Issue 1 2019

CEO MONTHLY / ISSUE 1 2019 19 Retailers must ‘go the extra mile’ to overcome inefficient and unprofitable delivery models considered it a top priority for themselves. Similarly, almost three quarters (73 percent) of consumers expressed that having convenient time slots available was more important than receiving deliveries quickly, yet only 19 percent of firms rate this ability as a priority. The report did, however, find that customers are open to experimenting with ‘crowdsourced’ style delivery options: for an incentive (the most popular being monetary), 55 percent were willing to deliver products to neighbors in their vicinity, with 64 percent indifferent if a delivery were made by a retail store employee, private individuals or third-party couriers. In fact, 79 percent of customers are willing to deliver these groceries at a price that is less than the current cost incurred by retailers to deliver it themselves. The report closes with the following recommendations for last-mile delivery success: • Optimize fulfillment locations: Increasing store- based deliveries by 50 percent could potentially lead profit margins to soar by as much as nine percent. Dark stores - retail outposts with store-like layouts intended only to fulfil online orders - can also process high delivery volumes and are 23 percent cheaper than conventional stores for same day deliveries. Additionally, if 30 percent of deliveries and returns are routed through parcel locker collection arrangements, organizations could expect an eight percent increase in profit margins. • Automate delivery options: The report finds that back- room automation could increase profits by up to 14 percent by reducing the cost of click-and-collect orders and deliveries from store. Furthermore, automation offers a range of benefits including reduction of fulfillment errors and managing returns (which forms 26 percent of the delivery cost). Tim Bridges, Global Sector Leader, Consumer Products, Retail and Distribution, at Capgemini said, “Today customers are neither satisfied with the quality of delivery services, nor willing to bear the total cost of last-mile delivery. Therefore, the dilemma facing retailers is to provide last-mile delivery services that customers value, without damaging their own profitability. If done right, and their last-mile experience can win over customer satisfaction, retailers stand to gain loyalty, increased purchase value and frequency, while mitigating profitability risk through automation and optimization of fulfillment locations.”