If there is one thing we can all agree on, it is the fact that 2020, and the pandemic, transformed everything, from industries to people’s lives. In retrospect, retail has undergone more change over the past couple of years than in the earlier 50. The pace of change has been accelerated due to the large-scale switch to digital, demand for contactless deliveries, changes in consumption patterns, omnichannel routes of engagement, and rising customer expectations around speed and convenience.
Widespread deliveries became popular due to the pandemic, and now people are unwilling to give up on the huge convenience, time-saving, and cost advantages offered by fast home deliveries. “The way forward for retail will be a blend of brick-and-mortar stores with online selling platforms, with both likely to continue to grow in markets like India,” says a Deloitte report, ‘ReWriting the Rules of New Retail’.
As per a McKinsey report, when delivery times are too long, almost half of omnichannel consumers will shop elsewhere. The race to shorten click-to-customer cycle time is, thus, one of the biggest differentiators in the future of omnichannel supply chains. Given the rising costs of omnichannel order fulfillment, retailers are faced with tough challenges as they work toward improving delivery speeds while maintaining profitability. Considering the need to build speedy omnichannel deliveries without any compromise on the quality of products or services, the infrastructure and costs of such operations can prove a nightmare for retailers.
From the customer's perspective, online and offline channels are just two sides of the same coin, and they expect seamless, glitch-free, and faster deliveries. Retailers also realize that speed matters. Biggies like Amazon have changed the convenience game by offering free, reliable, fast, and quality deliveries, setting very high benchmarks in the industry. Needless to say, the bar continues to rise for retail and direct-to-consumer brands, and consumers are unlikely to cough up more money for services they have now come to expect.
With delivery times shortening, supply chain and logistics become increasingly important. Fulfillment operations need time to pick and pack deliveries, and these processes may take four to eight hours, though the better equipped retail operators can fulfill orders within two hours of customer purchase. Once a package is in the parcel network, doorstep delivery can take an additional day or more. Delivering within a day or two of purchase is, thus, fraught with operational, execution, staff, and cost challenges. In addition, omnichannel retail involves inventory accuracy and SKU complexity. For safe and secure parcel deliveries, trusted regional partners and gig services come into play. Ensuring timely returns is an additional task, with its own set of problems: older returned products must be marked down and may sell for less for far lesser than the original price.
Nowhere in the world was retail designed with fulfillment in mind, nor are the stores necessarily staffed or equipped with the technology to do so at scale and with utmost reliability, while offering assurance of zero wear and tear while delivering. During peak times, as in during the pandemic lockdowns, it’s been hard for most stores to ensure accurate and timely picks - all of which are important to gain and hold on to loyal customers. Many retailers are now offering options of buying online and picking up in-store or curbside pickups. Therefore, the retailer must be prepared to serve such diverse requirements - being available online, offline, for store pickups, at the curbside, or even home delivery.
Solving the speed dilemma is, thus, one of the greatest challenges for retailers. Understanding customer needs, prioritizing goods depending on customer preferences or kind of orders (groceries, for instance, need the fastest deliveries), working on expansion networks and increasing productivity with analytics and automation are some ways to overcome the speed challenge.
It is also important to gather information as to where speed matters. Consumers living in metros are likely to expect faster delivery than those in Tier II or Tier III cities. Speed expectations change with consumers’ age, location, economic disposition, willingness to pay for speed, type of purchase, and so on. Geography, past behavior, and demographics have a strong bearing too. While perishables have to reach faster, apparel can wait for a day or so, and the time for dropping bulk items like furniture or electronics needs to be coordinated with customers. Since the delivery staff is dealing with customers directly, they need to be trained for such tasks so as not to lose customers due to rude or inappropriate behavior.
Network expansion needs a holistic view to ensure costs don’t rise up due to delivery logistics.
Keeping up with the scale of biggies like Amazon and Walmart distribution networks is not advisable for all retailers. Dedicated fulfillment locations, near retail networks, help in reducing substantial costs of last-mile delivery by up to 20 percent. Adopting digitization in the entire supply chain from sourcing to store to the warehouse will help as will centralize the information online on the cloud to run sophisticated fulfillment algorithms. Analytics can help retailers test, learn, and adapt more sophisticated omnichannel inventory strategies.
With more and more people becoming conscious of the carbon footprint of the choices they make, retailers who choose sustainable packing material and eco-friendly deliveries (like EVs or cycles) will widen their appeal. While there are certainly real costs associated with enabling faster deliveries, the costs can be managed with a combination of strategies like network expansion, digital capabilities, and partnerships. The customer is king and must be satisfied. The onus is now on retailers to fully incorporate the trend of fast, omnichannel deliveries.