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The Final Mile

The Final Mile

The Final Mile

There will always be a place for free delivery but the final mile looks set to be the focus for

innovation in 2014. Emma Herrod reports.

Peak volumes for the delivery industry over Christmas 2013 were about 20% higher than 2012, estimates MetaPack, with UK e-retailers dispatching just short of 800 million parcels during the whole year. This gives a growth figure for the level of parcels delivered throughout 2013 of 12%. Hermes had its busiest peak period delivering 21 million parcels with 98% of its standard service parcels delivered at the first attempt.

CollectPlus reports that its last Christmas parcel collection was made at 23:59 on Tuesday 24 December and the first return was recorded just one hour later at 01:12 on Christmas Day. With IMRG forecasting that the online retail market will grow by 17% in 2014 there’s going to be no letup in the volume of parcels dispatched and delivered. But what do consumers think of the delivery options they’re offered?

Andrew Starkey, Head of e-Logistics at IMRG, says the additional cost of home delivery has deterred some shoppers from purchasing. The association’s 2014 UK Consumer Home Delivery Survey found that 46% of shoppers questioned had abandoned their basket at checkout because of delivery concerns. Although retailers are thought to have lost £6bn in 2013 as a result of abandoned baskets, it is a trend that’s on the decline. Putting the delivery messaging earlier in the purchasing process is one way to cut the number of abandoned baskets. The 2014 Micros Multi-channel Retail Delivery Report found that just under 60% of the retailers it investigated now show the delivery charge on product pages. Also offering customers choice alongside a free delivery service enables them to make informed decisions.

“Pre-delivery data is increasingly important,” says Starkey, since about 50% of consumers look for deliver information before they start shopping and more than 80% want progress updates once they’ve purchased. “All progress update options are considered important, but the main requirements are advice the day before delivery and a time slot estimate on the morning of delivery,” he says. Consumers’ preferred communication channels are SMS (45%) or email (44%). “Having to refer to the retailer’s or carrier’s website will no longer meet the need,” he adds. Micros found that 18% of retailers sent a text before delivery, up from 15% last year.

Most allowed customers to rearrange the delivery day by replying to the text, and most gave access to carrier tracking The IMRG shoppers’ survey also found that the vast majority still have their online orders delivered to their homes, and click and collect is preferred to having a parcel left with a neighbour or delivered to work. The decision to collect orders in store is primarily cost driven since it is generally free, but the trip can also be conveniently combined with other activities such as the school run, other shopping or appointments.

When choosing a third party click and collect location, 76% of shoppers surveyed said they would expect no delivery charge with 43% prepared to travel up to 5 miles and 37% only willing to go 1 mile for their order. Cost, therefore, is still a big influence on delivery preference. Free delivery as standard or once a minimum spend has been reached is becoming the norm across the industry: 71% of retailers now offer it compared with 63% last year, according to Micros.

“A form of free delivery will always be part of the retailer’s arsenal,” believes Neil Ashworth, CEO, CollectPlus, and it is these economy services that are currently expanding. But he warns that it’s unsustainable to expect high levels of accuracy at the current cost level.


The number of delivery choices has been growing: 72% of retailers now offer next-day delivery, up from 68% in 2013, according to Micros . Some 97% of retailers will deliver to a location other than the billing address, 44% offer click and collect and just 8% offer reserve and collect in store.

Deadlines are also getting later with 18% of retailers able to accept orders after 6pm. Fashion retailer Next accepts them up to 10pm and will deliver free to store for collection after midday. Its next-day home delivery service costs £3.99. It also offers ‘send to a friend or neighbour’, evening and Sunday delivery.

In February, Hermes became the first consumer delivery company to offer its retail customers a 7-day service when it started delivering on a Sunday. The Sunday service will initially be available as a next-day service, with customers able to order all day Saturday for a Sunday delivery and will be fully tracked. “Retailers are continuing to listen to customer requests and suggestions and adapting their business structures across the value chain as a result,” says Pat Phelan, VP of Client Services, EMEA, at Bazaarvoice.

“Amazon has begun to trial Sunday deliveries to Amazon Prime members. This is has the potential to permanently change the speed at which customers expect to receive their goods from digital retailers. There are clear similarities between this and Sunday opening hours which only occurred in the UK in the 1990s. This change has happened as a result of the digital revolution and is an obvious response to contemporary customer demand. We will continue to see similar adaptations being made over the coming year.”

