Capgemini global study finds 3 in 4 customers would increase spend and be more willing to try new offerings in return for satisfactory online grocery deliveries. Yet just 1% of customers are willing to cover the full cost of delivery.
Paris, January 10, 2019 – A new study from the Capgemini Research Institute has highlighted that retailer investment in “last mile” delivery - the final leg of the online purchase journey before a product lands in the customer’s hands - is needed in order to uncover new revenue streams. The report found that 97% of organizations believe that current last-mile delivery models are not sustainable for full scale implementation across all locations, and that free shipping costs cannot be maintained unless delivery costs are reduced through automation.
“The Last-Mile Delivery Challenge: Giving retail and consumer product customers a superior delivery experience without impacting profitability,” study surveyed over 2,870 consumers in addition to 500 supply chain executives, and entrepreneurs and industry leaders.
The key insights from the report include:
By comparing and contrasting attitudes between retailers and customers, the report identified the following trends:
Organizations are currently charging customers only 80% of the overall delivery cost, and deliveries are now the most expensive part of the supply chain: The report found that 97% of organizations believe that current last-mile delivery models are not sustainable for full scale implementation across all locations. As such, they must be viewed as a key investment for 2019, with only 1% of customers willing to absorb the total cost incurred for last mile deliveries.
Despite low delivery costs being the top priority for half of all customers, only 30% of organizations considered it a top priority for themselves. Similarly, almost three quarters (73%) of consumers expressed that having convenient time slots available was more important than receiving deliveries quickly, yet only 19% 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% were willing to deliver products to neighbors in their vicinity, with 64% indifferent if a delivery were made by a retail store employee, private individuals, or third-party couriers. In fact, 79% 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:
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.”
A copy of the report can be downloaded here.
The Capgemini Research Institute conducted a primary consumer survey of 2,874 consumers across 5 countries in Europe and North America in October 2018. Executives from 500 grocery retailers and consumer product firms were also surveyed. Capgemini then conducted interviews with industry leaders and leading entrepreneurs, examining the impact of last mile delivery on cost, loyalty and profitability.
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About Capgemini Research Institute
The Capgemini Research Institute is Capgemini’s in-house think-tank on all things digital. The Institute publishes research on the impact of digital technologies on large traditional businesses. The team draws on the worldwide network of Capgemini experts and works closely with academic and technology partners. The Institute has dedicated research centers in India, the United Kingdom and the United States. It was recently ranked #1 in the world for the quality of its research by independent analysts.
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