There’s no perfect approach to perfect delivery. Every retailer must build a plan — underpinned by a flexible and agile tech stack — that delivers unique value to its customers. But as customers continue to adjust their online shopping behavior amid the continuing pandemic, merging it with in-store, curbside and more options that have yet to be experimented with, that value becomes a moving target, causing radical business model changes for retailers and manufacturers.
In this article, we discuss the challenge presented to retailers in 2020 and for the next decade – how to achieve a perfect delivery for customers as the definition of perfect delivery continues to evolve. Readers will learn about the benefits of:
- Engineered planning
- Frictionless orchestration and flexibility
- Adaptive logistics and cross-border trade visibility
To say COVID-19 challenged many retailers is an understatement. While some had existing delivery and pick-up programs to lean into, others had to start from scratch — and the transition wasn’t always seamless. But the greatest challenge of all was that the sudden shift in consumer behavior also came with a shift in customer expectations, including a significant focus on the delivery experience.
Almost overnight, retailers had to provide a sophisticated, seamless delivery experience — which might take place in one of several in-store or at-home locations — amidst increased order processing complexity, volatile supply and demand, and dynamic conditions based on pandemic-related delays and policy changes.
Notable changes in global consumer behavior post COVID-19
- 63% of consumers reported trying new stores to meet their needs for essential goods, and more than half plan to continue shopping at these new stores moving forward
- 82% of grocery shoppers reported trying private-label or store-owned brands
- 48% of consumers have discovered new brands on social media, including Facebook, Instagram, YouTube and TikTok
- BOPIS grew 28% y-o-y, and 56% of consumers surveyed reported high intention to continue using it
- Grocery delivery grew 57% y-o-y, and 45% of consumers surveyed reported high intention to continue using it
- 71% of consumers say that speed of service, checkout experience, and delivery options are important to stay loyal to a retailer
- 73% of customers expect real-time updates as their order moves from the distribution center to their front door
- 33% of consumers say that delay of goods equates to a bad shopping experience
The problem presented to retailers in 2020, and for the next decade, is how to achieve that perfect order, on-time and in full, as the expectations of a perfect delivery continues to change and evolve.
“Retailers that want to achieve perfect delivery must first define what they mean by ‘perfect’ and ‘delivery,’” said Michael Forhez, global managing director of the Consumer Markets Industry Strategy Group at Oracle.
“‘Perfect’ depends on the conditions of the life of your customer, which are widely varied and ever-changing, especially now,” explained Forhez. “And ‘delivery’ doesn’t always mean that a package is arriving on a customer’s doorstep. ‘Perfect delivery,’ then, is all of the pieces of the puzzle that lead up to a customer receiving the product, which can now take place in-store, curbside, in lockers or on the doorstep, depending on the needs and preferences of your customer.”
The ultimate challenge of achieving a perfect delivery is that there is no framework to fall back on, and no iterative improvements that can be made to handle these changes because retailers are operating under completely new conditions. Moving into 2021, all retailers must redefine what it means to offer customers a perfect delivery. And the retailers that want to outperform their competitors in the coming years will need to study and perfect the following five principles in pursuit of a truly perfect delivery experience.
5 cornerstones of perfect delivery in retail:
- Engineered planning
- Frictionless orchestration
- Adaptive logistics
- Cross-border trade visibility
“COVID-19 introduced change to commerce, plain and simple. Consumers and retailers alike have had to adjust their habits to respond to new limitations. But in asking retailers and consumers to step outside their comfort zones, COVID-19 has also introduced exciting new best practices like using videos to engage with customers, offering BOPIS and curbside pick-up, and more.” – NICOLE LEINBACH REYHLE, CONSULTANT AND FOUNDER OF RETAIL MINDED
Regardless of how a retailer or customer defines it, perfect delivery starts with perfect planning. Planning today must be nuanced and comprehensive, looking beyond traditional metrics to take into account important customer data like demand signals, loyalty, demographics and more — all data that retailers have been collecting for years. But with great amounts of data comes great pressure to use it productively. This is proving to be more difficult than retailers might have thought, because there’s so much of it: It can be hard to know what’s relevant and what’s not.
“In the past, retailers could rely on traditional forecasting systems, algorithms, analysis, and data to reveal the best path forward,” said Mario Vollbracht, Global Senior Director of the Consumer Markets Industry Strategy Group at Oracle. “But today, planning must take into account all the ways the retail landscape is changing, and all the potential retailers have to gain a deeper understanding of their customers. Data overload is a real risk. Because it’s hard to know what data are giving a signal and what data are noise, retailers can end up feeding a lot of data into the system that only muddies the waters — hence the need for engineered planning.”
