top of page

Home Delivery: Building More Intimate Customer Relationships Beyond the Doorstep

Bart van Eijden, Senior Manager Retail at IG&H, explains why the last mile is often overlooked by retailers as an opportunity to boost customer trust and loyalty.


Historically, the last mile to the customer’s front door is often viewed by retailers as a costly expense. However, a change in perspective can transform home delivery into a valuable platform for growth.

For a consumer making an online purchase, (home) delivery is often the most crucial part of the ‘experience’. The difference between a satisfied or dissatisfied customer is made by the speed, reliability and sustainability of the final leg in the logistics delivery chain, also called the last mile. The encounter at the front door is a crucial one, as it is the only physical contact moment of a digital customer journey. This provides the opportunity to (almost literally) get a foot in the door as a stepping stone to a more intimate customer relationship and loyalty.


Battle at the front door

For many years, the competitive arena for retailers has been the physical and digital shopping street. More recently, the battle for the customer is partly moving to the front door, a trend accelerated further by the pandemic. Take Amazon as an example: Besides the fact that the company built up its own gigantic delivery fleet of tens of thousands of electric vans worldwide, it also introduced Amazon Key. Thanks to this smart lock technology, which allows you to open the door with a special code or through a camera-enabled live consultation with the homeowner, Amazon can deliver behind the front door. Ideal when customers are not at home, especially for restocking the fridge with those heavy and precious groceries!


The idea behind the Amazon Key is however far larger than providing the best home delivery experience. Within the United States, Amazon Key plays a pivotal role in Amazon's strategy for expanding its suite of services. This digital key gives professionals associated with Amazon Home Services direct access to customers' homes, enabling Amazon to offer various services, such as house cleaning, pet sitting and dog walking. Privacy invasion or not, it is a compelling example of fostering a more intimate customer relationship. If a retailer (or delivery service) establishes such trust, it substantially lowers the buying threshold for additional services. Amazon, in particular, aspires to introduce as many as 1,200 distinct services on a global scale.


Amazon clearly has a winner-takes-all mentality and shows us how to build an entire ecosystem of new propositions around home delivery. The belief is that consumers only allow a limited number of (commercial) organizations into their private environment. Once they are in, it often marks the beginning of a long-term relationship of trust.


illustration of arms in delivery services uniform knocking on door

A few examples closer to home

Coolblue and Picnic in particular have also entered this fray. They see delivery as an integral part of the customer journey and as a platform for innovation. From their acquired position to ring customers' doorbells, they are now also slowly expanding home delivery services.


Picnic is deploying AI to make delivery more personalized and is happy to help with any returns for DHL. Coolblue installs solar panels on people’s rooftops, a next step after building a strong delivery and installation service for electronics and home appliances. And Just Eat Takeaway (JET) is stepping into the realm of grocery delivery, seeing it as a natural evolution in providing everyday convenience. JET can build on a strong foundation of its on-demand meal delivery network, large customer base and retail understanding.


All three companies truly leverage the value of the last mile. They also happen to score above average on customer satisfaction and have strong brand value. It could be one of the reasons why other retailers are following in their footsteps. Leen Bakker and Kwantum recently started a delivery service for oversized goods and were quick to also provide personal interior advice and installation at home. Do-it-yourself retailer HUBO even has a handyman service to help customers with almost any kind of home renovation.


Getting the delivery right – and gaining trust – is not easy

To secure a preferred position at the front door, it is crucial to first win customer trust. And that is not a given. In 2022, one in three home deliveries in The Netherlands went wrong in some form, according to the Dutch Consumer Association.


The delivery market has been under pressure for years. Challenges include structural labor shortages, more restrictions and difficulties in reaching inner cities, more and more congestion, high employee churn, rising costs and low margins. This results in rushed delivery drivers with little time or interest in real human contact, moving around the neighborhood in anonymous vehicles. In addition, consumers are increasingly experiencing delivery delays, even outside the usual peak periods such as Black Friday and Christmas.


This can be partially explained by the fact that home delivery is still frequently just seen as a cost. The relationship between a retailer and a transportation company is often transactional: focused on low cost rather than added value. There is a limited exchange of information and forward-looking insights, for example, to properly accommodate volume changes or respond to changing customer needs and increasing regulation.


Retailers taking over control

In this context, several retailers are taking a closer look at their distribution strategy. More and more are transitioning to a multi-carrier setup, often expanding their delivery options to parcel lockers and evening delivery. Bol went a step further and acquired bicycle courier Cycloon and founded Ampère as a service provider in parcel logistics.


Established companies like PostNL, GLS and DHL have witnessed the entry of numerous contenders into the last-mile sector. Many of these newcomers are tech-savvy and bring a startup mentality to the table. Companies such as Budbee, Trunkrs, Homerr and Packaly are actively competing to secure their share of this expanding market.


The immediate implication is that delivery networks are proliferating and becoming increasingly complex to manage. As a response, retailers will increasingly have to take the wheel. Retailers may choose to step into delivery themselves, serving the most valuable customers – often in urban areas – and outsource other (rural) areas to more generic bulk networks. It can however lead to complex competitive dynamics as retailers will then become both customers and competitors.


To continuously play the game of home delivery well, the support of advanced data techniques and technology is important. From knowing exactly where your customers are, when they are at home, and which delivery options are available at which point in time. The last mile is an integral part of the end-to-end logistics chain and requires careful planning to avoid reaching capacity constraints and risking dissatisfied customers. For retailers, this is often a difficult step because it is not part of their own core business. It may therefore be a consideration to work more intensively with external parties, seeking more scale and expertise, in response to the dominance of the larger players and platforms.


Rethinking the last mile: from cost to added value

Last-mile delivery has typically always focused on the last few kilometers. In the coming years, it will increasingly be about the few meters beyond the doorstep. By rethinking the last mile from cost to value, retailers can unlock the next phase in their innovation journey and achieve higher customer loyalty. Delivering a great last-mile experience provides trust and lays the foundation for home delivery as a platform for growth.

Yorumlar


Yorumlara kapatıldı.
bottom of page