Retailers ‘losing customers due to poor delivery’, research from Zedify shows

Half of retail businesses in the UK are losing customers due to a poor delivery experience, according to a report from Zedify.

The Cambridge-based sustainable delivery company studied 250 responses from retailers with a minimum UK revenue of £10.5million.

The research also showed that:

- 45 per cent of respondents are finding it hard to meet delivery times

- 44 per cent are struggling with customer communication

- 39 per cent are finding increased shipping costs to be a real challenge.

But there were aspirations from some to improve their commitment to sustainability.

The research found that 57 per cent of UK retail companies responding were committed to investing in more sustainable delivery options, while nearly a third (32 per cent) want to work with eco-friendly carriers.

Some 30 were seeking to use more eco-friendly packaging, while 25 per cent planned to reduce greenhouse gas emissions.

Rob King, CEO and co-founder of Zedify, which uses a fleet of cargo bikes for last-mile deliveries, said: “The last mile is rife with inefficiency, high costs and environmentally unsound solutions and our research demonstrates just how much retailers are struggling with it, so much so they are losing customers as a result. This shows just how pivotal the delivery experience is for retailers when it comes to customer loyalty.

“But it’s also encouraging to see how many are looking to engage in more sustainable business practices with a focus on delivery.

“By investing in super low-carbon delivery options such as cargo bikes over vans, electric or otherwise, not only can retailers make massive carbon savings per delivery, they can ensure more accurate delivery times and a more pleasant doorstep experience, thereby improving the customer experience as a whole.”

The research found:

- 72 per cent of retail businesses have sustainability targets in place for deliveries, while 46 per cent plan to use cargo bike deliveries.

- 57 per cent worry they will be accused of greenwashing if they promote their green deliveries.

Zedify’s report notes: “Brands are under pressure to improve the sustainability of their carrier options, but may feel let down by what’s available to them. The green credentials of their current last mile options may not appear ‘strong’ enough for brands to feel they can talk about them in the public eye. For others, the pressure of having to be ‘100 per cent green’ across the whole brand operation, and ‘beyond reproach’, can cause reticence to publicise any positive action.

“With a tightening up of the laws around greenwashing - including the addition of new laws from the UK’s Competition and Markets Authority and the EU’s proposed Green Claims Directive - regulations are finally catching up to the demands of the market, where consumers are desperate for honest, easy-to-understand information about the sustainability credentials of their favourite brands. This is no doubt a good thing. However, retailers may feel increasingly nervous about making claims publicly.

“The good news is that a green last mile strategy can provide far simpler, clearer cut improvements on a business’ ESG commitments. Unlike, for example, product manufacture which involves many complex inputs, review of material provenance, and so on.”

The report notes how consumer trends are driving change at lightning speed.

There is increasingly a move to a ship-from-store model in urban areas, while customers increasingly expect transparency around shipping costs, with free shipping still being used to entice customers. Subscription models have growing importance, while real-time tracking and a desire for sustainable delivery options were also significant.

The report adds: “It won’t come as any surprise that we learnt consumers still value next day delivery options as a top priority, alongside contactless and no-touch deliveries. This is a standard that’s become the norm post-pandemic and is likely to stay.

“Interestingly, returns convenience scored highly here, too. With the rise of PUDO lockers and customer autonomy in terms of the options on offer for how to return products, we predict this will be an area of rapid development in the next five to 10 years, with brands adapting to changing customer needs to maintain their NPS (Net Promoter Score).”

But high shipping costs continue to eat into profit margins for ecommerce businesses, while deterring customers.

Other ‘pain points’ mentioned by retailers include the difficulty of providing speedy delivery in an age of instant access and the last mile delivery challenge - in which 53 per cent of the cost of a delivery is bound up.

Returns processing, customer communication and using and finding sustainable solutions were also mentioned.

Zedify argues cargo bikes “are now increasingly seen as a practical solution for urban deliveries”, with the likes of Amazon, Ikea, Hello Fresh and Zara among those delivering significant numbers of orders by this method.

It is currently operating in Cambridge, Brighton, Bristol, Edinburgh, Glasgow, London, Manchester, Norwich, Plymouth and Waltham Forest, and is planning expansion soon to Bath, Birmingham, Cardiff, Leeds, Liverpool, Nottingham and Oxford.

Rob concluded: “Being sustainable is not just good for the planet, it is good for customer retention and happiness, which translates to growth.”