Commentary

OPINION: Last minute, last mile… the new face of peak for retailers

 

Retailers face three key challenges this peak – with delivery a key feature of all of them, says Patrick Eve, chief commercial officer, Gophr

Many retailers have held their breath in the run up to Black Friday 2021: would it be a rapid, early spending spree, or would it be a harbinger of slow and low Christmas sales. Early data suggests the former, with Barclaycard announcing that this Black Friday is ahead of 2020 by 23% and 2.4% ahead of 2019’s pre-pandemic level. The omens are good.

However, retailers still face a peak like no other; consumer spending may either continue to surge, or could now fall away, and issues with supply chains remain. Retailers face three essential challenges in the uncertain weeks ahead and into the early months of the new year: how to coax shoppers to spend; how to compete with Amazon for that spend and mitigating supply chain issues.

These three challenges all have a common thread, delivery. Adopting a new, more agile approach to delivery, right now, is going to be key to cracking these three problems, as well as creating the kind of ecommerce business that is fit for purpose in 2022.

Coaxing out consumer spending

While consumer spending this peak is likely to be spread across the six weeks from Black Friday to New Year, getting consumers to overcome their wariness and to splash out will depend more than ever on the service they get.

The key to ecommerce has always been to offer the flexibility and speed that is inherent in physical retail, but with endless choice and a better price. This is what has made Amazon so successful. Competing with this in such a tight market needs some creative thinking around delivery.

There are several factors shaping consumer shopping habits right now. Many are nervous of visiting physical locations – especially given the appearance of a new Covid variant and the accompanying mask mandate – so are looking to online for their shopping needs. Many are wary of spending until they are clear as to how much they have in their budget – there may be fewer Christmas bonuses, people are still worried about their futures – and there is the fear of missing out as supply chains look a little shaky in some sectors.

The upshot has been a sort of backlash against avid consumerism and many shoppers are looking at shopping locally, shopping more ethically and, of course, looking for the best price. Integrating rapid delivery here is now key. Shipping locally from store ticks both the local and the sustainability boxes, while it can also alleviate some of the worries of visiting stores.

From a retailer point of view, there is the worry that with these factors causing an unpredictable peak, they may either run out of stock or be left with overstock. It is vital that they too can have the means to entice more sales from their customer bases. Amazon does this very well, so retailers have to find ways to out-Amazon Amazon. One of its key attractions, apart from the vast array of goods, is that it has nailed delivery. Next day is now almost standard, same day on some goods in some locations is getting there. This has created an unprecedented ‘expectation creep’ among shoppers, who want this from all retailers they look to shop with. If they don’t get it, they will go elsewhere.

Last minute, last mile

Rethinking last mile and last minute deliveries holds the key. Research in October by Gophr shows that 22.5% of retailers are already looking at adding same day delivery, with 7.5% looking at doing it with a two-hour specified window. Many have taken inspiration from the hot food delivery industry and are looking at how to apply the same principles to delivering anything.

The DIY space is a good example of this. The boom in staycationing and the desire to make the home a haven and the home office ‘zoom ready’ is seeing a swing to buying tools, wallpaper and more. And many want this delivered toute suite – Saturday morning DIY preparation drives demand for getting a cordless drill later that afternoon!

Near instant delivery also helps retailers mitigate that loss of serendipitous shopping – fewer office workers out on their lunch break who wander into their favourite stores to browse and find that perfect gift. Being able to offer rapid delivery drives sales. The days of trying to inspire buyers with ‘just one left in stock’ are coming to an end, instead shoppers are swayed by seeing ‘order now and get this item before 10pm tonight’. This shift to using rapid delivery as a sales tool is going to be key not just this Christmas, but across 2022.

Winning review

Here reviews take on a new significance too. There is growing evidence that people are, as slightly more stressed shoppers, a little bit less brand loyal. They kind of have an idea of what they want to buy, but don’t necessarily go to the one retailer that they have used before. Increasingly, people are thinking I just want that certainty of the item arriving, not so much the brand arriving.

And having this certainty leads a lot of people to make shopping decisions based on Trustpilot reviews and non-reviews by customers. In fact, experience suggests that many reviews today are not necessarily about the quality of the product, but about the delivery experience – whether positive or negative. A negative review for a great product can be enough to scare a prospective shopper away. This should lead retailers to have as many irons in the fire on the delivery front as possible so that they can get it right first time.

Making it happen

So how does this all work in practice? The answer lies in using a range of carriers. Gophr’s research shows that 25% of retailers use in-house carrier fleets only, but of the rest, 40% use one or two carriers. Only 12.5% use five or more, but as well as economies of scale, this approach can also allow a retailer to create the range of delivery options – and back up plans, that will generate the experiences that drive positive reviews – the benchmark for standing out from the rest.

One of the biggest challenges for retailers is having a single view of stock – if you haven’t got that view and don’t know where items are, then it’s hard to be clever about Omnichannel.  One solution is to have a dedicated same day provider, who collects and performs multiple drops both from the warehouse and the store, and delivers direct-to-consumer.

The alternative is a more ad hoc approach, where the retailer recognises that they have the item in stock in a specific store. If they use the right same day carrier with its own front-end booking engine, the item can be collected and delivered efficiently and, most importantly, cost effectively. This is increasingly important with the growth in demand for ‘hands free shopping’ where customers want to buy in store and have items shipped directly to their home or as a gift to someone else.

By Patrick Eve, chief commercial officer, Gophr

Image credits:
  • Gophr