COVID Pulls the ‘All-Delivery’ Economy to the Present
The Impact on Retail & Customer Expectations
- Consumers already familiar with multi-channel and online-only shopping spent more money online during the US shutdown than they previously would have during the same period.
- According to a report, more than half of shoppers surveyed in the United States and France — and 62% in Russia — said they chose to purchase goods from one retailer over another specifically because of expanded delivery options, which included contactless delivery, in-store pickup, and a curbside experience.
- Nearly 60% of consumers said they would be more likely to shop on a site that made the return process easier. Moreover, nearly 70% of global shoppers looked at a retail website’s return policy before completing a purchase — up 200% from 2018.
The ritual of shopping is upside down. Before COVID-19, we had two options — the endless aisles and convenience of shopping online or the customer experience and curated simplicity of the in-store experience. The ritual of shopping maintained its appeal because there was a balance of value — a balance which no longer exists and may never return.
While consumers have been inching toward an e-commerce-first economy for some time, retailers have had to play a balancing act — both for their balance sheets and for the implied behaviors of customers (some seeking digital experiences, some seeking in-person, most seeking a hybrid.) This has changed dramatically and the consumers’ reliance on e-commerce has forced brands and retailers to leapfrog their roadmaps and the technology/services that power them. Strategies that were originally designed to be carried out over years have been forced to fit a 4-to-7-month timeline.
There is no doubt that a hybrid of digital and in-person shopping will continue and we believe that the digital shopping experience will borrow more and more from the physical shopping experience and vis-a-versa. With these two channels beginning to look and feel more similar, a core tenant (and expectation) for both will continue to be convenience. Whether consumers are buying online and shipping, buying online and picking up in-store, buying in-store and having products shipped, or some other hybrid, convenience — myriad options for consumers to pick and choose from — will stand as the connective expectation.
Throughout the history of disruptive innovation, some companies have thrived in extreme circumstances, thinking quickly and cleverly to adapt to a changing economy. And with the winners, there have also been losers — those ill-equipped to make the necessary changes for any number of structural, financial, organizational, or other issues.
In retail, the trickle ‘disruption’ was already a stream before COVID. It is now a waterfall. Of course, this ‘waterfall’ phenomenon is driven by a massive shift in demand. And, as stated earlier, there are always winners and losers. This pandemic is responsible for converting new customers at rates rarely seen, and it is compelling those comfortable with online shopping to spend more. A large segment of consumers who previously only shopped in-store have now turned to online shopping, not out of desire, but out of necessity. Once converted, they will remain digital customers, in some capacity, indefinitely. And with more time online, there will be more discovery, more advertising, more attention. When it comes to “LTV” rather than “CAC”, one of the more interesting statistics is as follows — consumers already familiar with multi-channel and online-only shopping spent more money online during the US shutdown than they previously would have during the same period.
When the dust settles, the common experience (and expectation) that both channels will share is convenience. Delivery is EVERYWHERE. Uber Eats, Amazon Prime, GrubHub, Doordash, Goldbelly, FreshDirect, and so many more. The on-demand, on-time, transparent delivery experience is here and here to stay. This is true of retail as it is of other conveniences.
In this article, we are setting out to connect the dots. To look at the role that changing demand, changing customer expectations, changing opportunities, and changing technology are playing to enable the ‘all-delivery’ economy — the on-time, on-demand, transparent acquisition of goods. There are so many details when it comes to logistics. Let’s pull back the curtain so you can better understand where the opportunities are, where the traps are, and what is happening now.
MORE DELIVERY OPTIONS IN THE NEW ‘DELIVERY-ONLY’ NORMAL
According to the latest Global eCommerce Consumer Research Report, more than half of shoppers surveyed in the United States and France — and a whopping 62% of consumers in Russia — said they chose to purchase goods from one retailer over another specifically because of expanded delivery options, which included contactless delivery, in-store pickup, and a curbside experience. In every case, consumers valued up-to-date delivery information, the ability to choose what was best for them, and the knowledge that the carrier and consumer would stay safe and healthy throughout the delivery process.
