While the chaos of supply chains has been tamed from its pandemic peak, new disruptions are being forecast and the holiday shopping season will only compound those issues.
Retailers need to make sure last-mile deliveries are satisfying customers and not hurting profits. Failed deliveries snowball into big expenses with refunded charges, reverse logistics, and re-delivery. The additional hidden, and perhaps most costly, burden is the reputational hit that comes with these inconveniences.
Let’s take a look at what customers want in last-mile deliveries, the expense of missing those expectations, and how to minimize that cost for your business.
Two years of pandemic-related disruptions and increased retail sales reset customers’ delivery expectations and reinforced that a smooth delivery process leads to the best experience possible.
Oracle’s 2021 retail trends report found that 74% of global consumers expect a one-to-five-day delivery window, and 80% are angry or annoyed if their order didn’t arrive when expected.
Delivery times aren’t just crucial for expectations—they also affect sales. Research from Shopify shows that free shipping is a significant or very significant influence for 75% of potential shoppers; fast shipping (60%) and flexible delivery (53%) are also top factors. Visibility into granular tracking information is a priority for 70% of shoppers, according to Oracle’s report.
Unfortunately, some deliveries fail if retailers don’t have the level of visibility they need and customers crave. According to a survey by Loqate, 8% of U.S. first-attempt deliveries fail, with an average cost of $17.20 per failure.
When you also account for the expense of a second delivery attempt, return shipping, and surging inventory levels, profit margins shrink at a rate your company likely can’t stomach on a large scale.
What’s more, that first delivery attempt is crucial to customer retention. An overwhelming 84% of shoppers are unlikely to return after a poor delivery experience, according to Convey. If your last-mile logistics partner routinely can’t get it right the first time, you may be losing revenue and customers.
There are a variety of reasons a failed delivery might occur. Loqate’s survey shows that 71% of businesses find inaccurate delivery addresses to be a primary cause. But many retailers struggle to have visibility into where their orders are at any given moment. Only 17% of retailers in Deloitte’s 2022 retail industry outlook survey believe that their transportation management system is in good shape.
The first step in fixing the problem of failed deliveries is visibility into the last mile. You and your customers need to know where orders are at any given time, and a centralized view of your supply chain data will cut down on the guesswork.
Having that data when you need it makes you more agile and allows you to make changes, whether that be re-routing an order or keeping a customer in the loop. According to Shopify, two-thirds of shoppers are generally aware that supply chain delays are likely to impact their orders. Passing that visibility onto customers can be key to retaining them, even if their order ends up delayed.
By having visibility into all your supply chain data, you can work to alleviate roadblocks like inaccurate addresses by validating addresses with third parties like the U.S. Postal Service before delivery.
You can further optimize last-mile delivery costs by collaborating with a partner that can reduce the friction in your supply chain. Maybe that means access to a fleet of vehicles that makes the most sense for your products, or finding the most efficient routes for your own internal fleet.
Whatever you’re looking for in that partner, interoperability with your enterprise resource planning (ERP) systems is paramount. That way, you have the visibility you need and can communicate with your most important stakeholders—your customers.