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Centrum kommenterar: Incorporating customer value into e-commerce last mile delivery

Publicerad: 2020-12-09

Despite years of academic efforts to support e-commerce actors in understanding and accepting the customer perspective and customer experience in a given setting, it is highly common for e-retailers and logistics service providers to have a very vague idea of “What’s in it for the consumer?”

Photo by Claudio Schwarz on unsplash

 

The last two decades of the e-commerce surge have turned into self-sufficient operations at the core of various types of organizations and a part of everyday life for almost 2 billion consumers. Enterprises conduct a part or all of their operations online while juggling the changes in customer expectations and demands that are not yet fully understood. This is because customer behavior is a matter of continuous change, just like the market where the operations take place. Any supply chain actor, starting from the top of the network, can now connect directly to the end customer, thus avoiding many types of third-party actors and is so able to optimize the internal processes. These changes create an opportunity to reduce the lead time and optimize resources throughout the entire supply chain. Yet, not all firms manage to benefit from the system because they fail to fit into the market requirements or meet customer needs. With the diversity of the conditions and customer groups among actual end consumers, it is the B2C e-commerce that presents the most challenges to the market players involved.

The delivery service becomes the differentiator in e-commerce forces. As a source of competitive advantage, it should be based on the consumer delivery experience. The front-runners are well aware of this. An example is the absolute market leader, Amazon, which has established an enormous customer pool through Amazon Prime membership that offers same-day delivery. This is pushing the competitors to step up their logistics game. As a result, innovative service solutions are developed, tested, and applied. These services and tools target the improvement of existing solutions (e.g., digital locks that improve home delivery services) or generate utterly new service algorithms (e.g., drone deliveries to “on-request” locations). Simultaneously, applying a new service solution can be a challenge in and of itself because altering a delivery system that has long-established traditions can lead to changes in customer behavior and stakeholder relationships in the B2C e-commerce last mile delivery setting.

Despite years of academic efforts to support e-commerce actors in understanding and accepting the customer perspective and customer experience in a given setting, it is highly common for e-retailers and logistics service providers to have a very vague idea of “What’s in it for the consumer?” According to recent industrial logistics reports, two-thirds of the e-commence front-runners in Europe deal with customer insight issues at the management level; for slow-runners, the same issues are relevant for a quarter of the companies. This shows that the broader the companies’ operations become, the more they lose touch with the consumer. Thus, a paradox arises in the e-commerce market, where the more customers and customer experience an enterprise has, the less understanding it has of the customer perspective. This paradox can be addressed with new approaches and methods of evaluating and managing the customer relationship, customer value, and the customer value creation process. Such actions are no easy task for practitioners or academics. It is certain, though, that new knowledge creation methods and service techniques are imperative for the success of the future e-commence market and its actors.

When addressing the gap in consumer insight, first and foremost, the market stakeholders are to adopt a holistic approach and coordinated actions for evaluation, (re)designing, and implementation of potential solutions. Particularly, both e-retailer(s) and logistics service provider(s) need to adopt a holistic perspective on the e-customer journey through the e-commerce last mile since e-customers perceive the experiences and the actors involved as one. This means mapping a united e-customer journey that includes online experience, delivery, and return services.

Recent research shows that consumers do not assign the value creation and destruction within their online shopping experience in a manner of actual responsibility distribution (including the brand relationships, online experience, and the logistics related experiences – delivery, returns, and packaging). In other words, failure of one actor, such as late delivery, damaged packaging, and/or the wrong item carried by a logistics service provider, is likely to carry negative implications on the e-retailer’s relationship with the consumer. To gain executive power of the consumer’s e-journey, e-retailers would need to switch from the “convenient” logistics outsourcing to a joint e-journey design where the logistics service offer is tailored to their retail operations and strategy, as well as it could need to be matched with the particular consumer needs in order to enable the virtuous value creation for all actors involved.

Coordinated joined retail strategy development that incorporates customer journey (with the delivery experience) and the customer-value creation perspective into the operations design, can enable enchasing consumer experience, which would consequently translate into higher consumer satisfaction and retention. Furthermore, joint customer journey mapping and management would provide the ground for successfully implementing the novel strategies, methodologies, and digital tools, that have been overwhelming media, academia, and industry for the last years by promising benefits for all the retail actors.
 

Yulia Vakulenko, Centrum för handelsforskning

Yulia Vakulenko är forskare vid Förpackningslogistik LTH och Centrum för handelsforskning vid Lunds universitet.

Läs mer om Yulias forskning.