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On Sunday, The Independent published an investigation into the great 'online delivery scandal' which looked at the 'hundreds of thousands' of people who received less than satisfactory service in the run up to Christmas. 

It was accompanied by an editorial which uses the findings to disparage online retail.

As an advocate of ecommerce, my gut reaction is to object to this, but it's clear that 'the last mile' is an issue for retailers, and for consumer confidence in online retail. 

So what can retailers do to combat these problems? I asked several ecommerce experts for their views...

Online delivery: the issues

The Independent uncovered some damning stats on failed deliveries, including: 

  • During December, at least 225,000 parcels each day failed to arrive when promised.
  • 60% of people shopping online last year had problems with delivery of their item.

An Econsultancy survey carried out last year, looking at Christmas 2011, found that a quarter of deliveries arrived late. However, retailers did have the excuse of bad weather conditions which played havoc with delivery schedules. 

This year, there was no weather-related excuse, but the extra demand appears to have caught out some retailers and couriers. 

In a survey of 1,000 UK consumers, carried out online, we found that 87% said their orders had arrived on time, which of course leaves an unhappy 10-13%

Did your Christmas gift orders arrive when retailers said they would? 

The issues are not just about late deliveries, there is also the quality of the service. For example, one well-known high street retailer left a package containing a laptop at my front door in full view of passers by. Not good at all. 

Now, as the Independent article points out, this may well be due to extra demand on courier services, and inexperienced temporary delivery drivers, but the blame is likely to be placed on the retailer in question. 

Our survey found that 59% said they would not shop with a retailer again if they failed to deliver on time. 

The consumer view

Delivery issues are made worse for customers by the sheer amount of time wasted, either waiting in for parcels that don't arrive, or waiting in call queues when trying to chase up deliveries. 

Pete Handley of the mediaflow had a poor experience with Yodel, which he details in this post:  

My views on this are all that of a consumer that got angry enough to write a blog post and talk about my issues a great deal on social media. I wasn’t entirely surprised to read the Independent story on Sunday.

The issues that caused me such ire occurred around the Easter Holidays last year with a particular courier. By all accounts they were transitioning between depots locally at the time, along with an extended break for the holidays themselves.

I wrote a couple of blog posts, contributed on forums, attempted to reach out to the courier and retailer on social media as well as making lots of phone calls and sending lots of emails in an effort to actually receive the parcel I’d ordered.

After weeks of chasing this, with no delivery attempt made at any time, it was sent back to the retailer who eventually refunded me (when they got the parcel back from the courier). My requests for an immediate refund were ignored. 

What do consumers want from delivery? 

  • Clear, accurate tracking online. This can save a lot of wasted time, and reduce pressure on call centres. 
  • Informative, proactive communication (text, phone or email updates). I was impressed by the SMS notifications used when I ordered gifts from Hobbs before Christmas - it sent me a one hour delivery slot, allowing me to change it if inconvenient. This is also offered by Kiddicare: 

  • Good levels of communication when problems (inevitably) occur. Even the best online retailers will experience delivery issues now and then. The key here is to communicate with customers - don't make them work too hard to find out about their delivery. 
  • Non premium rate phone numbers to call at the courier. Premium rate phone numbers for customer service are a big mistake. Having failed to deliver items, don't add insult to injury by making them pay for the call.  
  • Greater levels of support from the retailer. As a retailer, it's not enough to just palm delivery problems off onto the courier and have customers chasing their order up. Customers will hold the retailer, not the courier, responsible so be pro-active in following up problems. 

Pete Handley is well aware of the potential problems with couriers, but does think retailers can do better: 

I do blame retailers to a degree, particularly when they ignore widespread criticism of the same problematic couriers. They are however almost certainly locked in to contracts with these companies in an effort to secure the cheapest prices over a set period of time.

Retailers' problems with couriers 

You may have provided an excellent customer experience, and the customer may have been very happy with price and product, but the last mile is out of the control of most retailers. 

Of course, if you're Argos or Tesco with your own fleet of delivery vans, then you have more control here, but that's not realistic for most online retailers, and they have to rely on courier services and/or the Royal Mail. 

When these third parties become involved, there is much room for complications. According to Ecommerce consultant James Gurd, there are two models that can cause problems: 

1. Third party fulfilment

SLAs are agreed upfront but the resource is managed by the third party so they control the people who pick, pack etc. The only mechanism for improving quality is by enforcing SLAs or having punitive clauses for poor performance.

However, you can’t dictate who they employ, only influence by proactive management. Success is determined by the quality of contracts, how well you enforce them and how proactive you are at managing the service provider e.g. Director to Director relationship.

