We recently spoke with thought leaders hailing from different business backgrounds and selling a diverse range of products on their thoughts on the recent economic ongoings and their direct impact on delivery operations for eCommerce businesses.
Zoe Donovan, LK Bennett
Hannah Lia, Hampers.com
Steve Davies, Consultant, Benson for Beds
How is the volatility impacting businesses and their consumers and what are businesses doing to protect delivery and boost consumer confidence despite uncertainty?
Let’s find out in this excerpt from our discussion.
Protecting the Customer Experience amid Rising Costs
The cost of delivery has skyrocketed in the past few months with rising fuel costs, inflation, labour scarcity and overall price increases. Businesses need to decide if the cost is going to be passed on to the customer or hit business bottom lines.
Hannah Lia: We offer free delivery as part of our offering for customers and about 60% of our customers take it up. But we had to build that into our pricing model as we are seeing continuing increases in our cost of goods. We realised we were using a real premium shipper for the free delivery service. So we worked with GFS to change our carrier to a more economical carrier for our free delivery and then offer customers the ability to choose premium delivery by paying a premium. This way we get to pass cost and give the customer that choice — whether they’re happy to have an economy service of free delivery or premium delivery. In fact, by changing carriers for the economy service, we now offer customers a better all-round option as we’re able to work out free next-day delivery six days a week, so it means both cost savings and a better customer experience.
Zoe Donovan: We have free standard delivery but with an order threshold, and we charge for more premium services. We are taking in some of the cost increase ourselves, but with our customers, there’s less price resistance and they’re willing to pay for more premium offerings because it’s all about convenience as they want the luxury delivery experience. We are increasing the cost of those more premium services to fund increasing costs across the board.
The industry has set a precedent for consumers to expect returns to be free, which is now a direct blow to many eCommerce businesses as they see costs go up significantly. With 50% of UK adults say it’s the customer’s responsibility to pay for shipping charges while making online returns 1, is it time that the eCommerce industry considers charging for returns?
Zoe: Fashion returns, as well documented, is a problem and we’re seeing some businesses go to the wall as a result of returns. I think 12 to 18 months ago the idea of charging for all returns was an absolute no-no. We did start introducing charges for returns just on sale products as it’s end-of-life products. We expected customers to complain but they didn’t, so I think there is more understanding than we appreciate that returns do cost businesses. As far as we’re clearly communicating to customers that we’re introducing this charge to cover our costs.
What’s really helped in the last 12 months is a few of the big retailers have made started charging for returns, which has set a really nice precedent in the industry and an increasing expectation that I think more retailers will move.
Steve: I think it’s an important point with the cost of living crisis there is a secondary economy now that is so powerful. The returns process isn’t the end of the cycle anymore as it used to be with products entering landfill. Retailers need to have an integrated returns process and resell refurbished items that have a greater demand than ever right now across customers.
Fluctuations for Peak 2022
Delivery plans for Peak usually get locked in by end of September. But there are bound to be more fluctuations this year as uncertainty is rife. How are you going to manage this season?
Zoe: We’ve completely moved away from discounting outside season sales and Black Friday for over 12 months now. So for those customers that do stretch up to pay the LK Bennett prices and really wait for our discount, there will be quite a lot of pent-up demand with that customer base so we are expecting Black Friday to be a big time for us.
We also make sure we’re working with GFS and our 3PL to have some flexibility on our site to bring in any extra trailers and storage to prepare in advance.
Hannah: It’s usually close to the ‘Strictly Come Dancing’ finale when we see people really get into Christmas, and all of a sudden we go from 5000 to 1000 orders overnight. So for us, it’s all about using clever and creative ways to spread out the demand in December.
We work closely on carrier capacities daily with GFS and our account managers. So if we need to chop and change carriers, we were able to do that with great flexibility because we’ve got multiple carriers.
Just when you think you’ve seen it all, regardless of all the forecasts and planning, there are always hidden surprises — more so this year than ever before. How do you build contingency and put a Plan B in place?
Hannah: Last year we put our forecast into GFS around July-August, and just after we got a corporate order for 22,000 units. It was our biggest order ever for a corporate offline order, which is fantastic, but they wanted delivery in the first two weeks of December. We were panicking because we hadn’t got that capacity. But very quickly we were able to get on a call with our account managers at GFS who came up with creative solutions on how to handle this, which alleviated the pressure on us.
Zoe: Black Friday historically has been more spikey for us than Christmas, but in 2021 we saw a big surge during Christmas and much more demand for next-day delivery than we’d anticipated.
But very quickly we worked with the GFS team to put something in place where we could get more capacity. Now we’ve learned our lesson and make sure with GFS’ help that we can secure the vehicle sizes that we need.
Steve: The one rule I’m going to take throughout my entire career is one carrier does not fit all no matter what happens. Through experience of unexpected peak surcharges being sprung by a carrier in the past, even if a courier promises they can do it all and give us great experience for our profile stock, I would never want to put my eggs in one basket.
Protect Domestic and International Delivery this Black Friday
Over 35% of consumers in the UK say they have stopped shopping with a retailer completely following just one negative delivery experience 2. The pressure is ON for businesses to ensure they protect costs and meet customer expectations.
GFS can help you move quickly to protect delivery with pro-active support and one quick & easy integration. We currently have capacity for both UK domestic shipping and GFS International services for Europe and worldwide deliveries.