On January 9, 2007, Steve Jobs walked on stage at MacWorld in San Francisco and said, “Every once in a while, a revolutionary product comes along that changes everything….” He was right, of course. The iPhone was the catalyst for a seismic shift in how we interact with the world. It became a remote control for our lives. The iPhone disrupted and shattered existing industries and spawned utterly new ones. It moved access to the internet from our desktops to our fingertips. Everything changed.
It’s happening again.
The new reality of ecommerce
We’re living through a period of profound disruption redefining the consumer economy. This change is permanent. Enabled by mobile technology and accelerated by the pandemic, consumers are moving online at a magnitude that would have seemed unimaginable just a few years ago. New direct-to-consumer digital retailers are popping up everywhere, entering retail markets and capturing market share from established brick-and-mortar sellers seemingly at will. Over half (55%) of all consumers now prefer to buy directly from brands rather than multi-brand retailers, and that number is significantly higher among younger shoppers.
Amazon has stayed ahead of the curve, growing its e-commerce platform almost exponentially – today, two of every five dollars spent online in the U.S. is spent on Amazon. The Amazon experience has raised consumer expectations about convenience, speed, reliability, and responsiveness. I want something today, order it on my phone, and have it tomorrow (or maybe today), with very few exceptions. And delivery is ‘free’ with an Amazon Prime membership. How do you compete with that?
And whether you like it or not, you are competing with Amazon. The convenience and reliability of the Amazon Prime Delivery is the benchmark all retailers are measured against. So what exactly does that mean?
Download 7 Must-Haves for Your Last Mile Delivery Carrier
Consumer expectations by the numbers
To start with, your customers want it fast. Gone are 4-5 days or longer delivery days. One in four customers won’t consider buying an item if it isn’t shipping in 2 days or less. Over 60% of consumers prioritize brands offering next-day delivery. And there is a growing preference for same-day delivery. They also want it free – over half of consumers will abandon a cart if presented with an extra shipping cost. But there is a caveat – two-thirds are willing to pay a small premium to get their package early.
Perhaps more than anything else, consumers value convenience. Three in four list convenience as their top priority, while 95% of shoppers list convenient delivery options as a significant factor in purchasing decisions.
Consumers need a good reason to be loyal, and they’re shopping for more brands today than in the past. Delivery is a crucial part of their brand loyalty, and 84% will walk away from your brand after a bad delivery experience. Three in five consumers are likely to remain loyal to retailers who are open and honest about delivery costs and timing.
A new playbook for last-mile delivery
It seems almost inevitable then that as e-commerce growth accelerates and consumer expectations grow, you’ll be competing for any advantage in the last-mile delivery experience. Long viewed as a back-end commodity, logistics will transition from cost center to opportunity, becoming a new source of competitiveness and a catalyst for brand growth. This will be especially true in densely packed urban markets, where most of your potential customers and key influencers reside.
Last-mile logistics will be critical to growing your brand, which presents a unique challenge. Logistics execs almost universally agree that the last-mile is the most inefficient part of the delivery chain, accounting for 53% of total shipping costs. In addition, it involves trade-offs that can sometimes sound like a lose-lose proposition – providing a higher level of service can break the budget, and containing costs can lead to unacceptable service levels.
Last-mile delivery done right becomes an enhancer for your brand. What does ‘done right’ entail?
- Localized inventory – micro hubs that push inventory out closer to the end delivery point, in essence shortening the last mile and supporting speed and sustainability
- Dynamic control – Operational flexibility to continually adapt to surges or dips in demand
- Completely transparency – 100% visibility for the shipper of the end-to-end process with no black holes, 100% visibility for the consumer of where their package is and when it will arrive
- End-to-end precision – data and algorithms that drive daily optimization of capacity and routing
- 24/7 availability – real-time response and recovery
Finding your north star–exceeding customer experiences
The reality is that there is often a disconnect between consumer expectations and the capabilities and services offered by last-mile delivery carriers. To thrive in the current disruption, your brand must exceed those consumer expectations. The ‘Amazon experience’ is table stakes for last-mile delivery.
Your brand needs a last-mile provider with the capabilities to match that experience in terms of on-time delivery, reliability, and visibility and then go a step beyond Amazon. The box has your name on it, and the goal of your last-mile carrier should be to make you look like an expert in logistics. That’s the true North Star for last-mile delivery, and when you achieve it, everything changes.