2. Drop ship

This can be a major headache for retailers as the quality and proficiency varies by supplier.

Some may have the tech in place to seamlessly integrate with your ecommerce platform to enable rapid, accurate order management. Others may be too small to have this investment in place and rely on manual processing, which increases the error count.

I’ve worked in several drop ship environment and can safely say that it’s imperfect – there will always be a small percentage of Suppliers whose attention to detail and quality is poor.

According to James: 

Of course, retailers can terminate agreements and focus on the suppliers who don’t let them down. The problem here is that if one of the unreliable suppliers is a category killer for you (i.e. Their products are essential to your competitive positioning), then you risk damaging your online brand proposition by shelving the range.

What do you do? Accept lower than desired delivery efficiency for the sake of range coverage, or sacrifice the range to remove the delivery headache. Either way, it can have a detrimental effect on the business.

The inside view

I asked one Ecommerce manager, who preferred to remain anonymous, about their experiences with couriers: 

We currently use Parcel Force through Despatch Bay and are very happy with their service. We do, of course, get the odd issue, but compared to other couriers we've used, we find both easy to deal with and largely reliable.

One issue we have faced is with rising costs due to the cherry-picking of parcels handled. Parcel Force do not like handling heavy, bulky items shipped in sacks, as they get snagged on conveyor belts and require manual labour to shunt around the depot.  

As a result, they've significantly increased the price we are asked to pay to ship these items, in an attempt to discourage us from sending them through their hub.

As a result of their price hike for these bulky sacks, we switched to Yodel. We'd used them in the past and had been very unhappy with the service, but seeing as Parcel Force wouldn't handle them at a realistic price, we were forced to send some parcels through Yodel.

This has been a painful experience for some of our customers, our warehouse operations staff and our call centre, who've had to deal with the fallout. 

Our customer services staff found Yodel a right pain to deal with, and we lost count of the amount of times their lorry failed to arrive, didn't have space for our pallets, or had a delivery driver who refused to load the goods onto the vehicle.

They've been so bad, that we've now decided it's better for our customers and our business for us to place the sacks into boxes (at considerably greater expense) just so we can get Parcel Force to handle them again.

This will cost us about an extra £30K per year, but hopefully it's going to prevent customers defecting because we're sending their order via Yodel. 

We do have issues with making claims against our couriers for items which are damaged in transit or lost. It feels like the process of making a claim has been made harder and harder, and despite providing the data requested to make a claim, they invariably get rejected, which leaves us to foot the bill.

What should retailers do to improve this? 

Clearly, while the retailer is forced to hand control of the last mile over to the courier or postman, there is a lot they can do to make sure standards are high. 

James Gurd has some suggestions: 

  • Be diligent when negotiating SLAs and contracts with third parties.
  • Vet the couriers that any third party fulfilment partner will be using 
  • Manage as many products as own stock as financially possible – you can then control the delivery promise.
  • Ensure the tech is in place to support end-to-end order management integration. Don’t process orders through the platform then hand them over to a supplier who has to manually export and process.
  • Enable real-time stock management and order status updates so accuracy is high.
  • Ensure there is a robust and detailed order management process flow that has been reviewed by all parties involved, tested rigorously and reviewed regularly.
  • Don’t make promises to customers that can’t be delivered. Better to say five working days and be 100% accurate, than claim three days and let many customers down.
  • Ensure there is a clear feedback loop for customers and that all data sources are compiled e.g. Web feedback, emails, Customer Service calls, social media comments etc.

Making things easier for customers

There is much that retailers can do while customers are placing an order which should make things easier further down the line for couriers and customers. 

Lovehoney's Ecommerce manager Matthew Curry has a few tips: 

Get accurate address information

Getting accurate address information seems obvious, but remember, the customer knows their address better than any address lookup system - remember to provide a method for manual entry of this, or overriding the information the address lookup system has returned.

Allow customers to select a safe place to leave parcels

If customers can select a safe place for the postman or courier to leave the parcel, or to select a trusted neighbour, this will save time for them, and customers won't need to head to delivery depots for collection.

Here, Naked Wines allows customers to add a message: 

Use tracked delivery

Royal Mail offers relatively cheap tracked services, so you can look into the viability of this as the "standard" delivery option. The more information you have about a delivery, the more information you can pass to the customer.

Manage expectations

The retailer should also manage expectations, charging for "standard delivery" seems suicidal to me, but lots of retailers still do it. Paying a fiver for delivery is still a lot of money, and so the customer will want a service that reflects that.

The base expectation when buying online is an order promptly dispatched, securely packaged, and delivered on time, so what does that extra fiver get them? If your "express" service is a tenner (!!) what does that get the customer? Your delivery costs are a way for you to compete, you shouldn't be using them to bump up profits. 