James Hardy, Head of Europe at, agrees that a growing number of retailers are likely to try and satisfy shoppers’ desire for immediacy by offering next- or same-day delivery. He advises retailers to “get ahead of the curve by improving your delivery times and setting the standard in consumers receiving goods ordered online”.

For the past year, supermarket chains have been experimenting with a variety of delivery options. Trials have included drive-thru, lockers, pick up from service stations and delivery to park and rides.

Since the end of November, Asda shoppers in London have been able to order their groceries online before noon and have them delivered to their car at a London Underground station car park after 4pm the same day. Tesco and Waitrose are following suit, while InPost is installing its own lockers at three stations.

According to Graeme Craig, Director of Commercial Development at Transport for London (TfL), the Asda pilot had been very successful and new partnerships with other retailers are on the cards. The income from this retail linkup is expected to generate £3.5bn for TfL in coming years.

Asda says the trial is generating interest which is being converted into orders. Kieran Shanahan, the retailer’ Multichannel Operations Director, is impressed by its click and collect trials, particularly the ones at service stations, and how the same-day cut-off options have been working. “We didn’t expect them to do as well as they have,” he says. “Reading Business Park has done really well.” The final mile looks set to be the innovation zone in 2014 a retailers and the delivery industry continue to provide new ways of getting orders to where customers want them, at the right time and at the right price. “We’ve already seen Amazon talking about futuristic models such as their drones and possible ‘anticipatory delivery’. Even for retailers with their feet on the ground, options like the collection points at London Underground stations for online Asda shoppers were met with a positive reaction from both the industry and shoppers,” says Leon Brits, Principal Consultant at digital commerce solutions company Tryzens.

“Micros’ findings reveal that retailers are goin the extra mile to offer convenience and choice to consumers in how they get their hands on their online purchases. From the retailers’ standpoint this raises an interesting question: how to offer this choice without eating into already-squeezed profi t margins.” Arne Strauss, Assistant Professor of Operational Research at Warwick Business School, suggests that grocery retailers mine big data to predict when online shoppers want their weekly food shop delivered. He says this will not only improve customer service but could also boost retailers’ profits by as much as 4%. “If customers aren’t being given incentives when it comes to requesting their delivery times, then this can have a large impact on route planning and efficiency for the delivery team. Business failures such as Webvan – which went bankrupt in 2001 after trying to offer a same-day delivery service – brought home the message that while small delivery windows appeal to customers, they do cost the retailer money,” Strauss says.

Is click and collect from locations convenient to individual shoppers therefore the future for online delivery and a way of levelling the service for pureplay and clicks and bricks retailers, or is it just another option (albeit a big one) in the retailer’s arsenal? “For the customer it’s about convenience, where they are and where they are going,” says Ashworth. “There’s no point having a pick-up point that’s one mile north of the customer if they are going south.”

For busy commuters, National Rail’s launch into the market as a collection and returns point may be the answer. Trials of its Doddle service started at Milton Keynes station in December 2013 and expansion to a further 74 station is planned for 2014.


The convenience and certainty of not missing a delivery that click and collect offers is striking a chord with customers; industry figures estimate that 25% of multichannel sales are now reserved or purchased online for collection in store. Between the start of 2013 and the third quarter, click and collect orders increased from 11% to 19%, according to the IMRG and Capgemini . In the same period of 2012, 13% of multichannel sales were collected in-store. The number of retailers offering click and collect is also on the rise with 44% of the 239 businesses in the Micros report offering the service to customers.

“Click and collect is big,” commented Mark Lewis, Online Director at John Lewis, at a meeting following the retailer’s successful Christmas 2013 trading period, during which it saw the number of collect in store orders increase by more than 60%. At Tesco, 70% of general merchandise sales use this order and delivery method.

Is the rate of growth really being driven by a number of large retailers promoting it as part of their proposition: Boots , Tesco, John Lewis [ (including Waitrose) and eBay (through its deal with Argos )? IMRG believes so. It also says there are signs that the rise of mobile commerce is having an impact on click and collect: mobile shoppers are more likely to use this mode of receipt than home delivery. Mobile commerce is now the growth area for online shopping. The number of parcels and packages generated by online purchases (excluding 2-man and groceries) is also forecast to expand and reach almost 2.2bn by 2017. Now is the time for retailers to focus on that last mile, work out how it fits their proposition and margins, and discover whether every customer really wants to be offered a plethora of delivery options. Will 2014 be the year in which the final mile becomes personalised?

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