Commentary

Opinion: Why free delivery is a false economy

Great delivery has to be about more than just cost but should be appropriate to the needs of the customer and what’s being delivered, says Ian Bolton, director of logistics at DX.

In an increasingly competitive landscape, it can be tempting for logistics firms to focus exclusively on price when trying to win new business. However, this approach isn’t healthy for firms or their customers. It risks creating a culture where service comes second to price, at a time when the quality and convenience of service is more important to consumers than ever before.

Growing consumer demand

The boom in online shopping, with many retailers opting to have both a store and screen presence, has altered the way consumers shop and has pushed logistics firms to the forefront of the customer experience. While this poses an exceptional opportunity for logistics, firms will need to show that they can offer more than just low prices.

Today’s consumers have come to expect a variety of quick, easy and convenient delivery options, which means that retailers are under pressure to fulfill those requirements. Balancing the customer expectation and existing perception amongst retailers that consumers are unwilling to pay for premium services can be a recipe for disaster. This is also a threat with social media becoming a channel for them to air their frustrations.

As a result, some retailers will choose a cheaper service and simply hope that the customer can convince the driver to do more than the service allows. This outcome rarely materialises, though, which means that customers are left with a poor delivery experience that reflects badly on both the retailer and the delivery company.

It’s important that logistics firms recognise the challenge retail partners face in not wanting to lose a sale at the same time as not wanting to degrade their brand. Free and cheap delivery is nothing but a false economy; delivery options need to strike a happy balance between competitive price and real added value. As such, firms need to offer their customers a mix of suitable services – along with exceptional customer service – that balances the value of the experience with the cost of delivery.

Matching services to customers’ needs

As the e-commerce market grows, so too does the size and value of items sold online, which calls for a range of tailored delivery services. Providing nothing but economy options is a sure-fire way to fall short of customers’ expectations, which will do more harm than good in the long run.

For example, when an item is large or particularly valuable, a two-man delivery service may be needed. With this type of service, firms are normally trained to deliver items to a specific location within the house. Needless to say, no one likes to pay over the odds, so being competitive on price will always be an important factor for firms to consider. However, if the benefits of a premium option are made clear at the point of sale, consumers may decide that it’s worth paying a little extra.

To stay ahead of the game, logistics firms must deliver a truly premium service that enables the customer to take as little or as much of the delivery experience as they want – whether that’s delivery and assembly of a new bed into the bedroom or an item left on the doorstep. By giving customers control of the delivery right from ordering to opening their package, logistics firms will help retailers provide a service fit for their brand and customer experience.

The changing landscape

There has been a drastic change in the logistics industry in recent years. The traditional KPIs that were used to measure success are no longer enough, meaning that logistics firms are having to rethink what good looks like. For logistics firms to succeed, KPIs must now be intrinsically linked to the customer experience, with the aim of delighting the customer. This new approach can be measured in a number of ways including net promoter and customer satisfaction scores.

While consumers have come to expect shorter waiting times and greater flexibility, logistics firms must also contend with their social and environmental responsibility. Fortunately, technology now allows delivery vans to gather vast amounts of data, from speed and fuel consumption to braking and speed bumps. This information can be used to help logistics firms decipher the optimal routes so that drivers can meet their delivery slots while maximising their efficiency and ultimately reducing costs.

When it comes to price, the race to the bottom isn’t good for anyone – not for businesses, nor for customers. Instead, logistics firms must invest in technological advancement, training of delivery crews and great customer care. After all, customers depend upon a firm’s reliability, trust and service levels – not simply the cost.

Ian Bolton, director of logistics at DX.

Image credits: DX and Fotolia

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