Delivery innovation – how can retailers steal a march on Amazon?

Prime Day is upon us: for 48 hours, shoppers worldwide will be flocking to Amazon and completing millions of orders

Amazon’s July bonanza is set to cause a “halo effect”, as it has done in previous years, boosting other retailer’s sales with its own. According to Adobe Analytics, this phenomenon started on Prime Day 2017, when big name retailers saw a 35% increase in sales while small retailers saw a growth of 17%. However, the yearly online shopping event will also place the delivery process in the spotlight, putting pressure on retailers, logistics partners and couriers to make sure customers receive their items in a timely manner.

When it comes to delivery, Amazon is a pioneer: enabling next-day, free and international shipping services, there are very few retailers who can match its capacity to fulfil orders and meet customer demand quickly. And this doesn’t stop the eCommerce giant from seeking to constantly innovate: only last week it announced a new programme with the UK Government to explore the steps needed to make the delivery of parcels by small drones a reality for customers.

With Amazon setting such high expectations, where does this leave emerging retailers? Are delivery drones and robots the only way to keep up? Or are there more savvy and achievable tactics that can help them succeed?

Free shipping – is it possible and how?

If online conversion rises as retailers eliminate barriers to sale, charging customers to ship their orders certainly adds a layer of friction to the buying journey. After all, the numbers don’t lie: 91% of consumers will abandon their cart if fast, free delivery isn’t offered. Shipping free of charge is easier said than done as, while it satisfies customers, it can greatly impact the bottom line. That’s why vendors should look into how they can implement this while maintaining their profit margins. For example, setting a minimum order value for free delivery can contribute to encouraging customers to buy more, thereby increasing revenue. Alternatively, offering free delivery can be a viable option for standard, as opposed to charging for expedited shipping.

A merchant’s relationship with carriers is also crucial to facilitating low cost or free delivery. While Amazon can leverage its high number of orders to negotiate prices, smaller retailers don’t necessarily have that option. With carriers increasing prices when delivering to residential areas or during seasonal peaks, navigating this minefield of additional charges and understanding how they can be avoided is crucial to containing fulfilment costs. Retailers should also avoid single-carrier shipping systems and consult different companies to find more favourable prices.

Same-day delivery – is it worth the effort?

One of the elements that helps Amazon stand out from the competition is its Prime membership one-day delivery service. In today’s fast-paced reality, customers are not always willing to wait

around for their orders. Consequently, retailers are increasing the speed and convenience of their shipping services and moving towards same-day to meet this need.

However, this requires impeccable coordination between several different touchpoints – warehouse, stores, drop-off locations – making it an extremely costly process that dramatically reduces profits.

Retailers who are leading the way with this service aren’t necessarily the biggest, proving that the right strategy can enable smaller businesses to experiment with innovation. For example, online supermarket Ocado focused its efforts on West London when trialling one-hour delivery. Whereas, French beauty retailer L’Occitane is simplifying the logistical aspect of same-day delivery by shipping from its stores.

That being said, no matter how you work out the exact logistics, same-day delivery remains a serious investment. Research shows that 86% of shoppers prefer free to fast delivery, yet retailers assume that 43% prefer the former and 57% the latter. Things like customer surveys and monitoring reviews can provide insight into what customers of certain brands actually want — it might be that same-day delivery doesn’t need to be a priority for all merchants.

Either way, transparency is everything

Whether they go for fast or free, clarity will eliminate disappointment at the checkout. When a retailer displays the estimated cost & date of delivery on each individual product page, it sets expectations early and reduces cart abandonment.

Good communication must also be maintained after the order has been processed. Order-tracking correspondence should be an open conversation between seller and buyer so that, if the shopper’s circumstances change, retailers can flexibly adapt time and place of delivery to accommodate. Merchants can integrate their order management system with a shipping tracking function and enable real-time notifications. This way, customers can be aware of their orders’ whereabouts at all times, without feeling the need to constantly contact the customer care team. If the shipping experience turns into a stressful process, the customer is likely to not shop with that brand again.

Delivery is now viewed as a revenue generator, key part of the customer experience and powerful marketing tool – as proved by Amazon. Retailers will succeed by taking inspiration from the best-in-class, but also figure out what works for them and their own customers specifically. By identifying the right shipping strategy, they are all set to deliver a positive experience that will keep their customers coming back.

About the Author

Brian Green, Head of Commerce Sales at Magento, an Adobe company. Successful Sales & Marketing Director in Enterprise Software currently driving the adoption of the market leading Digital Experience & eCommerce platform for building, delivering and optimising digital transformation.