Despatch items promptly

How frustrating it is to pay (often exorbitant) costs for delivery, only for the order not to leave the warehouse until several days later. In an environment where customers are familiar with next day, and increasingly same day services, being sluggish picking the order is unacceptable.

On peak days, you should see it at Lovehoney where everyone heads down to the warehouse to help out - satisfying the customer is always priority over all other business functions.

Dealing with higher value orders

If it's a high-value order, then delivery should automatically be upgraded to a tracked, signed-for service.

We upgrade customers to a Tracked First Class service at a £30 spend (much less than our AOV), and a Signed-For Next Day at £75. It mitigates the risk of a resend, and delights the customer.

You get what you pay for

You do get what you pay for with delivery companies, not in the "last mile" part of the journey, but in the systems, integrations and tracking they have available.

However, these costs are not to be passed onto the customer, I like to think of them more as Cost of Retention.

Conclusion

Delivery will continue to be an issue, as the growth of ecommerce puts more pressure on couriers and mail services, while seasonal peaks mean that it's necessary to recruit untrained and perhaps less motivated staff. 

Retailers need to be vigilant in dealing with couriers, and put pressure on them to provide the best possible levels of service. It's their reputation at stake, as well as their customer retention rates. 

What is also vital is to provide the best possible customer service after customers have delivery problems. At this point, it's still possible for the customer's experience with your brand to finish on a positive note. 

Graham Charlton

Published 9 January, 2013 by Graham Charlton

Graham Charlton is the former Editor-in-Chief at Econsultancy. Follow him on Twitter or connect via Linkedin or Google+

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Comments (10)

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Ben

The 1 hour delivery slot is offered by DPD. They're the ones that send the texts and emails too, just branded as their client.

almost 4 years ago

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Leon Bailey-Green

Are delivery networks making enough profit to incentivise their drivers to provide a service that is more than satisfactory?

Customers react positively to free/cheap delivery options, so online marketers naturally use it for promotional purposes. But someone’s got to pay for it to get from A to B.

Retail margins are increasingly being squeezed so delivery networks/partners are nudged to share the hit in order to win business. Ultimately everyone in the chain suffers.

You can implement as many customer support and online communication policies as you like but in the end we get what we pay for.

almost 4 years ago

James Gurd

James Gurd, Owner at Digital JugglerSmall Business Multi-user

Hi Graham,

Thanks for the write-up.

Leon - that's a great question/dilemma. The problem for many smaller retailers is that the behemoths like Amazon have delivery nailed - they have set the bar. Their huge infrastructure and revenue base enables them to provide market leading delivery services & costs. Just look at Prime.

The problem? People start to expect this across the board.

However, I also know from playing around with delivery charges when I was Client side that for most customers, quality & reliability are more important that saving a couple of £. If you have a robust delivery service that works and can be trusted, then you can charge a fair price. The issue is when you charge delivery but frustrate the customer, especially if you are taking payment before dispatch which just isn't good practice.

Where a high delivery cost can hurt you is online channels like price comparison/shopping portals + for discount traffic from price sensitive shoppers (think vouchers code sites).

You have the option to tier delivery costs based on visitor source but that can be messy.

I still believe that a focus on quality and reliability, backed up with crystal clear communication as Graham points out, will actually help you acquire and retain customers far better than being the cheapest retailer for delivery cost.

What's your take?

Thanks
james

almost 4 years ago

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Peter Handley

Thanks for taking some of my words for the post Graham.

I've started to be left with the feeling that to a degree you get what you pay for. When you sign up to a free delivery option, should we be more realistic about the expectations that doing so sets? Should retailers stop offering free delivery and improve the service by imposing fees on customers? Should customers look to increase their budget when purchasing an item and spend more on “better” delivery options? Does spending more always mean problem free delivery?

I don't know the answers to these queries really... but I do know that I rarely take the "free" delivery option now since these issues, and that my expectations of the quality of that service increase.

This ties in to Leon's point though - at the cheapest end of the market are drivers incentivised to give good service? Or even adequate service? Or in my case, even bother to deliver the goods?

I suspect not in a lot of cases

almost 4 years ago

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Mark Bolitho, New Business Director - Ecommerce at more2

Nice post, Graham - hugely contentious issue.

Leon is spot on, of course, but I think if you ask the 87% if they'd be happy to pay a little more for delivery they'd say 'no' because they've not had an issue. The 13% most probably would be happy to pay a bit more to ensure no repeat of their problems.

