Analysis

Delivery’s reputation problem – what can be done?

A recent Capgemini report offered empirical support for something that crops up regularly at the anecdotal level: delivery companies are not hugely popular.

A net promoter score (NPS) is based on how people respond when asked how likely they would be to recommend the company, product or service to a friend or colleague. Detractors, who give a negative score, are then subtracted from promoters, who have given a positive score. The creators of the metric claim it is correlated with revenue growth.

Capgemini found through a survey of 2870 consumers across the UK, France, the Netherlands, Germany and the US that the average NPS was -7. In France, Germany and the Netherlands the NPS figures were -29, -13 and -13 respectively. In the US, delivery companies did slightly better with a +9 NPS, while in the UK it was exactly neutral at 0.

As mentioned above, this is supported through anecdotal evidence: for example, the regular news articles on delivery drivers from major companies that throw parcels over fences or even reviews on comparison sites.

These scores look particular poor compared to other industries. Retail as a whole has a positive net promoter score of +54, for example, according to CustomerGauge’s 2018 NPS & CX Benchmarks Report, which looked at a number of industries across the world. Telecoms, the worst performer on that list, came in at +24.

So what is the remedy? With the caveat that other surveys may produce different grievances, here are the reasons that the respondents gave for their poor perception.

 

The complaints

Price is too high – 59% of respondents

It may seem galling that price was the biggest criticism, especially when so many retailers are offering free delivery. Even more galling might be the fact that the survey found 99% of consumers were unwilling to cover the full cost of delivery in the first place.

Lack of same-day delivery – 47% of respondents

Amazon has set the bar high for delivery with its Prime service – in some cities the offer extends to delivery within one hour for a fee or within two hours for free (subject to an order of a certain size). In particular sectors such as fashion, consumers are getting used to being able to leave it to the last minute to order an outfit.

Late deliveries – 45% of respondents

This is possibly the least surprising entrant on the list. Customers make choices based on what is available and expect the basic promise to be fulfilled.

 

The wider picture

Simon Mardle, principal of retail supply chain at Capgemini, tells eDelivery that consumers are “becoming increasingly disillusioned with delivery services, tired of delivery costs, lack of same-day delivery options and late deliveries.”

Unfortunately, he cautioned that there is “no one-size-fits-all solution”. The combination of automated product handling and order orchestration was one effective area.

In the longer term, he said innovative solutions such as the gig economy, crowdsourcing and delivering to the car boot could help.

Stuart Higgins, former head of logistics at Halfords and now partner at BearingPoint, tells eDelivery that retailers had created a “perfect storm” in the last mile, with consumer demands leading to the falling NPS.

As he points out, the cost of home delivery is going up. Paying for a courier for the last mile would always be more expensive than selling in a store, but the shorter lead times mean additional processing costs.

He says that pricing for home delivery has been in a “race to the bottom”. Accordingly, some retailers are managing fulfilment costs back to a reasonable level, he says, relying on other methods to retain loyalty.

“Others are pushing back on the market impetus for speed by recognising that it is simply not something that it is important for their particular customers and therefore premium lead time home delivery can be costed to break even, not at a price to entice the customer to use it,” he says.

Higgins adds the important reminder – retailers must keep an eye on their profitability throughout all of this.

 

Some solutions that retailers are using now

Automation: Automating processes, either through software or hardware, provides a way to cut costs and processing times.

Increasing choice: By offering options such as click and collect, retailers can avoid some of the pressures of the last mile by delivering to store.

Investing in customer service: If your delivery service does fall short of expectations, helping them or resolving their complaints through a contact centre may be the difference between a mollified customer and a one-star online review.

Parcel tracking: Providing the customer with some visibility over where their parcel is can help them plan their movements and avoid missing a delivery. It may also stop late delivery from being a complete shock.

Plan for peak: Peak is not only the busiest time of year but also one where consumers will be most demanding. Ensure that you have the capacity to scale up your logistics operations rapidly during the ever-growing peak period.

 

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