The logistics services sector, especially last mile delivery, has changed significantly under the impact of the unprecedented growth of e-commerce during the pandemic. According to Data Insight, the volume of the e-commerce market in 2020 made up RUB 2.7 trillion, up 58% year-on-year.
Three months of self-isolation have driven at least 10 million new shoppers into online commerce who are reforming consumer culture by pushing logistics to the limit. Polina Kovard, Marketing Manager at Checkbox Delivery Platform, discusses how a business can keep up with growing demands and retain customers.
How to organize delivery that will attract customersVictoria Safronova
Here and now
In the past year, delivery has turned from an additional option into a daily necessity, forcing companies to pay attention to the so-called “last mile” – the final stage of transportation of goods to the buyer (courier-client). The focus was on both delivery channels and customer expectations.
Consumers are increasingly evaluating their purchases in terms of shipping options. These conclusions were reached by analysts of Euromonitor international, having surveyed about 20,000 consumers around the world. The study was conducted at the peak of self-isolation – in March and April last year. Specifically, according to the Euromonitor Digital Consumer Survey 2020, the majority of respondents complainedthat received orders later than expected.
The mood in the domestic market is in tune with global trends – according to Yandex Go, delivery of 55% of online stores in Russia does not match customer expectations neither in price, nor in speed, nor in terms of time – consumers are forced to wait for an order all day long and pay more than 350 rubles for it.
The so-called effect of mixed expectations or “liquid expectations”, described in the material of Fjord Global, forces the business to compete for the user’s wallet not only with direct competitors, but also with all companies that can cover their needs in different ways, which are in the same row.
Customers transfer the familiar user experience from one area to their loved ones, as it seems to them, by meaning. For example, if today a taxi is appointed in less than a minute and arrives within 10-15 minutes, it is logical to expect about the same efficiency from delivery. Today, consumers expect any online stores to deliver an order within an hour or two, and this time will continue to shrink.
The “arms race” at the last mile is also intensifying due to the growing popularity of direct selling or direct-to-consumer (d2c) approaches, when companies independently promote, sell and deliver their product without the participation of any intermediaries, in particular, marketplaces. Brands using the d2c philosophy are gaining popularity by monitoring and continually improving every stage of customer communication, from dating to direct delivery.
An already academic example of a successful d2c case – the sportswear and footwear company Nike in 2020, through direct sales, attracted almost a third of its annual revenue. 2020 d2c brand sales made up a whopping 33.1% of revenue, up from 13.5% in 2010.
Summarizing the trends, it is important to note:
- In the mind of the consumer, logistics is part of the product, 48% of customers will leave from a store that does not have express delivery;
- Brands today prefer the direct selling model, where quality control of each stage of product creation takes more place. US d2c e-commerce sales grew 45.5% last year to $ 111.5 billion, which is 14% of total e-commerce retail sales as estimated by eMarketer. The trend towards d2c will increase.
3 aspects to consider when organizing delivery
1. Be the best service in your segment
If your potential customers live in a metropolis, consider whether you can initially calculate the economy in such a way as to offer the customer door-to-door delivery. Although the share of pickup points in Russia prevails over other types of goods receipt, according to Data Insight, it made up 68% of all shipments in 2020, Door-to-door delivery will gain in popularity as technology spreads to reduce costs.
Instant routing of continuously arriving orders can provide Next Day’s economy for Same Day delivery, due to the fact that several shipments share the cost of transportation among themselves.
The pandemic has formed new habits among customers: in April 2020, due to quarantine restrictions and self-isolation, the share of door-to-door delivery exceeded share of orders to pick-up points.
This trend will continue to grow despite the return to normal life – as soon as customers are able to massively receive delivery day after day at a specific time interval, they will choose this option, gradually narrowing the waiting time.
Door-to-door delivery is combined with a number of additional services: payment, return, fitting. Only those services will be able to win in a competitive environment that offer all the accompanying options – in one click.
2. Dive into technology and combine approaches
Businesses today really have a lot of options to arrange for delivery. At the same time, the mechanics of solutions overlap in different approaches. High volume companies often combine all the options available on the market.
To set up logistics in an optimal way, first you need to make a decision – to choose your own delivery, use the services of other companies, or combine both options.
Self-delivery is the most time-consuming approach, which can involve multiple, manually controlled couriers or a technically complex IT system.
If 3-5 couriers can handle your volumes, and the number of deliveries per day does not exceed 100, you can manage them manually. If the numbers are higher, then various digital solutions come to the rescue.
There can be three main approaches here:
- Purchase of a ready-made IT solution with integration. In this case, the task of hiring and working with couriers will remain with you.
- Purchase of point IT solutions – for example, the part concerning the distribution and fulfillment of orders, or the part that is engaged in building routes, and the rest is developed by our own IT specialists. This option also implies an additional burden on the HR department: it will be necessary to search, train and work with couriers independently.
- Connecting a ready-made platform solution, which is an IT part, plus a staff of trained couriers equipped with everything you need – in this case, you just transfer orders to the platform.
If we talk about outsourcing and services of logistics companies, taxi services will be the fastest and most expensive. The minimum cost in Moscow with the door-to-door option starts at 299 rubles. When choosing a taxi, you should also pay attention to the restrictions on the weight and dimensions of the cargo.
If you are a brand for which the quality of courier service is critical in terms of future sales and communication with the client, you must remember that aggregators offer delivery to taxi drivers due to a shortage of passenger orders not during peak hours, and often to drivers don’t like it, which directly affects the quality of the service.
3. Courier as the face of your brand
If you only sell online, the only person from the brand that customers interact with live is the courier. The quality of this contact affects the overall product experience.
When organizing logistics within the company independently, it is necessary to work out the hiring issue in a quality manner. Be sure to conduct a personal interview with applicants, giving preference to candidates considering a position full-time.
The issue of further training of couriers in the aspects of working with different types of goods is also relevant: clothes need fitting, products need temperature control.
The high level of requirements for couriers will be justified not only due to the remuneration above the market average, but also due to the comfortable working environment. Here the quality department is indispensable, which will be in constant communication with couriers: it will answer the question promptly, understandably and amicably, quickly check the complaint and help with the analysis of difficult situations.
Offer the client a convenient system of how to tip the courier – for example, by connecting the online tip service. According to the SuperJob service, which surveyed about 3,000 respondents from different regions of Russia, couriers’ tips over the past year have grown by a third, 11% of buyers always leave a tip to the courier, and another third do it periodically.
Delivery organization checklist
- Look at your product as a service – in addition to delivery and payment, the client may need fitting, quick returns. One service – one click.
- Explore how your customer can receive delivery more conveniently. If this is door-to-door delivery, offer the buyer specific time intervals.
- Combine approaches – both purchasing point digital solutions for your own logistics, and connecting platforms with full outsourcing of delivery.
- Check if your logistics capacity is optimally loaded. Ideally, your courier’s route should be reconfigured in real time, similar to Uber.
- Think of the courier as the person who represents your brand. Increase recruitment and training requirements as needed.
Photo: Shyntartanya / Shutterstock
Source: RB.RU by rb.ru.
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