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Customers are expecting more

The 13-39 year old group have the highest delivery expectations of all consumers.

Retailers are suffering from customer delivery expectations. The customer wants their order completed the fastest and cheapest way. Studying the trends since 2010, we have found that those in the 13-39 year old group have the highest expectations of all. These tech savvy customers are constantly raising the bar for retailers. Year after year, we see that customers are demanding more conveniences, flexibility and service.

This has increased pressure on the retailer or 3PL to deliver merchandise with the lowest cost possible. Those dynamics are challenging for retailers. Shipment can’t be free and same day without the retailer suffering somehow. The cost of handling and transportation continues to increase while the customer expects to pay a minimal amount if anything for the increased level of service.

Many retailers have a new initiative; flexible fulfillment. As customers look for more ways to receive their merchandise, flexibility is key. Technology has provided new ways to deliver such as drones, Uber delivery, and Deliv. But, retailers have a ways to catch up and they continue to fall further behind.

In a study by IDC, we see that flexible fulfillment is expected even from a store purchase. The customer wants their order delivered anyhow at any time. Not surprising, customers want the ultimate convenience of home delivery. Click and Collect or a Manned Pick-up Point are where the retailer should focus as these areas offer flexible fulfillment with greater profitability since the store inventory is leveraged and requires no shipping.

Flexible fulfillment is expected

Retailers continue to expand their delivery order to meet expectations. The retail market has become a more challenging than ever and retailers look to compete and differentiate by offering expanded services. These services are expensive, but offer great rewards.

Consumers want easy pickup

Source: IBM Consumer Expectations Study 2016 and IBM 2016 Omni-channel Customer Experience Index Study

But, retailers continue to disappoint the customer. As an example, the IBM Consumer Expectations research indicated that 79% of the consumers want easy pickup of online purchases. While the IBM secret shopper Omni-channel Customer Experience research concluded that only 22% of the retailers can provide an easy pickup of purchases. Keep in mind many retailers have offered buy online and pickup for over 10 years!

Importance of delivery times

Source: IBM Consumer Expectations Study 2016

The big trend in fulfillment is same day delivery. Amazon started the same day delivery offer to their Prime members and retailers like Macy’s, Walmart, and Nordstrom have same day delivery. Even non- traditional retailers like Google and eBay are playing in this space. But, is same day delivery important to the customer?

IBM’s latest Customer Expectation research probed for consumers’ preferences for various delivery windows and found that consumers consider same-day and 1-2-hour delivery less important than next-day or 2-day delivery. Furthermore, the research indicates that the only group rating same day very important >36% was the 13-19 year old range.

Shipping and fulfillment strategies are great ways to add service for customers, but at what cost. Amazon had over $1 billion in net shipping losses in each of the last two quarters. Supply chain executive must meet the customer delivery expectations, but doing so profitably is an enormous challenge. In order to do so, they must have a strategy and the IBM research would help. We have the data as to what customers expect and are willing to pay for these delivery options. When can we meet with you to discuss these results?