How to lose customer loyalty before it’s even begun

FacebooktwitterredditpinterestlinkedinmailFacebooktwitterredditpinterestlinkedinmail

Retailers must not destroy customer loyalty by offering a poor fulfilment experience, says Tobias Buxhoidt, founder and CEO of parcelLab

Buxhoidt: retailers need to consider fulfilment an important influencer on consumers’ loyalty

Delivery is a key part of the whole customer experience and therefore an opportunity for retailers to build long-term relationships with customers.

The problem is, right now, this opportunity is being squandered because it is largely in the hands of a third party, the carrier. However tight the relationship may be between the retailer and their carriers, both parties have different priorities, most notably that the carrier runs primarily on volume and speed and, unlike the retailer, is not deeply or at all invested in customer relationships.

Many of the problems with last mile are well documented, particularly by the national media which likes to pick up on stories of deliveries that were damaged because the courier threw them over the fence or deemed to choose a shopper’s dustbin as a suitable ‘safe place’ to leave a parcel. The everyday world of the last mile is a lot less dramatic but it is still filled with micro moments of potential negativity that could add up to giving the customer an overall bad experience – where’s my order, what do I do now that I am not going to be in, how come my email says a delivery is coming but not what it is, why couldn’t I choose a courier I trust, why have I heard nothing since I got thanked for my order – and so on.

Problems with last mile are well documented

Sadly, just as consumers started to order more online as stores closed during the lockdowns and needed more help and guidance than ever, many retailers actually cut their delivery options rather than increase them. Our recent research of 150 of the UK’s top retailers in our latest report – Operations Experience 2021 – How Does UK Retail Measure Up? – we found that almost a fifth (19%) had to suspend delivery services due to the pandemic, with operational issues driven by social distancing requirements in warehouses slowing picking, staff shortages due to higher levels of absenteeism or not having enough flexibility within their own fulfilment or 3PL (third party logistics) suppliers to meet surges in demand. 

While this is understandable, it is not sustainable in the context of growing demand for e-commerce and the fact that consumers were already demanding better service before the pandemic. What we think will happen is, once things return to some kind of normal, many retailers will not be able to sustain the boost they got during the pandemic. As competition grows, consumers become even more adept at managing their online life and as the cost of doing business online goes ever upwards, retailers that do not offer a good fulfilment and returns experience, will lose returning and loyal customers.

There is good news, however. Many more UK retailers are offering consumers more choice in online fulfilment options. In our research, we can see that 66% now offer to ship to parcel shops or collection lockers, such as Doddle or Hermes Lockers. 57% offered three alternative delivery choices for shopper ordering online, while almost a quarter 23% offer four fulfilment formats.

More UK retailers are offering consumers more choice in online fulfilment options

However, the good start now needs some momentum, particularly after the pandemic. Only 4% of retailers were using collections or returns through their stores partners as an easy way to expand their networks. Offering this would of course have paid off during lockdowns as these partnerships are often with essential retailers, such as supermarket chains – think AO.com’s collaboration with Tesco and Sweaty Betty’s tie up with Waitrose. Going forward, it will be important to think about partnerships in the context of how different consumers’ shopping patterns will be even after all stores reopen. For instance, many have embraced local retailing and formed relationships with businesses that they will be keen to maintain, while other will change – if fewer people travel by train then it makes less sense to fulfil orders through stations or transport hubs.

It is also important to avoid making assumptions about how consumers will act once things return to some kind of normal. They of course have no choice but to manage all the elements of a bad fulfilment process themselves and it might seem that this is no big deal because they are stuck at home and have plenty of time on their hands. But who actually did any research into how annoyed consumers get when the fulfilment goes wrong or what impact this had in their choice to not use that retailer again?

Retailers need to consider fulfilment as an important influencer on consumers’ loyalty on top of the current measures of price, quality, style and fit. Both retailers and their fulfilment partners are generally doing a great job on their own account but there is still a lack of integration between their various systems, processes, communications and actions around the expectations and needs of the customer.