Alternate Delivery Locations
Are You Prepared to Offer Alternate Delivery Locations?
Customers show they are willing to trade off the convenience of home delivery for improved shipping reliability and cost savings.
Customer journey mapping has become all the rage when it comes to competing in a digital world. In the case of small parcel shipping, examining the customer journey reveals a willingness of buyers to forgo the convenience of traditional point-to-point residential delivery in favor of the hub-and-spoke model's use of third parties, which we call Alternate Delivery Locations (ADLs).
It's an emerging trend - that isn't as counterintuitive as you might think. By providing customers the freedom to choose where and when to collect deliveries, shippers offer customers convenience and security, and even the potential to save them money. Carriers have embraced and enabled the ADL model; shippers should follow suit and prepare for system modifications to stay competitive.
To some, having a package delivered to somewhere other than their home residence might seem strange, but according to a 2017 ComScore study, 37 percent of online shoppers prefer to have their items shipped to an alternate location for pickup (for example, to a grocery or convenience store, a gas station, or a 24-hour fitness club) and more than half of consumers are interested in the ADL option.
Many customers are now defaulting to picking up their package at a designated ADL; the carriers have responded, as evidenced by the success of UPS Access Point™ and the FedEx Onsite™ programs. UPS just expanded their network by adding 1,000 locations in Canada, and FedEx has recently partnered with Walgreens to offer this option at almost 8,000 stores by 2018. Amazon is embracing the ADL concept as a way to reduce delivery time even more with its Instant Pickup (having identified ADLs near college campuses, where student orders from an app can be picked up within minutes).
It's easy to understand the scenarios behind the numbers. First, rushing home to avoid parcel theft is stressful and often inconvenient when you're not quite ready to leave the office (75% of consumers are concerned about "porch piracy"). Also, there's nothing more disappointing than seeing an "attempted delivery" sticker on your door when timeliness is an issue. In a growing number of cases, buyers complain of heat spoilage, especially annoying when it's an expensive wine or food item.
If a signature is required, travelling to an alternate location is often going to be necessary anyway after a failed delivery attempt. Many customers don't like their shopping habits being in full view of the neighbors as their shopping cart goes on full display at their doorstep. Lastly, this option can save the customer money: your competition may already be passing on savings to the customer by avoiding the Residential Delivery Surcharge (which can be over $2) plus the reduction in repeated delivery attempts that lower the shipper's cost structure.
A Preference that will Quickly Become a Demand
Historically, shipments defaulted to an alternate location after failed delivery attempts or by permanent consumer selection, regardless of the shipper. But soon, this option will be both customer-driven and shipment-specific. We expect that buyers will not only want this feature, they will demand it. If the probability of your customers demanding ADL is high, how can you get ahead of the curve? How will you make it easy for both you, and your customer?
First, shippers must recognize that offering ADL isn't a trivial system change. Many retailers will require one or even two years for system readiness. Hence, start planning now given there is high probability your competitors will offer this option very soon, even offering a discount for ADL orders.
Plan for At Least Three System Modifications
System changes for retailers can be significant requiring adjustments to i) the ecommerce experience, ii) OMS/WMS data integration and iii) parcel shipping management systems.
For example, shopping carts will need to offer an ADL picklist close to the buyer's location preference. Some customers will prefer a location that is close to work versus close to home. In addition, the shipping cost calculation will need to be altered to either accept Ecommerce Rating calculations or an adjustment to reflect a pass-through of the savings. Remember, customers will expect to save money by choosing the this option, especially if your competitor offers a discount. Customers will also expect to be notified by text or email when their package arrives at their designated location.
In addition, your OMS/WMS systems will need to accommodate storage of these "alternate addresses." These addresses will need to be passed to the parcel shipping management system which must be able to store the data, re-rate the order if necessary, render it on a carrier-compliant label, then include this information on the carrier's EDI/manifest.
While the requisite modifications may not be technically difficult, they do demand planning given the flow of data through to at least three or more systems plus a significant change to the consumer's check-out experience. Large volume shippers will generally require a significant head start to get ahead of both their competitors and the expectations of their customers. But it will be worth the effort: the ADL business case will return healthy ROI as it delivers happy customers. Since Shippers, Carriers, and customers want the ADL option, is now the time? Only you can answer the question.