While consumer supply chains can be baroquely complex, for the last 10 years, their goals have been simple: speed and cost. Companies needed to be able to get their products into consumers’ hands as quickly and cheaply as possible.
Amazon, of course, was the big impetus for this. Consumers willingly signed up (and paid a modest fee) for its Prime service, which promised “free” two-day delivery. Once the rest of the ecommerce world caught up, the race was on for one-day and eventually same-day shipping. But today, companies are running into the dual constraints of physical possibility and customer satisfaction.
According to research organization IMRG, for example, it’s simply not possible for most retailers to do anything better than next-day delivery. Even Amazon seems to have given up on immediate fulfillment by laying off dozens of people working on its proposed drone delivery service.
What’s more, the average consumer seems ok with speed as it is. “It seems, in the delivery sector, at least, that we’ve reached our point of ‘fast enough,’” says Will Cunningham of IMRG. “Even without much knowledge of the inner-workings of logistics, shoppers understand the mechanics of ordering an item online, and have settled on next-day fulfillment as being perfectly adequate.”
So, if supply chains don’t need to get any faster, how can they continue to differentiate one company from another? A recent study by Convey of online shoppers’ attitudes towards Amazon reveals a clue. It found, perhaps unsurprisingly, that companies haven’t been wrong to focus on speed and cost. The top reason that people shop at Amazon is “fast, free shipping” at 73%. But this was followed not too distantly by “easy and convenient purchase” at 58%. People are clearly placing a higher value not just on when goods come, but how.
This comes into sharper relief when you look at the other side of the coin: inconvenience. A study by Smart Insights found that 97% of people have abandoned a purchase because of inconvenience. So, while convenience may not be top of mind when people are asked why they purchase from a company, its absence certainly is.
In other words, with the speed and cost boxes checked, a new battleground is opening up over convenience and experience. As consumers more finely slice their needs, they may want delivery on a particular day, at a particular hour, or to their cars at work.
Amazon, as usual, is leading the way with a huge push for its Amazon Day service, which consolidates all of a household’s weekly purchases into delivery on a single day. This can be a win-win for certain consumers. First, they know exactly when things are arriving, so they can be sure to be there and safeguard their deliveries. Second, it greatly reduces the carbon footprint of their deliveries. For environmentally conscious consumers, this takes a lot of the sting out of ordering online.
From a logistics standpoint, convenience and experience are all about flexible supply chains. Are you set up for click and collect? Can you do contactless delivery for food? Are you able to ship cold? Can you reach consumers with bulk products? Not only these but many other unpredictable considerations can come into play, and companies that deliver goods to consumers need to be able to adapt and adjust as new needs arise.
A further consideration is who exactly is doing the shipping. During the pandemic, the rush for speed and cost created a public relations problem for the industry. When workers faced the dangers of in-person employment, and some companies showed indifference, that didn’t sit well with consumers. As a result, supply chains need to become much more people-focused, and they certainly can without sacrificing profit. International shipper DHL, for example, has long had a reputation for treating its employees extremely well, to the point that it was ranked #4 in Fortune’s Best Places to Work in 2019.
In other words, a new frontier has opened in which companies need to offer more convenient delivery and a great experience to consumers and their employees alike. The good news is that with consumers largely satisfied with when things are delivered, supply chains can now focus on how they arrive, as well as the welfare of the people doing the hard work of getting them there.