I think Matt has framed this nicely; a good way to view a reasonable delivery cost is as a cost of retention so they're likely to return. I realise there are implications for margin, but the market mechanism will prevail. We move in to brand loyalty etc here, the implication being that those competing on price at the drop shipping, price comparison feed end of the market can struggle to add value right throughout the process, let alone delivery, and so are at a disadvantage.
Most customer reviews are canvassed very quickly, often before the customer has gained any utility from the product itself, and so they tend to focus on service and/or delivery.
I'd be interested to see more of a breakdown of the figures to see if there's a strong correlation between the 13% of unhappy customers and products/retailers/carriers.

James makes a good point about Amazon. I think a really important thing to note here is that they're very careful not to over-promise. One of their key KPI's is 'Delivery on promise', i.e. 'did we do what we said we were going to do?'

I had a bit of difficulty myself with Holland & Barrett recently, and that's the point - I see it as a problem with the retailer and not the carrier. It's hard work sometimes, no doubt, but ultimately the retailer or brand is responsible for engaging and managing the carrier. Retailers/brands must take responsibility - it's pretty futile to pass the buck.

almost 4 years ago

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B Pritchard

One of the things that drives me insane when ordering online is not knowing who will be delivering my order.

Many retailers offer you the option of having it delivered somewhere else - but what I want to know before deciding whether to get it sent to my work or home address is whether it will be sent by trusty Royal Mail or by courier.

If it's Royal Mail then I know they will keep it safe and that I can go an collect it on a Saturday or the late night that they open and I don't have to struggle home with a large or heavy package on public transport.

If it's a courier then I know it has to be the work address as there's no pick up point, they'll only deliver 9-5 Mon-Fri, that they are quite happy just to dump things I've paid for on the doorstep to be stolen.

But it is important for me to know who is delivering BEFORE I tell you where I want it delivered....

almost 4 years ago

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Dave Kelly-Hughes, Head of Marketing at Updata Infrastructure

I agree with B Pritchard - knowing who will handle delivery is also a key factor for me. I've switched away from a retailer after a poor experience with Yodel.

almost 4 years ago

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Stuart Miller, CEO at ByBox

Great article Graham. This is area in which I’m extremely passionate in – for full disclosure, I’m the founder of ByBox, a locker solutions business that is aiming to help consumers avoid exactly the issues Graham and the fellow contributors here are discussing.

Obviously I’m not here to disparage any delivery providers, but what Dave and B Pritchard are saying with regard to switching retailers due to a certain delivery partner is something we’re seeing more and more of. Retailers need to realise that a placed order does not signal the end of that customer’s experience with their brand – delivery by its nature is open to complications, and too often brands are allowing reputational damage to occur in the hands of a delivery provider.

almost 4 years ago

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Amelia

Hi,

I'm going to forward this article to the customer services team at Scan Computers because just before Christmas my partner and I ordered an expensive (for us) computer, printer and monitor from them.

Their delivery is appalling, absolutely dreadful, and they use their own 'courier' (I put that in inverted commas because I believe it's just a guy with a van) so they should have no excuses. What annoyed me most wasn't that the delivery was late (well, that is annoying, but given seasonality I kind of expected it) but that their customer services reps lied to me over the phone (then lied about lying) when I phoned up to find out if the order would be delivered on the day they said it would, because between my partner and I we only had one day left to take as holiday to receive the goods. I explained this to two different people at Scan and was told that the order would in 'high probability' arrive on the right day, etc etc. So, my partner took a day off work, and waited in all day, but nothing turned up... Then I was told we'd have to wait in on another day, which we couldn't do (no holiday left - which I'd warned them about before they decided not to deliver the goods on the day they said they would), so we ended up having to pay someone to wait in for the order! Of course, when the delivery guy finally turned up he decided to leave the wrong monitor, and failed to deliver the printer at all! My friend had no idea we hadn't ordered a Dell monitor, so couldn't correct the delivery man at that point. So, back to Scan - apparently my partner and I were being 'unreasonable' because we couldn't wait in for a further day for their delivery. In the end, we had to pay our friend a second time to wait in for the guy to pick up the wrong monitor and leave us with the right one and the printer.

As an apology, Scan Computers offered us vouchers to spend on their website! Errr... I would rather stick pins in my eyes than ever deal with them again! In the end, they did agree to give us £35 for our 'inconvenience'.

It is a real shame that the delivery and poor customer services gave us such a sour taste because the computer is excellent. Next time though, I'd prefer to pay a bit more for the product and delivery.

almost 4 years ago

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David

At Spiffing Hampers we have been using APC overnight and to be honest we have found them to be good and reliable. I think, however, that from a customer point of view the DPD text system is absolutely top notch.

almost 4 years ago

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