Delivery Experience Brand All Blogs
Aug 08, 2023
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On January 9, 2007, Steve Jobs walked on stage at MacWorld in San Francisco. He said, “Every once in a while, a revolutionary product changes everything….” He was right, of course. The iPhone catalyzed a seismic shift in how we interact with the world. It was a remote control for our lives. The iPhone disrupted and shattered existing industries and spawned utterly new ones. It moved access to the internet from our desktops to our fingertips. Everything changed.
It’s happening again.
The new reality of ecommerce
We’re living through a period of profound disruption redefining the consumer economy. This change is permanent. Enabled by mobile technology and accelerated by the pandemic, consumers are moving online at a magnitude that would have seemed unimaginable just a few years ago. New direct-to-consumer digital retailers are popping up everywhere, entering retail markets and capturing market share from established brick-and-mortar sellers seemingly at will. Over half (55%) of all consumers now prefer to buy directly from brands rather than multi-brand retailers, which is significantly higher among younger shoppers.
Amazon has stayed ahead of the curve, growing its e-commerce platform almost exponentially—today, consumers spend $2 of every $5 spent online in the U.S. on Amazon. The Amazon experience has raised consumer expectations about convenience, speed, reliability, and responsiveness. I want something today, order it on my phone, and have it tomorrow (or maybe today), with few exceptions. Delivery is free with an Amazon Prime membership. How do you compete?
And whether you like it or not, you are competing with Amazon. Consumers measure all online retailers against the convenience and reliability benchmark Amazon Prime delivery sets. So what exactly does that mean?
Consumer expectations by the numbers
To start with, your customers want it fast. Gone are 4-5 days or longer delivery days. One in four customers will only consider buying an item if it is shipping in 2 days or less. Over 60% of consumers prioritize brands offering next-day delivery. And there is a growing preference for same-day delivery. They also want it free—over half of consumers will abandon a cart if presented with an extra shipping cost. But there is a caveat—two-thirds are willing to pay a small premium to get their package early.
Perhaps more than anything else, consumers value convenience. Three in four list convenience as their top priority, while 95% of shoppers list convenient delivery options as a significant factor in purchasing decisions.
Consumers need a good reason to be loyal, and they’re shopping for more brands today than in the past. Delivery is crucial to their brand loyalty, and 84% will walk away from your brand after a bad delivery experience. Three in five consumers are likely to remain loyal to retailers who are open and honest about delivery costs and timing.
A new playbook for last-mile delivery
It seems almost inevitable that as e-commerce growth accelerates and consumer expectations grow, you’ll compete for any advantage in the last-mile delivery experience. Long viewed as a back-end commodity, logistics will transition from cost center to opportunity, becoming a new source of competitiveness and a catalyst for brand growth. This will be especially true in densely packed urban markets, where most of your potential customers and key stakeholders reside.
Last-mile logistics will be critical to growing your brand, which presents a unique challenge. As stated in the recent PYMNTS interview with AxleHire CEO Raj Ramanan, consumers hold brands accountable for the delivery experience, and great delivery experiences can lead to loyal customers and repeat purchases. The last mile is, after all, the last interaction the customer has with a brand and the last opportunity to form a positive brand perception.
Logistics execs almost universally agree that the last mile is the most inefficient part of the delivery chain, accounting for 53% of total shipping costs. In addition, it involves trade-offs that can sometimes sound like a lose-lose proposition—providing a higher level of service can break the budget, and containing costs can lead to unacceptable service levels.
Last-mile delivery done right becomes an enhancer for your brand. What does ‘done right’ entail?
- Localized inventory—micro hubs that push inventory out closer to the end delivery point, in essence shortening the last mile and supporting speed and sustainability
- Dynamic control—Operational flexibility to continually adapt to surges or dips in demand
- Complete transparency—100% visibility for the shipper of the end-to-end process with no black holes, 100% visibility for the consumer of where their package is and when it will arrive
- End-to-end precision—data and algorithms that drive daily optimization of capacity and routing
- 24/7 availability—real-time response and recovery
Finding your north star—exceeding customer experiences
The reality is that there is often a disconnect between consumer expectations and the capabilities and services offered by last-mile delivery carriers. Your brand must exceed consumer expectations to thrive in the current disruption. The ‘Amazon experience’ is table stakes for last-mile delivery.
Your brand needs a last-mile provider with the capabilities to match that experience in terms of on-time delivery, reliability, and visibility and then go a step beyond Amazon. The box has your name on it, and the goal of your last-mile carrier should be to make you look like an expert in logistics. That’s the true North Star for last-mile delivery; everything changes when you achieve it.