How Sustainability Concerns Could Slow Down Retail’s Last Mile

By January 14, 2020Power of the Profession
200113 January Cover

As consumers, we’ve all gotten used to faster and faster fulfillment of our purchases from online retailers and brands. Few things feel more convenient than ordering something online one evening and realizing you can receive it tomorrow or knowing you can order your groceries this morning and collect them from the store this afternoon without leaving your driver’s seat.

As shoppers, we never really asked for this sort of speed — it just became available and we started using it, and industry report after industry report tells us that we’re now demanding it more and more. Retailers and brands, meanwhile, conditioned to meet consumer needs at almost any cost, are busy building warehouses, transportation and technologies to meet our seemingly endless appetite for instant gratification.

However, somewhere in this increasingly fast-paced order fulfilment world that’s being created for us, lies a big disconnect between what consumers are perceived to want and what they really want. This disconnect has been around for several years now, but has neither been fully understood nor acted upon by most of the online companies that service us.

  • We don’t want to pay shipping charges. Industry reports consistently state that more than 70% of consumers take action to secure free shipping for their order, and younger generations are even more opposed to paying for shipping.
  • We don’t want everything delivered quickly. Groceries yes. Urgent items yes. Non-essential clothing and other purchases we can and do wait for.
  • We like the idea that fast shipping is available, but we’re selective in using it as sometimes fast fulfillment can be inconvenient when we wish to have more control over how, when and where we receive our online purchases.

Too many online companies feel that they have to compete with Amazon and other marketplaces on fulfillment speed without fully using their existing business advantages or properly understanding consumers’ motivations in order to compete in different ways.

Perhaps the biggest disconnect of all has been between the fulfilment models being pursued by online companies and the emergence of consumers’ desires to minimize the environmental impact of these very same models.

Statistics that canvas consumers’ opinions about the environmental impacts of the retail industry in general and last-mile delivery in particular have been pretty thin on the ground until very recently. New reports are frequently unable to show trends over the past few years because consumers weren’t being asked the right questions. Now, we’re starting to see insights into these feelings, and the numbers are pretty startling.

The UPS Pulse of the Online Shopper 2019 report canvassed the opinions of 18,000 consumers across 15 countries.1 It found that:

  • 51% of shoppers will consider cheaper but slower shipping alternatives, with 38% open to being incentivized to accept slower shipping lead times.
  • 35% of shoppers will consider receiving multiple orders in a single consolidated delivery.
  • 22% would be open to simply being asked if the order was required right away.

Additionally, Accenture’s 2019 Annual Holiday Local Shopping Survey surveyed 1,500 consumers across 17 major U.S. cities and drew similar conclusions to the UPS report in its findings.2 They include:

  • 50% of shoppers are willing to opt for “greener” delivery options; that is slower shipping lead times or in-store pickups in order to protect the environment, with 34% of shoppers unaware of the negative environmental impact of today’s shipping operations.
  • In order to reduce paper usage, 64% of shoppers are willing to receive nonwrapped gifts, with 50% being prepared to send nonwrapped gifts.
  • When considering from which retailer to purchase, 47% of respondents stated that it is extremely important or very important for retailers to demonstrate environmental awareness.

So, my recommendations for supply chain leaders responsible for order fulfilment in retail and brand companies are:

  • Ensure that their consumer order fulfillment operation meets the needs of their specific consumers rather than just following market fulfillment speed trends. Work collaboratively with customer service functions by canvassing consumers to clearly understand their fulfillment requirements.
  • Strengthen your brand and appeal to consumer environmental concerns by offering sustainability-related fulfillment services.
  • Develop a wider range of order fulfillment services by balancing the continual shortening of order fulfillment lead times with the introduction of longer than current lead times coupled with incentives for their uptake. This allows consumers to have orders fulfilled on their terms.

Tom Enright,
Research Vice President,
Gartner Supply Chain
[email protected]

 “UPS Pulse of the Online Shopper,” UPS.
 “Most U.S. Shoppers Expect to Spend as Much or More This Holiday Season Than Last Year, With Many Turning to Physical Stores for Inspiration, Accenture Survey Reveals,” Accenture.

 

Avatar

Author Guest

More posts by Guest