E-commerce logistics

Shipping and delivery services are the central factors for success in online retail and improve customer loyalty. With online retail’s dominance in the modern age, retailers need to be capable of delivering the customer’s desired product, when and where they want it using the preferred shipping method.

The retailers of today need to be flexible and adapt to customer wishes. In many cases, the availability of the desired product on the same day is even more important than same day delivery itself. This makes click and collect highly persuasive in that goods can be collected in the store, as well as in parcel shops and lockers.

Guaranteed product availability is a fundamental component of same day delivery

An interlinked, seamless supply chain is a fundamental aspect of successful same day delivery. To achieve this, retailers need to digitize and automate their processes, especially those of inventory management. Highly accurate processes, preferably in real time, form the basis for processing online orders as quickly as possible.

Quick, quicker, same day – soon to be commonplace?

More and more online shops are offering same day delivery, such as Zalando, Brack, Microspot and Steg. But overall, only nine percent of Swiss online shops offer this delivery option (Source: Swiss online retailer survey 2018). Among customers, 28 percent of younger people want this service, while only nine percent of older shoppers request it. (Source: E-commerce trend indicator 2018).

The service may be appealing to customers but the additional delivery costs can be an obstacle. Experience shows that buyers only use the service if it costs less than ten Swiss francs and the goods are needed more quickly for important reasons (replacement parts, medications, spur of the moment gifts).

Shipping and delivery play a crucial role in retaining customers. Customer satisfaction is high in general, but the demands are increasing. With super-fast delivery, retailers can cement the customer relationship in a similar way to a loyalty bonus. This also applies to free-of-charge same day delivery.

Same day and click & collect

Delivery is a decisive part of a customer’s shopping experience, which is why the last mile processes need to be exemplary. Quick, convenient and dependable delivery plus transparent rules for returns are key components in this. To hold onto customers, retailers and brand manufacturers need to couple their delivery strategies closely with customer needs.

• 62 percent of consumers want a choice of delivery options. (Source: E-commerce trend indicator 2018).
• 32 percent opt to use the retailer’s special collection points (PUDO – pick up, drop off ) or collect their purchases at a local shop. (Source: Metapack - State of E-Commerce 2018)

Collection at a branch may be of interest to the retailer provided that it also offers potential for cross- and upselling. (See Omnichannel retail done right)

How sustainable are the various delivery methods?

The diagram below compares the CO2 footprint for delivering a book (pink), a pair of shoes (red) and a coffee machine (purple). In the diagram, the last mile is covered by bicycle or vehicles powered by biogas or diesel. The amounts include all ground transport to the warehouse. Same day delivery has the least favourable CO2 total, while next day delivery ranks as best as it gives logistics teams more time, such as for optimizing routes, which is more sustainable.

The problem of sustainability inherent in same day delivery is that individual retailers do not have enough time to load their delivery vans to full capacity. But there are start-ups, such as Notime, a bicycle-based courier service, which promise emission-free express delivery.

A growing level of awareness in society: more and more consumers are striving for sustainable buying habits. Options such as Click and Collect, collection stations or collective deliveries enable online retailers to offer a convenient and socially responsible shopping experience.

Take-away

How (free) same day delivery can pay off for online shops

1. It increases the customer lifetime value

People who shop online do it for primarily one reason: convenience. For shipping, this means free delivery as quickly as possible. Sounds expensive but it does pay off. After all, it will increase the order volume received by the shop. Loyal customers feel confirmed in their choice; for new customers, free same day delivery is perhaps the most decisive selling point.

2. It pushes up the conversion rate

Sophisticated marketing strategies, promotional codes and similar are no longer sufficient to make a shop successful. Retailers who ship on the same day as the order reduce the risk of customers cancelling the purchase. Today, logistics is primarily a marketing point.

3. It increases the value of the shopping basket

Free same day delivery leads to customers spending more money overall. Customers value the benefits of a free product higher than a cheaper yet identical product. As a result, they are willing to spend more if they receive free delivery in return.