With the chaos of the 2024 holiday season descending, the National Retail Federation predicts U.S. ecommerce spending in November and December will increase 8%-9% over 2023, translating to $295.1-$297.9 billion in sales. In addition, the holiday shopping period between Thanksgiving and Christmas this year is 26 days—five days shorter than in 2023—potentially creating additional headaches for online vendors and their delivery partners attempting to fulfill a greater volume of orders in less time.
Given the many aspects of retail operations outside a business’ control—from supply chain disruptions and labor shortages to inflation and interest rates impacting both operational costs and customer behavior—the fulfillment challenge this peak holiday season is acute. The onus is on ecommerce retailers to control the controllables, and focusing on eliminating uncertainty from the consumer fulfillment process and optimizing the last mile is a smart approach.
Last mile on shaky ground
According to Descartes’ 2024 Ecommerce and Home Delivery Consumer Sentiment Study, two-thirds (67%) of consumers experienced a problem with a delivery in the three-month period surveyed, often related to the timeliness of delivery: 22% of consumers reported a delivery came much later than promised and 21% at a different time.
Of serious concern for retailers, many consumers cited delivery issues as a potential barrier to future online buying. When shoppers were asked what would put them off making more ecommerce purchases in the future, 21% indicated they’d had negative delivery experiences, 20% said deliveries were not reliable, and 17% were dissatisfied with the delivery process. Additionally, 63% of those who experienced delivery problems took some form of action that had negative consequences for the retailer or delivery company.
Ensuring a consistent, timely delivery experience becomes even more difficult during times of peak demand, but adding resources to manage the volume spikes is costly and can quickly erode margin during lower volume times. Plus, with the ongoing labor shortage, finding seasonal staff is increasingly difficult.
With these considerations in mind, how are ecommerce retailers gearing up to manage the deluge of peak season shipments? Are they meeting consumers’ home delivery expectations, whether that’s affordable delivery, specific time windows, or sustainable options?
Understanding what consumers want
With billions of dollars of orders poised to test the capacity of retailers’ shipping operations this peak season, minimizing fulfillment uncertainty and transforming customer confidence through optimized last mile delivery becomes priority one.
The good news for retailers is that speed of delivery is becoming less important year on year; far fewer customers are prepared to pay for fast delivery, opting for a lower-cost alternative. Many customers also prioritize a precise delivery window over next-day options, preferring the certainty of a delivery that arrives when they are at home.
When considering their last mile strategy this peak season, retailers should also take note of the growing interest in the environmental impact of home delivery, especially among younger consumers. A recent study of home delivery sustainability found that 83% of consumers aged 18-24 and 71% of 25-34-year-olds consider the environment when making a purchase, compared to only 43% of consumers aged 65 and older.
By mapping customer delivery personas to the delivery choices they offer, retailers can improve fulfillment certainty to protect margins. For example, price-conscious consumers don’t need an expensive next-day delivery option; instead, delivery service with a longer lead time but lower cost will appeal to this group.
Similarly, with 57% of consumers quite/very interested in sustainable delivery options, eco-conscious shoppers will respond well to delivery choices that include “green slots” where deliveries are consolidated in a specific area. This option maximizes delivery density, cutting transportation costs through reduced mileage and minimizing fuel usage and emissions to reinforce ESG goals.
Embedding predictability
Retailers can influence buyer behaviour—during the online purchasing process—by offering achievable delivery options (e.g., dates several weeks in advance) based on real-time insight into existing commitments and delivery resources. By continually monitoring the capacity planning process, in tandem with constant assessment of inbound orders, retailers can present customers with a range of delivery options and prices that accurately reflect the retailer’s capacity and cost model, imposing greater certainty over the last mile process.
While data-driven capacity management helps to reduce the likelihood of delivery problems, real-time updates throughout the last mile journey keep customers informed of any issues, minimizing the risk of missed deliveries while also reinforcing customer confidence. Similarly, maintaining a strong chain of custody (e.g., proof of delivery with picture and signature capture) has become a core component of a positive delivery experience—especially for high-value goods often purchased during peak season—and increasingly key to boosting customer confidence.
Optimizing peak season and beyond
By understanding the unique needs of various customer delivery personas, providing consumers with delivery options tailored to their preferences, and better educating consumers about the benefits of different types of deliveries during the online buying process, retailers can protect margins, boost delivery performance, and minimize the chance of delivery issues to foster brand loyalty and drive repeat business for many holiday seasons to come.
