Failure to Deliver

Delivery is one of the final hurdles for online retailers trying to compete. Supply chain logistics are complicated and expensive and shipping remains one of the most inefficient and costly variables in the process. Unfulfilled and rearranged deliveries account for huge losses in the sector; in the UK, one of the strongest e-commerce markets in the world, the cost of unfulfilled orders runs into the millions; while in the US, fulfillment cost Amazon $4.6 billion in 2011 alone.

Anyone who has ever shopped online can tell you why. The chief consumer frustration with ordering online is being available to sign for the goods at any time in a 24 – 48 hour delivery window. And that’s if the order is actually completed in the first place; a recent study found 50% of online shoppers abandon purchases at the check out because of dissatisfaction with delivery options offered by the site.

In the e-commerce race to offer more, faster for less, giants like Amazon, Wal-Mart and eBay have determined shipping as a prime site for battle; competing to break the same day delivery barrier and, in some cases, reportedly absorbing the massive costs of logistics in order to compete.

All the major e-commerce players have increased their investment in logistics in the past year. Amazon acquired Kiva Systems, an automated order fulfillment system that uses robots to retrieve entire shelving units; Wal-Mart has recently launched ‘Wal-Mart To Go’ – an ecommerce platform that allows customers to choose between in-store pick up and same day delivery within a four hour window – in selected areas of the US,; and both eBay and Google are testing apps that connect online shoppers with local retailers, promising same day delivery in the San Francisco area.

This is good news for US customers but for those who live elsewhere in the world waiting up to three weeks for delivery is still a reality. Expansion into foreign markets remains one of the challenges for e-retailers. Significantly cheaper price-points and lack of product availability internationally often means the consumer is willing to wait. But lack of delivery options, sky-high shipping costs and unexpected customs fees remain prohibitive. Local and multi-channel retailers internationally are also getting more savvy to the needs of their customer, proving to be serious competition for the ecommerce giants in markets like Australia by offering same day, evening and personalized delivery services.

By considering regional differences in online behavior and delivery expectations companies such as Amazon have been able to successfully infiltrate international markets. By offering payment-on-delivery in Italy for example, the company is alleviating concerns about secure online payments; while in the UK, Amazon delivers to the corner store, saving on fulfillment costs while providing an all-too-rare human interaction in the e-commerce world, between the corner store merchant and the Amazon customer.

A number of third party delivery systems are also easing the pain of e-commerce delivery for international consumers. BufferBox launched this year in Toronto, allows delivery to a BufferBox locker at local train stations and grocery stores and even pays your customs fees, simply adding it to your BufferBox bill. CarDrops out of Belgium is trialing a system that will deliver to your vehicle. While Shutl, a UK start up that will be launched in North America in 2013, claims to ensure delivery within the hour by connecting retailers to same-day couriers in the area. Their website boasts their fastest delivery as 14 minutes and 58 seconds.

Delivery is the only physical interaction the customer has with the online merchant. If it’s not a positive one, or delivery fails all together, it can prove costly for the online retailer while compromising the customer experience.

the author

Jamie Farshchi

Jamie Farshchi is managing editor, digital for miscmagazine.com and senior editor for MISC. She is based in Toronto, Canada.