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Consumer demands are changing — retailers and delivery partners need to listen

Pressure to improve service conflicts with efforts to reduce fulfillment costs, improve sustainability

As consumers become accustomed to same-day delivery, retailers and their delivery partners are facing increased pressure to improve the overall experience. (Photo: iStock)

Consumers are creatures of habit, but once they are exposed to innovation, it can quickly take hold. That is one of the takeaways from a Wednesday webinar hosted by delivery and fulfillment company Bringg.

“When it’s same-day delivery, they want it faster and faster. Amazon Prime showed us that when we could get something in two days, we wanted it. And now that we have same day, [consumers] want that. Once they are exposed to something, they want it [more],” said Erik Logerquist, strategy lead at Uber for Business (NYSE: UBER) and co-founder of Uber Direct, the company’s B2B delivery service.

Logerquist told Bringg’s Daniela Perlmutter, senior vice president of marketing, that consumers are learning they have control over how they shop, whether that is in-store, online, curbside pickup or any number of delivery options available today.

Bringg conducted a survey of consumers and brands that Perlmutter referenced throughout the webinar. The survey, the 2021 Bringg Barometer, found that consumers define “fast” delivery as same-day delivery. Additionally, 43.6% of consumers want free two-day shipping, and nine out of 10 said on-time delivery is important.

“It’s not just the fast and free of charges that we had, but [during] the pandemic … the reliability came into play and this had a huge impact on retailers and their expectations to deliver,” Perlmutter said.

Improving that last-mile experience represents a large opportunity to improve customer relations, Logerquist said, adding that control and transparency are two big trends brands and their delivery partners need to follow.

Uber Direct is integrated with Bringg’s platform but is an example of how retailers can, and should, utilize multiple third-party delivery partners that offer flexibility to meet spikes in demand, Logerquist said.

“Fulfill from store is becoming a more critical part of the value chain,” Logerquist said. “I also think retailers are realizing you need more than one partner in the space, particularly if you have [a lot of SKUs].”

Uber Direct, for instance, is unable to deliver larger items, so a partner like Bringg adds those capabilities, he added.

The Bringg survey identified challenges retailers face with their delivery partners, including lack of shipment visibility (39%), lack of brand control (32%) and overall cost (29%). Currently, retailers are prioritizing cost (36%) as the primary factor for which delivery partners they work.

The survey also found that 38% of retailers offered same-day delivery as of January, of which 27% added it after the onset of COVID-19. Two-thirds of retailers, though, expect to add it by the end of 2021. Increases in shipment volumes are creating a capacity challenge for 41% of retailers, and 40% said reducing fulfillment costs is a strong driver of sustainability initiatives.

Logerquist said data indicates consumers will pay more for sustainable shipping options.

“Surveys are showing that consumers are willing to pay a premium up to 35% more to make sure they get the eco-friendly delivery,” he said. “Other surveys show that consumers are willing to wait longer if it’s an eco-friendly delivery.”

Logerquist suggested that if retailers can improve their fulfillment operations, that can lower costs and drive carbon footprint reductions.

“The more retailers can streamline in-store operations and have pickup times, that’s a way to improve the batching rate,” he said. “If we have to pick up one package, that’s one cost. But if we can pick up nine or 10 packages, that [allows us to reduce cost and pass on some of that savings to retailers].”

Forty percent of retailers are working to incentivize eco-friendly fulfillment options, the survey found.

“The consumer behavior we see is changing and it is here to stay,” Perlmutter said. “Those changes we saw during the pandemic are here to stay and that brings challenges to retailers because the costs are high … and that means the cost of delivery can’t increase in a linear way.”

Logerquist advised retailers to ideate and work with delivery providers to build better solutions. There are a lot of unknowns, “but I think that mentality of ‘let’s go test and learn’ is really powerful as we adapt to this new world,” he said.

Click for more Modern Shipper articles by Brian Straight.

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Brian Straight

Brian Straight leads FreightWaves' Modern Shipper brand as Managing Editor. A journalism graduate of the University of Rhode Island, he has covered everything from a presidential election, to professional sports and Little League baseball, and for more than 10 years has covered trucking and logistics. Before joining FreightWaves, he was previously responsible for the editorial quality and production of Fleet Owner magazine and Brian lives in Connecticut with his wife and two kids and spends his time coaching his son’s baseball team, golfing with his daughter, and pursuing his never-ending quest to become a professional bowler. You can reach him at [email protected].