“What’s perfect to me as a consumer depends on my need state. Some things might be absolute, like my brand preference for a certain kind of chicken soup. Other things might be more flexible, like the kind of paper towel brand I’m willing to bring home with me if the store’s out of stock. What’s perfect to me in these situations as a consumer is relative, and requires retailers to have a dialed-in understanding of what the consumer wants.” – MICHAEL FORHEZ, GLOBAL MANAGING DIRECTOR OF THE CONSUMER MARKETS INDUSTRY STRATEGY GROUP AT ORACLE
As a result of expanding the variety of order fulfillment paths, retailers today understand the importance of a robust order management and logistics process that delivers frictionless orchestration. Avoiding errors and maximizing the efficiency of picking, packing and shipping orders is the operational backbone of a retail company today.
This is where modern, cloud-based digital order management systems (OMS) come into play, creating a single, connected platform that makes it possible to orchestrate orders across different channels and different order fulfillment processes.
As a result, retailers are able to accurately and efficiently manage customer orders across several critical scenarios in the order fulfillment lifecycle:
- Identifying accurate pricing, configuration and order capture processes
- Determining optimal inventory stocking locations or production facilities
- Handling complex orders made up of products located across multiple stocking locations
- Scaling to meet demand surges by filling orders from the best available sources to deliver products on time
“It’s the retailer’s job to make every order that comes in a reality, regardless of the obstacles or complexities that stand in the way. Frictionless orchestration acts like the quarterback, pulling together other supply chain functions such as inventory, warehouse location, and increasingly the shopper dimension, as well. The most sophisticated retailers then close the feedback loop of what’s working well and what’s not working well by feeding data about each order back into the system.” – MARIO VOLLBRACHT, GLOBAL SENIOR DIRECTOR OF THE CONSUMER MARKETS INDUSTRY STRATEGY GROUP AT ORACLE
Creating these interactive systems to fulfill orders is complex enough. But the real challenge lies in creating these systems to be flexible enough to react to the ongoing changes in retail — because they’re not going to stop. COVID-19 had a sudden and dramatic impact on consumer behavior and shopping habits, and the fallout of those changes will continue to affect the retail space for decades to come. The processes retailers use to capture and fulfill orders must enable them to adapt and scale for growth no matter what comes next.
Companies without that focus on flexibility will suffer. If they are too reliant on rigid and inflexible legacy systems, they will not able to quickly adjust, and accommodate the complexities of achieving the perfect order. Fulfilling an order from different channels and multiple stocking locations, and then navigating the reverse fulfillment process for returns will not be seamless, and over time it will degrade customer experience and customer loyalty.
For example, new customer behaviors have inspired some retailers to re-think how they manage products in-store. Because of the various ways customers can have their orders fulfilled, many retailers have had their stores turn into quasi stocking locations. Shipments come in and are placed on the shelves by retail employees, then retail employees pick products off the shelves to put back into shipments for buy online, pick-up in store (BOPIS) or curbside delivery orders. This leads to an inefficient process. By adapting to this redundancy, retailers are looking into demand patterns for different kinds of fulfillment and adjusting in-store stock accordingly, creating room for a whole new way to operate that can be scaled efficiently.
“The entire model of the center aisle with an overwhelming number of products for customers to choose from has become obsolete,” said Vollbracht. “Customers don’t need an astounding amount of choice — they just need the products they’re looking for. With the right technology in place serving back the right data, retailers can see this as a growth opportunity instead of a period of time where they are just treading water.”
“The modern supply chain can predict supply and demand fairly well based on proven algorithms. But COVID-19 has shown us that you can’t make a provision for an emotional state of mind. What’s happened in the digital age only accelerates, amplifies and complicates the relationship between businesses, manufacturers and brands from the consumer’s perspective.” – MICHAEL FORHEZ, GLOBAL MANAGING DIRECTOR OF CONSUMER MARKETS INDUSTRY STRATEGY GROUP AT ORACLE
Processes Retailers Use to Capture and Fulfill Orders:
- Drones: Automated robots delivering products to customer homes
- Click-and-collect: Online ordering that results in store service, either in-store, curbside or at pop-up locations
- Third-party delivery: Partner services such as Instacart, goPuff and Shipt
- Sortation centers: A convenient stopping point between the distribution center and the customer’s location
- Robotic stock picking: Robotics, computeraided vision, and deep-learning technology to pick and pack orders
- Point-to-point: Major global retailers leasing their own fleet of air cargo planes
If there’s one trait of perfect delivery that all customers can agree about, it’s speed. Speed of the retail app or website, speed of order processing and yes, speed of delivery. But speed is a product of excellence in logistics, and that only comes from a carefully synchronized network of suppliers, transportation providers and distribution centers. Any disruption — even one outside the control of the retailer — can have a cascading effect that results in delayed shipments, increased costs and diminished customer satisfaction.
