Comment: Tackling the delivery challenge

Currently, there are few retailers that have fine-tuned stock visibility and have order management systems in place to fulfill online orders from a store location. Those that do can speed up in-store collections and home delivery times.

From our study of delivery performance of online orders placed with 54 retailers in the UK on Black Friday and Cyber Monday 2016, we discovered collection from store was almost twice as speedy as home delivery. The average time for standard delivery was 3.8 days, compared to 2.2 days for click & collect, which means customers saved on average 1.6 days per order by selecting this option.

Along with speed of delivery, retailers were also measured on order accuracy and delivery costs. Argos and Uniqlo were the fastest retailers to deliver for their customers, with Marks & Spencer a close third for both delivery and click & collect services. Argos was first for speed, delivering for customers the same day orders were placed, as well as providing a same-day click & collect service. Both Uniqlo and Marks & Spencer were also able to offer next-day collection in store.

Half of the retailers surveyed offering click & collect promised it would be in store within one day, almost three days quicker than their indicated estimate for home delivery. However, retailers are recognising customers would prefer a guarantee that their orders will be delivered on time, even if that means having to wait a little longer.

Overall, retailers have improved their actual delivery times over the past year by 10%: orders took an average of 5.3 days in 2016, compared to 5.9 days in 2015. The promised standard delivery times were also reduced from 6.3 days to 6.1 days. Fashion goods took almost a day longer to be delivered than general merchandise items (3.8 days compared with 3 days), while the latter took almost half a day longer with the click and collect option (2.5 days compared with 2 days).

The overall improvement is despite the fact that retailers, who promised to deliver goods in three or fewer days in 2015, were actually more cautious in 2016 and extended their lead time by an average of 1.5 days as a result.

Customer delivery expectations, however, vary considerably depending on the demographic – another reason why retailers are investing in getting to know their customers better so they can deliver against expectations – not just in fulfilling their online orders, but in all service areas.

According to recent Accenture research, 42% of UK consumers under the age of 37 say same-day or next-day delivery is very important to them. Speed of delivery is much more important to Generation Z shoppers (18-20 year-olds) than Millennials (21-37 year-olds). The study suggests 59% of Generation Z shoppers believe faster delivery is important, 20% want same-day, and 27% want next-day delivery. Only 48% of older Millennials crave faster delivery and 31% are content with next-day delivery.

To meet ever changing consumer expectations, retailers need to ensure they are operationally robust to fulfil customer orders and deliveries around hugely emotive times of year, such as Black Friday and Christmas, if they want to build lasting loyalty. Being nothing less than a well-oiled machine at peak times of the year is simply not an option.

Siobhan Gehin, is MD at Kurt Salmon, part of Accenture Strategy

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