THE IMPORTANCE OF CONTACTLESS DELIVERY
While relaxed shutdowns have allowed stores to open with limitations, many locations are still closed, or at least not operating at full capacity. For those that are open, many are finding success through Pick Up/Drop Off (PUDO) and Buy Online Pick Up in Store (BOPIS) services. As the pandemic continues, customers will continue to value deliveries that minimize social interactions, including contactless delivery and curbside pickup.
REIMAGINING THE ROLE OF STORES
As contact-free shopping continues to be the consumer’s preference, retailers are reimagining the role of the store. Ship from Store is an omnichannel model that perfectly encapsulates the need to support warehouse logistics while providing consumers with delivery options. The model, adopted by retailers including Target and Walmart, offers guaranteed rapid delivery services that utilize in-store stock more efficiently. Additionally, the Ship from Store model allows for brick-and-mortar locations to continue to bring in a profit, even while closed to the public. By populating the distribution network and turning stores into mini-warehouses, retailers can increase the items that they ship, improve stock dispersion and availability, and provide a broader choice of delivery options to customers.
THE UNAVOIDABLE ISSUE OF RETURNS
Returning merchandise has become a critical component of the e-commerce experience as more and more consumers turn their homes into dressing rooms. In a recent report, nearly 60% of consumers said they would be more likely to shop on a site that made the return process easier. Moreover, nearly 70% of global shoppers looked at a retail website’s return policy before completing a purchase — up 200% from 2018 — and nearly half of respondents said that a site’s return policy had deterred them from making a purchase. In the same report, nearly 30% of global customers, and 62% of Chinese customers, said they preferred to mimic the in-store experience online by buying multiple items and expecting to make a return, and these responses were submitted pre-pandemic. While returns can be a hassle for retailers, they are a key driver of customer loyalty and can make-or-break a purchasing decision.
To keep up with increased returns retailers can invest in technology to help run a return experience that is as seamless as the delivery experience. This is especially important as the option to return items quickly in-store is no longer desirable, or even available, to many customers. Many retailers have adapted to free and seamless returns that it has become the standard, with customers valuing return experiences that allow them to return online in a few simple clicks, choose how they want to return their items (including methods that are environmentally and paper-less), track returns, and get refunds more quickly.
COMMUNICATION IS CRITICAL
In addition to expanded delivery options, consumers are also looking for communication and transparency around the deliveries, pre-and post-purchase. Three-quarters of global consumers want retailers to share delivery options on product pages, as well as throughout the product’s shopping journey. Nearly 70% of consumers said the ability to track delivery was one of their top three considerations when buying a product online. Customization of the tracking process could be an opportunity for brands to earn customer trust. Brands that can localize tracking, notifications, and returns, rather than relying on the parcel carrier, may appear more credible. Additionally, any delays or issues that are managed and resolved by the brands themselves also create opportunities for connecting with customers one-on-one.
WHAT DOES IT ALL MEAN?
Consumer expectations around the shopping experience are becoming ever more aligned with the ‘all-delivery’ economy. This push for convenience means the obvious — retailers need to meet the customer where they are with what they expect. Retail has been under significant pressure for the past decade and that is a positive. In the past few years, many retailers have retooled, reorganized, and prepared themselves to be more agile. And while you ‘can’t eat the elephant in one bite’ you can surely prioritize your investments based on where the consumer is, what the consumer expects, and what your capacity is given your constraints. We hope that this article serves to highlight where you can make your first investments and we would like to thank our partners at Metapack for helping to arm us with the critical data. If any of the above looks to be worth a conversation, we encourage you to reach out to them.
Metapack is the leading provider of ecommerce solutions from checkout through to delivery, and beyond. Many of the world’s largest and most successful retailers and brands rely on us to help them deliver effortless ecommerce experiences. Metapack is on a mission to help retailers and brands make online shopping simpler and more enjoyable. Their solutions integrate front-end promises with back-end practicalities, resulting in simple yet powerful experiences across the entire ecommerce fulfilment journey. More delivery options at checkout, more dependable delivery timeframes, more user-friendly tracking and even simpler returns options – all underpinned by the largest delivery library in the world with 400 global carriers and 4,900 delivery services.