Speedy delivery remains a high priority for shoppers, but with current supply chain challenges, transparent and timely communication about delivery expectations is paramount. While speed is important, shipping costs are critical too, and the majority offer free shipping, however not without minimum purchase thresholds.
KATHY: It is necessary to examine how transparency, fulfillment, cost, and efficiency are evolving. In terms of delivery, transparency remains an issue, with only 24% sharing expected delivery dates, which is surprising given that some of the largest companies can now provide delivery times down to the minute and within a three-hour window. Although 61% offer next-day delivery, only 28% offer same-day delivery, suggesting there may be opportunities for improvement.
ROB: If I recall correctly, same-day delivery decreased by around 25% year over year. This significant drop suggests that during the pandemic, people had no choice but to buy online and wanted their products as quickly as possible. However, as we discussed before, every vertical is different, and not all items require immediate delivery, except for fast-moving consumer goods. The decline in same-day delivery also highlights how difficult and costly it can be, especially during a labor and workforce shortage. Balancing the needs of online and in-store customers while fulfilling orders and managing inventory is a daunting task. I believe that same-day delivery will eventually increase as stores streamline their processes, optimize inventory management, and address the new priorities of store associates. It's challenging to provide an accurate Available-to-Promise estimate when there is uncertainty about the product's availability on the same day, but there is more leeway when it comes to next-day delivery. While there was a dip in same-day delivery, I anticipate that it will increase over time for certain categories.
MATT: Over the past six months, there has been a significant market shift in consumer behavior regarding the trade-off between cost and speed. Many consumers who previously prioritized speed are now prioritizing economy. We've conducted multiple tests on various mechanics, interaction models, and prices, and the data consistently shows a shift towards more economical options. It's unclear how long this trend will last, but it's not surprising given the current economic climate. This recent market shift underscores the importance of offering a range of pricing options that cater to different consumer preferences.
KACEY: The pandemic has taught people that sometimes things don't go as planned. Widespread delays have been seen due to weather and other factors, and consumers have become more forgiving. There is now a bit of wiggle room for transparency, and consumers are more aware of the costs involved in shipping. This understanding has emerged as a positive outcome of the pandemic.
In 2016, only 33% of retailers and brands offered BOPIS options. Today, 84% offer BOPIS. The adoption of buy online return in store (BORIS) has been more swift – a table stake functionality offered by 92%.
KATHY: BOPIS has become a standard service that customers expect, as well as the ability to return items in-store. Customers are willing to drive to the store to collect their items within a few hours, provided that the promised delivery time is met. It's noteworthy that stores have not yet fully adopted scheduling for pickups. This is perhaps because they have prioritized offering a guarantee that orders will be ready within a specific timeframe after purchase confirmation. We have observed that all the retailers we work with are mindful of this service level and strive to fulfill their promises. Therefore, we consider BOPIS and in-store returns to be essential requirements for retailers.
KATHY: Although curbside pickup was not a common service before the pandemic, it has become more prevalent with 62% of retailers or brands offering it. We have spoken with several retailers and we understand that curbside pickup may pose some challenges for stores in outlet centers where there may be limited staff available to assist customers. However, we have worked with clients to develop strategies to address this issue, and we believe that curbside pickup is feasible even for these types of stores. It's not just a service for big box retailers, and it's particularly convenient during inclement weather, such as in the middle of January in the Northeast, when customers may prefer to stay in their cars. Therefore, we believe that curbside pickup is a service that is here to stay.
KATHY: We have examined the adoption rates of sustainability practices and programs, and we have observed that they come in various forms. Sometimes, it is just a checkbox in the "about us" page indicating that they participate in sustainable initiatives. However, we are noticing that sustainability is starting to take a more prominent role in product detail pages and loyalty programs, which is a surprising yet effective approach. For instance, we are working with a client on a loyalty program that rewards customers with loyalty points for bringing their own bag to the store. This approach not only reinforces sustainability efforts but also increases foot traffic in stores. We are pleased to report that 67% of the retailers that we analyzed in our index had some form of sustainability initiative, whether it involved eco-friendly products, packaging, sourcing, or donating.
ROB: Providing consumers choice around more sustainable, environmentally friendly, maybe it costs more, maybe it doesn't, is importanr. Okay, I can wait a couple more days on the delivery, if it's going to be a more environmentally friendly way to get it there. According to our research over the holiday, while 83% of the top 100 retailers have some initiative around sustainability, over the holiday, only 25% of them, actually publicly put that out there as part of the shopping journey. The others had it on their about us or investor page. So I feel it's there's going to be a shift over time of having more transparency around sustainability customers looking for it like board and then have the choice.