News / E-commerce customers now prefer guaranteed delivery dates to speed

Saks Department Store. © Oksana Byelikova Dreamstime.com.

US designer fashion retailer Saks Off 5th, with an online sales platform and more than 100 stores in the US and Canada, has revamped its fulfilment options around delivery dates calculated as the customer buys.

This gives shoppers instant visibility of when their order will arrive.

“A concrete delivery date will now be provided for all possible shipping methods at checkout, allowing customers to select the delivery date and cost that best suits their shopping needs,” said the company.

“Before Guaranteed Delivery Date, customers were presented with a standard delivery time-frame for each item, regardless of destination, which meant items shipping to New York, Seattle or Hawaii all had the same delivery period of three to five business days,” said COO Shivi Shankaran.

“We’re able to analyse all the many factors that go into estimating a delivery date, such as where the product is, where it needs to go and who can help us deliver, and provide a concrete date for when customers will receive their package.”

To get there required some tweaking of the company’s capabilities and investment. It struck up a partnership with shipping and fulfilment tech platform Shipium, embarked on an enhancement project for its fulfilment centres and undertook “significant” carrier diversification.

It said: “Full visibility into shipping timelines has become paramount to today’s consumer markets.”

This corresponds with a recent survey of 275 regular online shoppers by Circuit, a route planning software firm. Respondents expressed a preference for ‘timely’ over ‘fast’ (guaranteed next-day) delivery, as it allows them to plan for the day of delivery and not have to be on standby on other days.

Customer satisfaction aside, cost has also been cited as a major driver of a shift from ‘fast’ to scheduled delivery, as fulfilment costs have risen faster than growth in online sales. Retail giant Saks actually used the launch of its new delivery choices to table a fast delivery option at a premium price, a trend that is on the rise in the industry.

However, Saks is not the only retailer moving towards scheduled deliveries in lieu of rapid fulfilment, unless the latter is billed at a higher price.

“This is more of a trend in retail, driven of course by Amazon. One of the things Amazon has learned over the years is that consumers dislike early delivery almost as much as late delivery,” said Rick Watson, founder and CEO of strategist RMW Commerce Consulting.

Date-definite delivery solves the issues, as well as makes for a more reliable supply chain, reducing costs at the same time,” he added.

“While Amazon drove the need for next-day delivery, it is not really possible to do that across 100% of their stock, because of proximity of goods to consumers,” he said.

“I think, while Amazon has the best next-day capabilities, it will also continue to push consumers with incentives to optimise its fulfilment network, and its own costs. At the end of the day, the more things in the same box and the higher density routes they can run, the more profitable it will be.”

Logistics costs are certainly weighing on Amazon. In the third quarter, they were up 10% year on year, absorbing more than 37% of revenue. Moreover, they rose faster than online shopping sales, which were up 7%.

According to one report, Amazon is planning to lay off 10,000 staff, starting next month – in the middle of the peak season – a stark reflection that the e-commerce boom has lost momentum, allowing rising costs to rear their ugly head.