Online Shoppers Don’t Always Care About Faster Delivery
Is timing more important than speed for grocery delivery?
A recent university study finds that at least for the grocery space, precision (the duration of the delivery window) and flexibility (ability to pick the times of the day and days of the week for delivery) can be as or more important than speed for home delivery.
“The customer must be present to receive perishable goods from the retailer,” according to the study featured in MIT Sloan Management Review and led by researchers at The University of Porto in Portugal and of Chicago Booth School of Business. ”Attended home delivery requires the retailer and the customer to agree upon a delivery time slot that works for both parties.”
The study found online grocery shoppers:
Willing to wait 10.8 hours longer for a delivery if the delivery window is one hour shorter.
Willing to wait an additional 7.5 hours longer if the delivery can be received on a preferred day of the week.
The analysis also showed repeat customers are willing to pay more for the same delivery attributes compared with other shoppers. Moreover, customers with very large baskets are willing to pay double the delivery fee to improve delivery-window precision by one hour.
Recommendations from the study include investing in tools that track site navigation and online/offline purchases, analyzing customer-specific time-slot selection data to understand preferences, and utilizing predictive analytics to understand what delivery attributes drive loyalty and repeat purchases.
“Analytically minded retailers can craft delivery time slots that are unique to each customer based on revealed preferences,” says Nicole DeHoratius, adjunct professor of operations management at the University of Chicago Booth School of Business, in a press release. “I strongly encourage retailers to rethink their operations to optimize not only on speed but also the most appropriate combination of speed, precision, and flexibility.”
According to a consumer survey from Coresight Research from last fall, fast delivery was the sixth most-important factor when choosing a rapid delivery service (i.e., Gopuff, Gorillas, Getir, Jokr), cited by 40 percent. The top five were low or no delivery fee (61 percent), price of items (53 percent), in-stock availability (49 percent), product quality (45 percent) and product assortment (43 percent).
Analyzing online customer data may reveal that other delivery attributes matter more than how quickly an order is received.
The COVID-19 pandemic changed how we shop. Soon after the onset of the global pandemic, retailers reported a rapid shift from in-store to online purchases. Online buying accounted for 18% of worldwide retail sales in 2020, up from about half that in 2018. Grocery shoppers stampeded to the web: As of May 2020, 41% of U.S. online grocery shoppers were first-time users of such services. The expectation is that the online shift will persist well beyond the pandemic across most retail subsectors.
Adapting to these changes is no small feat, and doing so profitably — well, that’s even harder. In response to the shift in consumer purchasing behavior since the beginning of the pandemic, many of the retail executives with whom we work are rethinking their existing omnichannel strategies. Our conversations with the e-commerce director of a leading European grocery retailer offered evidence of how difficult it is to shift operations to support the online shopper. This director was reexamining where to locate inventory and whether to own or outsource home-delivery capabilities in order to minimize the time between the placement of an online order and its receipt by the customer at home. Each of the proposed changes aimed at shortening the time between order and delivery was going to require investment. He wanted to make the appropriate choice.
