As the pressure on physical retail continues to grow, including as a result of the impact of the pandemic on consumer behaviour and staff availability, brands must continually re-think their route to market. This presents opportunities for businesses who can deliver what their customers want, where they want it and quickly, but there are pitfalls.
Can you bright light to the ‘dark’?
Since Deliveroo launched its Editions business, which came to be referred to in the press as ‘dark kitchens’, we’ve seen ‘dark’ stores become an increasingly popular route to market across a range of industries – most notably, in groceries. Of course, the pandemic changed habits and accelerated change but this trend pre-dates Covid and will probably outlast it. The big question is - what industry segment is next?
There’s a huge opportunity to reach efficiencies bespoke to this new means of commerce. Where you’re no longer targeting ‘in-person’ shoppers, seeking to encourage them to walk through the aisles, place items into their baskets, and then grab that treat by the till - how should you set up your customer portal to achieve the same results; and specifically to quick commerce - how do you layout your physical sites so that these items ordered most commonly together, are stored so as to expedite the picking process (where aisles of similar types of goods no longer reflects the optimal solution?).
The fight for digital and physical real estate
Do you have your own app and delivery service - or do you benefit from the economies of scale of an established marketplace with its own logistics capability? If a marketplace, how do you manage where your brand sits on the digital real estate of that platform? It’s not as easy as buying a lease on Oxford Street but the impact on virtual footfall can be just as dramatic.
As much as a ‘dark store’ future presents a new lease of life for struggling high streets, how do you find the right location with the right planning use class (which can be an additional complication of a ‘dark’ store over traditional retain) for your business to reach its customer base quickly?
How quick is quick, and at what cost?
As quick commerce keeps getting quicker, what is the next offering where your customers will see ‘next day’ as not being quick enough? As all stakeholders sharpen their focus on ESG issues, more broadly, how do you facilitate your last-mile offering in a way that is environmentally friendly?
Am I operating sustainably?
The Committee of Advertising Practice has recently published guidance on environmental claims and social responsibility in advertising: there is a clear expectation for businesses to play a prominent role in encouraging responsible consumption behaviours. In this context, while customers demand ever-quicker deliveries, the pressure is on for businesses to demonstrate that their supply chains are sustainable and that they are seeking zero carbon emissions (or even net zero). Also take note of the CMA’s new Green Claims Code, which requires environmental claims more generally (and not just in advertising) to be robust and substantiated, the implications of the Green Claim’s Code are discussed further by Geraint Lloyd Taylor if you would like to find out more.
Demand for last-mile delivery is expected to grow by 78% globally by 2030 with a corresponding 32% increase in emissions from delivery vehicles. To improve the carbon footprint of ‘the last-mile’, can you use trains for freight, run your local delivery vehicles on electricity or hydrogen or make better use of cycle couriers. Think of Amsterdam which is well-known for its bike couriers zipping around delivering one-off items to individuals. Can you use AI and real-time data feeds to help you to achieve route optimisation for more focused and bundled deliveries (e.g. permitting more parcels to be delivered to the same street at the same time) to ensure that fewer miles are driven. Staff wellbeing in delivery companies remains a priority - another positive of more efficient supply chains can be to allow workers to work smarter and to have a better work-life balance.
With the advent of a plastic packaging tax in the UK from April 2022, businesses will need to ensure that they minimise the use of packaging and that the packaging they use is as sustainable as possible and can be recycled easily by consumers. Matt Rowbotham has written more on this here.
Oh crumbs, did I need a licence?
It is also worth noting the significance of product-specific laws, for example for items such as cosmetics or food. Do you need a licence to promote, offer, sell and/or deliver the items concerned? Do the products need specific types of packaging and can the products and their packaging be sourced ethically?
Surely I don’t need to comply with consumer laws? I’m just a matchmaking platform!
The consumer need for speed grows, but ‘cutting corners’ in the online sales process will end in tears! There remains a blacklist of commercial practices which are always unfair, such as falsely stating that a product will be available for a very limited time to nudge consumers into buying something immediately. Under consumer laws, online platforms must also make very clear to consumers what their role is in the sales and delivery processes: that is, whether they are providing the actual product, or acting as matchmaker between buyer and seller, or providing the delivery service, and where their recourse is. Even as a matchmaker, a platform needs to comply with various consumer laws, for example, describing products accurately (including total price), saying whether they are second hand, explaining their suitability and/or limitations, and making sure that the price is crystal clear (especially if a subscription model) and that any additional costs such as delivery or customs charges are set out clearly. Last minute information (such as delivery charges) in the sales journey is not allowed, and auto renewals remain under the CMA spotlight. In the UK, Ofcom is also consulting on new requirements for delivery companies, including ensuring that disabled customers receive a better service.
2022: the year when your FD becomes your CTO’s (even better) friend:
Technology is your best friend, but increasing budget is needed, a delivery management software that takes care of every aspect of the last-mile delivery may take away some of your woes: right from order request management to optimised route planning to order tracking to feedback management - something that transforms your day-to-day operations into a well-oiled machine. More and more enterprises are adopting last-mile delivery technology. The pandemic has forced us to keep one-on-one human interactions to a minimum if they are not virtual. Electronic proofs of delivery and digital payment gateways offer a gateway out of the crisis.
Finally, how did we do? It means a lot to us, really!
For a superb customer experience, can you make last-mile delivery tracking an experience in itself. While several logistics solutions offer real-time tracking capabilities (ahem, noting that too many texts and emails becomes annoying!), some tech solutions elevate the tracking experience to a whole new level with opportunities to brand the tracking screen, add product promotions, feedback sections, and more. While customers can enjoy the visibility into their order’s whereabouts, they can communicate with the delivery partners, update their availability and notification preferences, and have a top-notch experience.
None of these issues are straightforward to address, but they will no doubt be front of mind for all of your competitors and, as the world continues to be disrupted by Covid, the brands who are (as ever) well prepared, innovative and ahead of the game, will continue to thrive.
By Tarun Tawakley and James Gill, Technology and Communications Group – Lewis Silkin
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