Everyone knew ecommerce was the future; we just didn’t realize that future would happen virtually overnight. Growth in ecommerce accelerated by 4-6 years in a matter of months, and what was once a small segment of store growth has become the primary source of expansion for nearly all major retailers
Walmart, for example, reported a near-doubling of ecommerce growth over the past quarter alone. This monumental shift is causing DTC brands to re-evaluate their fulfillment experience to make sure they get it right. At the heart of that process is understanding how to improve the status quo by putting the customer relationship front and center. The stakes are high, but those who get it right will see substantial growth in the new world of delivery-centric customer experiences.
It’s More Than Just the Fees
Fees are the first and most obvious downside of the status quo. Retailers on major third-party delivery platforms can pay upwards of 40% of their profit for on-demand deliveries, and that’s under the current unsustainable model in which fleets are losing money. The real price is far more than a 40% fee; it’s the loss of a brand’s relationship with its customer. That truth led Nike and Ikea to delist from Amazon’s marketplace and is leading countless other brands to shift to fulfillment options that allow for full visibility and adaptation to their customers’ needs.
Customer Experience: At the Core of Every Delivery
Instacart provides an excellent tech-driven fulfillment experience for customers, but the merchants don’t get to know their preferences or reach out and engage them with relevant offers. Most fleets that work with retailers have some version of this same issue. Thought they may know who the customer is when they hand the order off, it goes into a black hole. Brands don’t get a full picture of delivery performance, have limited ability to provide a branded experience matching customer needs and can’t resolve issues in real time.
Speed and Reliability Determine DTC Success
Last year, a major survey found that 62% of U.S. ecommerce shoppers define a positive experience with a brand based on fast shipping speed, with over half saying an easy delivery process and simple returns are crucial considerations. That means any shift to DTC cannot trade speed for ownership, and will only work if it’s tech-driven; otherwise, simplicity and easy returns are virtually impossible. The challenge is that most retailers are not tech companies and don’t have the time nor the deep pockets necessary to provide that type of experience.
What Does a Viable Solution Look Like?
First and foremost, solutions need to empower brands to enjoy the benefits of tech and data in the last mile. This can include resolving customer issues with direct visibility, plotting the most efficient routes in real time or using features like live tracking and alerts. Second, any solution should include a real estate component. That can be accomplished by placing inventory in hubs closer to the customer to save time, turning on ship from store, BOPIS or curbside pickup or some combination of all. Lastly, a fully adaptable customer experience – handling specific delivery requests, adjusting orders in real time and offering bespoke options like white-glove assembly – are crucial to a winning formula.
This massive disruption upending the retail space presents a monumental challenge to retailers, many of whom are ill-equipped because delivery is costing them too much or are unable to meet customer expectations. However, it’s also a defining moment for early adopters to win over customers, build brand loyalty and future proof for the age of delivery. When brands can stand on their own two feet, it means a more competitive environment that’s better for the retail industry and customers alike.
Asaf Hachmon is CEO and Co-Founder of Bond