Maximize Retail Fulfillment and Delivery to Keep Loyal Customers Happy

Maximize Retail Fulfillment and Delivery to Keep Loyal Customers Happy

In an omnichannel world with more shipping and delivery options than ever, retailers should continually evaluate their operations to prepare for uncertainties and keep an eye on the competition to keep loyal customers happy. Organizations must figure out how to leverage fulfillment and shipping solutions as differentiators to both the customer experience and the bottom line.

Our 2023 Omnichannel Retail Index (ORI) confirms cost-effective fulfillment strategies have the power to drive consumer loyalty. Compared to 2022, the average adoption of shipping and delivery best practices dropped slightly. Some of the best practices criteria include having a specific expected delivery date (not just a range) on the product detail page and offering free shipping (outside of promotions). As pressure on expenses hit the bottom line, retailers have had to relook at the cost implications of free shipping, and we are seeing change happening on threshold levels and testing of shipping offers.

Delivery is a top customer priority

Delivery is a top customer priority

  • While the percentage of retailers offering free shipping has remained flat since 2022 at 79%, the percentage offering free shipping without a purchase threshold dropped slightly to 25% from 27% in 2022.
  • Providing shipping transparency is critical for shopper confidence. However, 49% provide specific delivery dates during checkout. This is up from 37% in 2022, reflecting the increasing importance to shoppers.
  • Fast delivery is still a priority, and although there was an increase in same-day delivery to 33% this year (28% in 2022), only 44% today offer next-day delivery (61% in 2022). Recent consumer studies have revealed that next-day delivery is no longer as important as previously assumed, which could explain why some retailers are cutting back on next-day delivery.
  • Shipping costs are constantly on the rise, and in today’s economic environment, retailers are scrutinizing budgets to cut costs. As a result, some no longer offer the next day, and some offer shoppers a discount for longer delivery windows.

BOPIS declines but still generates value

BOPIS declines but still generates value

Since 2021, we continue to see a slight decline in companies offering Buy Online Pickup In-Store (BOPIS) (82% in 2023, compared to the peak of 86% in 2021). BOPIS is still a customer favorite, and despite the slight decline, it has become table stakes for omnichannel retailers — the real challenge for retailers is how well they execute and deliver seamless customer experiences.

To deliver the best experience possible, retailers and brands must start by mapping the customer journey, assessing the customer data strategy and technologies necessary to support a seamless experience.

  • For those offering BOPIS, service levels are improving to meet customer expectations, with 75% confirming orders ready for pickup within 3 hours, up from 53% in 2022.
  • 34% have designated BOPIS service areas in the store (down from 46% in 2022)

Salesforce research shows that BOPIS generates value for the brand and retailer. In addition to faster online revenue growth for those companies offering BOPIS, Salesforce forecasts that in 2023 BOPIS will drive $28 billion in incremental global store sales when customers pick up their online orders.

Curbside stalls

Curbside stalls

As expected, curbside pickup has been on a steep decline since 2021 (49% of retailers offered curbside in 2023, compared to the peak of 73% in 2021).

  • Today, only 10% allow shoppers to filter products by curbside pickup (down from 28% in 2022)
  • Only 12% provide a direct store number to call for curbside pickup (down from 51% in 2022)

Interestingly, 16% of retailers offer curbside returns (a slight increase from 13% adoption in 2022), and 37% today have designated parking spaces for curbside pickup (29% in 2022).

The future of fulfillment and delivery

The use and growth of predictive analytics, which can influence future decision-making in last-mile delivery, will become a dominant trend. Analytics allow shippers to gain clarity on current issues and help them anticipate future problems, mitigate risks, and improve overall practices. The right AI-driven technology can work hand in hand with courier management capabilities to leverage the full fleet to address any issues that pop up and gain more visibility into delivery processes.

As retailers look for better ways to streamline their operations, outsourcing order fulfillment will continue to soar. AI-driven order fulfillment will become commonplace, assisting retailers in managing goals such as capacity, shopping costs, avoiding markdowns and stockouts, and optimizing fulfillment plans at the lowest possible cost-to-serve.

See how your company stacks up! Download the 2023 Omnichannel Retail Index and sign up for your free ORI assessment to understand how you deliver on omnichannel best practices compared to the overall Index, your vertical, and your competitors.

Rich Siefert

Author: Rich Siefert

Rich Siefert is a Senior Consultant, Practice Lead in OSF Digital´s Strategy group. He has over two decades of executive-level experience at large-scale retailers, particularly in the home categories, with a proven record in strategy, P&L management, and organizational leadership in an omnichannel environment.