Fortunately, this is where logistics technology, such as transportation management systems (TMS) really shines, allowing a retailer to understand operational performance and customer experience in real-time, then pivot at speed and execute to exceed customer expectations. Retailers gain access to an information bridge over traditionally siloed functions like geographic regions, languages, currencies and business units to facilitate the best possible customer experience regardless of where a product originates or where it’s headed.
In today’s retail environment, this is an important advantage. Customers are more sensitive to the fulfillment, shipping and delivery timeline than ever before, often comparing brands to the short delivery times of Amazon Prime. In fact, sometimes Amazon Prime cannot stand up to its own reputation, sending customers back to traditional retailers like Walmart and Target for same-day curbside pickup service or alternative e-commerce retailers for faster delivery.
“‘Stack it high and watch it fly’ is no longer a sufficient approach to operations in retail,” said Forhez. “Every retailer has access to the planning and logistics models that can deliver that. Post-COVID-19, the retailers that succeed are the ones who have a deep knowledge and understanding of their target customer, so they deliver exactly the experience those customers are looking for —no less, and no more.”
“Customers are increasingly fickle about brand loyalty, especially when it comes to the speed of delivery. Adaptive logistics gives retailers a resource to be proactive about the fulfillment, shipping and delivery timeline and protect their existing customer loyalty.” – MARIO VOLLBRACHT, GLOBAL SENIOR DIRECTOR OF CONSUMER MARKETS AT ORACLE
Cross-border trade visibility
For global retailers operating across borders, customs regulations, taxes and other fees are a critical part of the delivery process. Without oversight into cross-border trade issues, retailers can’t collaborate effectively with trading partners to pinpoint issues with the flow of goods across the supply network. Cross-border trade can also come up against different retail challenges, such as:
- Accurate customs documentation must be produced to prevent shipments from being held up at the port and border crossings
- Switching sourcing strategies may have implications or opportunities for existing trade agreements
- Changing suppliers or manufacturing locations may impact factors such trade compliance and country of origin
When shipments get delayed because of re-routing and insufficient documentation, the complexity multiplies. Operating without insight and visibility into the trade process is not a sustainable way to scale a retail business.
Cross-border trade visibility ensures perfect delivery through minimized delays, costs and trade risks. Retailers are better able to plan shipment routing to minimize taxes and customs fees, and they can also produce accurate customs and trade documentation that are in compliance, to avoid penalties and shipping delays. Access to real-time data through global trade management software helps customers properly screen transactions for restricted parties, sanctions, embargoes and tariffs on both imports and exports, ultimately mitigating financial and operational risk.
“Even before the pandemic, global trade and tariffs were very challenging. After the pandemic, it’s challenging at an order of magnitude. Having a system that automatically keeps track of the restrictions or policies in place is key for navigating the ups and downs of global trade, which now includes suppliers overseas shutting down or experiencing delays due to illness.” – MARIO VOLLBRACHT, GLOBAL SENIOR DIRECTOR OF CONSUMER MARKETS AT ORACLE
The road to perfect delivery
There’s no perfect approach to perfect delivery. Every retailer must build a plan — underpinned by a flexible and agile tech stack — that delivers unique value to its customers. But as customers continue to adjust their online shopping behavior, merging it with in-store, curbside and more options that have yet to be experimented with, that value becomes a moving target, causing radical business model changes for retailers and manufacturers.
Only retailers with an approach to perfect delivery built on the cornerstones shared here will find success, because these cornerstones cover all the ways in which perfect can and will shift and change over time — and make it possible for retailers to successfully adapt to those changes. Retailers that unify their customer experience across buying channels, capture orders easily and deliver rapidly and accurately—supported by the seamless orchestration across warehouses, distribution centers and modes of transportation—are the only retailers that can achieve a truly perfect delivery.