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Data, online delivery and the search for continual e-commerce improvement
Retailers and carriers met for the annual Delivery Conference in February, discussing how to use tech and data to drive improvements in e-commerce
In the sessions at The Delivery Conference 2024 in London, there were echoes of the famous quote, commonly misattributed to Albert Einstein (first written evidence instead points to Narcotics Anonymous’ Basic text), that the definition of insanity is doing the same thing over and over again and expecting different results.
During a varied and insightful day of retailer and parcel carrier presentations on 6 February, one consistent theme was how the retail industry can better use data and technology to ensure it continually improves the delivery experience for consumers.
Instead of repeating poor home delivery experiences time and time again or continuing to see margins eroded due to rising levels of product returns by customers, for example, many retailers are looking at the capability of emerging technologies to take the delivery sector in a better direction.
Gary Page, general manager for customer delivery and collection operations at John Lewis Partnership, posed the question: “As we look to the future, how do we learn and learn from our mistakes?
“How do we use data to teach us when things have gone wrong, how do we react to that and learn and do something different to ensure the next day it doesn’t happen? Or maybe we get a good delivery response…how do we learn and apply those to the next experience?”
For many in the room, artificial intelligence (AI) is the great hope for supporting this learning process. In particular, at electric-powered delivery company Hived, there is work under way to use AI to help finetune several elements of its service.
Murvah Iqbal, founder and co-CEO of Hived, said: “Maybe you live in London in an apartment block, [finding] delivery addresses is quite difficult sometimes.
“So, one thing we’re doing is if we’re delivering to the same apartment block three times a week, but it’s not the same delivery driver […] we take the data from the quickest delivery driver and make sure the next delivery driver going to that apartment block has the right data to get there.”
Another key area for Hived, Iqbal added, is how AI can improve its routing intelligence: “That’s something we get so many data points from, minute by minute – how we can manipulate that data further to make better decision on the routing and then specifically drill down on that data on how we can give customers more proactive updates.”
As Page said, it is incumbent upon the wider industry to tackle this together, adding: “There’s a huge opportunity for us to learn from that information, and in being more collaborative in how we share it between retailers and the carriers to [get to] the level of 99.9% customer success.”
A report produced by consultancy and research house Retail Economics in association with the company running The Delivery Conference, Auctane, was launched to coincide with the event.
The Ecommerce delivery benchmark report 2024 questioned 8,000 consumers on their delivery preferences. Among the key findings were that 80% of shoppers would like a minimum of four updates per online order, while 38% would value daily updates that give them detailed information on their package’s location and progress.
However, many online merchants fail to meet this demand, with two-thirds of the businesses questioned as part of the research falling short of customer expectations by only providing an update upon order dispatch, if at all.
The report highlighted the ways retailers would most likely consider using artificial intelligence (AI) to support their delivery proposition. The most popular function identified was sending order and delivery updates (31%).
Managing returns and exchanges (28%), searching for product information before making a purchase (26%), and answering general questions about a retailer or brand’s offerings (21%) were the other delivery functions where retailers would most likely want to deploy AI, according to the research.
Sweating existing assets
The challenge of returns in retail and how technology can help solve it in detail has been approached before, and the topic of how to get to grips with this margin erosive element of e-commerce was once again in focus at The Delivery Conference.
H&M and Zara are among the retailers that have recently started charging consumers for online returns, in recognition of the additional operational costs reverse logistics places on their businesses.
Lucy Matchett, manager in the retail & leisure team at consultancy OC&C, said that she expects to see more retailers inserting triggers or evolving their online proposition to facilitate more economical returns over the next 24 months.
“It’s time to put a critical eye on that element of the value chain,” she said. “Seeing a larger number of [apparel retailers] introducing fees [for returns] felt like a watershed moment in the industry. Returns fees coming in challenges the view pure-plays set in place that you have to have universal returns.”
Richard Lim, founder of Retail Economics, said that “retailers’ margins are under so much pressure”, suggesting they using periods of free returns as “a new value proposition” as opposed to standard practice.
According to the report, however, consumers are increasingly realising they can’t just have everything for free. Some 67% of those surveyed said they expect free returns, which although still significant, was a 13% decrease in this sentiment year over year.
Instead, out-of-home (OOH) returns are gaining momentum – with 30% of consumers preferring in-store returns and 25% favouring pick-up/drop-off locations. Perhaps it is because of such mounting interest in using OOH in online shopping journeys that multichannel retailers are increasingly likely to leverage their stores as part of their wider e-commerce strategy.
For instance, Page said John Lewis recognises the economic benefits from a retailer perspective of customers picking online orders up from a store.
“It’s becoming increasingly more attractive now,” he explained. “If you go to our checkout, click & collect is the one that is set as our default and through doing that we’re able to drive more customers to the proposition.”
He added there has been “natural growth and uptake” in click & collect since the start of the year as consumers view it as convenient, but by specifically directing online shoppers that way there are several business benefits for the retailer.
Click & collect’s growth in 2024, he continued, is supported by consumers’ growing willingness to use lockers to pick up and return goods. Click & collect is around 15 years old, but “it continues to build out”, he said, as new tech as well as retailer margins dictate it does.
To quote Einstein, this time from a letter to his son in which he included a popular simile, “life is like riding a bicycle – to keep your balance, you must keep moving”, and The Delivery Conference showed retailers and carriers continue to evolve by embracing emerging tech and using online triggers, which are good for both customers and for business.
Read more about retail technology
- New tech from supply chain companies, M&A activity among logistics firms, and H&M’s new fees show product returns is the retail industry debate that keeps coming back.
- Retail-related studies into AI’s influence suggest its capabilities are welcome by the sector and shoppers alike – but tech leaders advise treading cautiously.
