With record parcel volumes and customers facing mounting delays to their orders, the timing couldn’t be better for a sea change in last-mile delivery. COVID-19 poses a significant challenge to Australian retailers, who have enjoyed lively ecommerce growth rates for years, but now see demand over and above the level at which they can feasibly maintain their delivery promises. They now have to find a way to continue to get customers their purchases without falling behind on their service promises, and without the time to build new infrastructure to handle the volume.
In just two months we have seen e-commerce in Australia effectively leap forward 10 years. Where the demand curve had previously been steady and manageable, the spike saw supermarkets restrict access to delivery programs, mass-market retailers slacken their delivery windows from 3-5 working days out to several weeks, and the Federal Government relax requirements for daily letter deliveries in order to allow Australia Post to focus on spiralling parcel demand.
Yes, now that restrictions are beginning to lift and shops are re-opening, some of this demand is likely to dissipate. But hundreds of thousands of shoppers have started habitually using ecommerce to obtain the goods they previously went out shopping to get. We’re in exceptional times, but these consumers won’t simply forget all about ecommerce after we’re through with COVID. Much of that adoption, and consequent demand, will continue to stay with us. Against this background, retailers need to embrace more effective and profitable ways of getting ecommerce orders to customers, as well as kickstarting digital and ecommerce investment.
In Australia today, pick-up/drop-off (PUDO) fulfilment could dramatically ease the strain on retailers’ delivery capacity, yet is massively under-used. Given the highly urbanised population of Australia, it’s worth comparing other nations with more mature ecommerce markets. For example, China sees around 40% of its ecommerce order volume delivered to PUDO locations. Over in the UK, retail has begun to tap into this opportunity area, with 75 percent of the population living less than two kilometres from five PUDO options. They come in a wide array of formats, from locker banks to parcel shops to convenience store counters. The capacity already exists in Australia, thanks to Australia Post’s Collect & Return network, which comprises more than 4,300 Australia Post offices, 350 parcel locker locations,15,500 post boxes and a growing network of retail partners including supermarkets, hardware stores and pharmacies.
The addition of these retail partners to the Australia Post network, allows retailers to relieve pressure on delivery systems without adding non-essential movement because they are already providing essential services. By taking volume away from home delivery services, PUDO allows those who need home delivery the most – people living with disabilities that limit their movement, the elderly and those with compromised immune systems – to experience a more reliable and quicker home delivery service.
Even when the restrictions are lifted, consumers are likely to be more cautious about setting off on a shopping trip. Services like Australia Post’s Collect & Return network will play a vital role in driving footfall and re-engaging consumers with instore retail. The benefits for consumers are clear – they receive their online order faster, more reliably and in some cases, cheaper.
There are also upsides for retailers. Businesses who have pivoted or expanded online are justified in their concern that customer experience can be diminished by something they have little control over – the last-mile delivery. Horror stories abound, whether it’s a delivery driver casually lobbing parcels in the general direction of a door, parcels being left with unfamiliar or distant neighbours, or even being carded while at home.
PUDO delivery offers greater control over the customer journey and customer satisfaction. Crucially, PUDO allows for more convenient returns as well as deliveries. Convenience of returning items is an essential factor in generating loyalty amongst ecommerce consumers. While only around one in 50 customers return an item bought online, four in ten who have a negative returns experience end their relationship with that retailer. Customers overwhelmingly prefer to be able to manage returns for their online purchases at locations that are convenient to them, with most nominating post offices and retail outlets.
As retail changes permanently due to the impact of COVID-19, we can expect to see an expansion in PUDO networks locally and globally. The limits of home delivery systems have been exposed, and the need to augment them is clear and urgent. The best way to do this is to leverage the unused potential for PUDO services, and retailers who can drive more volume through PUDO will be rewarded with increased customer loyalty and reduced costs.
Rachel Caton is sales and marketing director for Asia Pacific at Doddle.