I’d like to talk to you about the C-word: Convenience. We hear a lot about convenience in the last-mile delivery sector. And in the retail sector too. There is a value in convenience – we all know this, right?
But convenience means different things to different people. If you live in Berlin, or Madrid, or New York you are surrounded by things that only exist to make your life more convenient. So much so, you may find you start to take it for granted.
If you live on the banks of a remote Scottish loch, your relationship with the C-word is going to be different to that of your urban counterparts.
It is reasonable to suggest, then that the value of convenience will be perceived differently, too.
Pay attention to the tension
There is a tension between convenience to the customer and cost to the merchant. Finding the balance between them is crucial. You only have to think briefly about free delivery as a concept to understand its long-term unsustainability. Every single point in the value chain represents a cost that has to be covered, after all.
The retail sector’s approach to last-mile delivery has always been more like a labourer swinging a sledgehammer than a surgeon wielding a scalpel. Maybe it’s time that changed. Maybe it’s time to create a convenience to cost continuum and help shoppers understand where they are on it.
For example, a shopper with an urgent need or facing limitations on their own ability to get to the store, is more likely to pay extra for delivery. Someone who is in no rush and who doesn’t mind waiting, is more likely to choose the lowest cost options.
We all know this. But historically, the range of options facing customers has been very limited. It tends to be a choice of three services: fast, nominated day, eventually. Add in a couple of click and collect options, and that’s as good as it gets.
Grey is the new black
In the process of writing this article, I searched for ‘black gloves’ on the site of a retailer I regularly use. I was given 112 choices teamed with five collection and delivery options ranging in price from free to about $15. Collect from the store tomorrow, no charge. Have it delivered to my home tomorrow, $15.
The difference in price reflects the difference in cost to the retailer. Again, we all know this.
But what if three people on the same street all bought something from the same retailer at around the same time? Wouldn’t that potentially change the cost equation to the retailer making it possible to offer customer-specific delivery options?
If I need my gloves so badly that I pay $15, why not bundle my neighbours’ deliveries with mine and offer them a premium delivery at a reduced price?
Instead of last-mile delivery options being choices between a handful of generalised offerings, it could be possible to offer a series of more nuanced options that speak more directly to each individual shopper. It’s more about shades of grey than stark black-and-white choices. The data needed to make that happen is already available. But it isn’t being used.
Using choice to bring about change
Let’s assume the scenario I’ve mentioned above becomes commonplace. Customer A pays for a specific delivery. Customer B lives near Customer A and is offered the same/similar delivery window. This enables the merchant to offer an additional, personalised delivery at no real marginal cost.
It could be offered as a no-cost option to the shopper. It could be offered as a discounted premium service. It’s efficient and at the same time it is an improved service to the customer that can help build loyalty.
It’s good for the business, the customer and the environment.
Let’s hang on to that last point now… good for the environment. Combined deliveries can mean vehicles are operating at capacity, so fewer of them are needed on the road – reduced congestion and carbon emissions, here we come!
The delivery price paid by the shopper needs to be based on the actual costs associated with their delivery. That’s hardly a revolutionary view. But how often is that actually the case? I suspect the answer is hardly ever. The true price of delivery would factor in the cost to the retailer, to the carrier and the environmental cost, too.
By scrutinising data on purchases and deliveries it becomes possible to offer more than just a high-end service at a bargain price. It becomes possible to encourage customers to opt for those delivery options that are kinder to the environment. That could be done via low-cost and high-cost levers – encouraging the choices we would like to see. Of course, that assumes that (in my scenario) the retailer and the shopper care enough about the environment to make changes to their behaviour.
After all, we can’t simply keep adding resources the last-mile in a linear fashion – vehicles, people, even drones. Ultimately, it isn’t sustainable.