Since the onset of COVID-19 forced physical shops to close, the number of online purchases has increased dramatically. Having grown to 43% of overall purchases from a pre-pandemic average of 32%, the number is expected to remain at 41%, even once the impact of the pandemic begins to decline. However, with more than half of consumers increasing the number of purchases they make online, demand has escalated to a level that businesses have struggled to keep up with.
The current HGV driver and supply chain shortages are a huge challenge for retailers, and with the peak season in retail approaching, it is only going to put further pressure on retail supply chains. Whilst these issues are recognised by the general public, expectations of the quality of delivery remain higher than ever, with just 16% of UK consumers completely satisfied with their delivery service – according to Descartes’ recent consumer research.
Parallel to the increased demand, consumer interest in the sustainability credentials and environmental impact of those they are ordering from is growing. Whilst COP26 looms and talk of net-zero becomes more prevalent, the pressure on businesses to consider their emissions is rising. It is essential that retailers act now to retain customers, reduce their environmental impact and gain a competitive edge.
Demand for eco deliveries
The sustainability of online deliveries is increasingly considered by consumers. According to Descartes research conducted in Autumn 2021, 23% of UK consumers would think twice about ordering groceries online due to the environmental impact, and this grows to 60% in relation to online orders across all categories. Considering this, businesses should be prioritising a transformation in the delivery process to provide a more eco-friendly experience. When there are potential sales and customer loyalty at risk – or to be gained – can retailers afford not to consider the sustainability of delivery processes? There is a substantial competitive advantage to be gained, for both sales and operational efficiency, by acknowledging the need for change in this area.
Delivery steering to create density
The interest and demand for a greener delivery from consumers can be seen as an opportunity for retailers. Using technology solutions, it is possible to steer consumers into selecting delivery slots that are better for both the planet and the retailer. With access to real-time information on existing orders, delivery commitments and available capacity, buyer behaviour can be influenced as retailers can begin to offer differential pricing to incentivise different delivery slots that will maximise delivery density. Clearly, increasing the delivery density and having a green option for buyers provides a benefit for all parties and will also improve brand perception.
The interest in bulking online orders is also increasing in the UK, with 27% of consumers interested in bulking orders into a single weekly delivery and 26% interested in bulking orders into a single delivery when there are multiple deliveries in the same area. Considering the challenge of rising costs and a shortage of drivers which is forecasted to continue for the foreseeable future, implementing options such as this will not only aid sustainability goals but also maximise the efficiency of the existing fleet operation, ensuring it is being used to its full capacity.
Greener deliveries through route optimisation
With the ban on new petrol and diesel vehicles a priority in the Government’s green plan, the presence of Electric Vehicles (EVs) on the road is increasing. Many delivery companies are also beginning to make the move to EVs as a way to address the costs associated with the UK’s Clear Air Zones and improve environmental credentials. Retailers and logistics companies must go one step further from just buying these vehicles – they must be used in the most effective way to really impact the delivery experience. Using intelligent route management and continuous delivery optimisation allows companies to ensure the right vehicles are deployed to the right areas while in transition. This can ensure they are reflecting environmental goals as well as matching capacity with demand. For example, EVs can automatically be allocated to deliver in a Clear Air Zone, whilst smaller vehicles can be routed to deliver in areas with more narrow roads such as rural areas. With access to real-time data on capacity, demand and routes, retailers can ensure they are optimising the whole process and maximising output with an existing pool of resources whilst achieving environmental gains and movement towards business goals.
The retail market is a challenge in the current climate. Coming into the peak season, retailers will increasingly be struggling to balance an increased demand for products with an ability to deliver effectively due to the driver and supply shortage. Despite these challenges, it is vital that companies are considering the environment and prioritising sustainable operations. With 88% of consumers under 25 and 77% between 25 and 34 considering the environment when purchasing, the need for retailers to take action is clear as there is a shift in trends and awareness. The ability to provide an effective, positive, and green delivery experience will aid retention of current customers, the acquisition of new customers, and help to move towards their own net-zero. By using simple and automated solutions that continuously optimise delivery operations, emissions and environmental impact can be reduced whilst maximising the delivery capacity of the existing fleet. Route planning their own journey to net-zero will allow retailers to continue to maximise and benefit from the COVID-19 online boom.
Andrew is Head of Marketing at Descartes Systems UK Ltd and has over twenty years’ business-to-business senior marketing management experience with high technology solutions (hardware, software and services) in complex business-to-business markets that includes logistics and transport with organisations such as Intel, Securicor, Unipart Technology Logistics and Orange.