Infinium Logistics Solutions

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How Do the Leading Retailers Thrive in an All-delivery Economy?

Maximising cost-efficiencies through green delivery solutions

Convenience and speed has long been a driver for the growth of the ecommerce industry. Globally, between 2014 – 2019, online sales tripled. Prior to the Coronavirus pandemic, the sector was expected to grow by more than 16% throughout 2020. However, government restrictions and store closures meant that the world rapidly became a far more internet-driven society. This resulted in a 28% boom by the end of quarter one alone. In fact, some nations witnessed ten years of ecommerce growth in just 3 months.

In response to this increasing demand, there are more diesel-fuelled vans on our roads than ever before. This growth coincided with the roll-out of numerous clean air zones across Europe in a bid to curb transport-related emissions, congestion and noise along with growing health concerns.

As single-item orders are shuttled from depots to individual addresses – granular home delivery is still the most popular method of despatch with so many continuing to work remotely.

Final mile logistics are responsible for over 50% of delivery emissions due to the stop/start nature of drop-off’s.

(McKinsey & Company)

Pre-pandemic, the World Economic Forum predicted a 30% rise in emissions from last mile deliveries by 2030. With the huge industry growth last year, it’s expected that this figure will be significantly higher.

Within our ‘all-delivery economy’, two thirds of shoppers’ are actively seeking to buy their products from climate-aware brands. This only highlights the importance of providing new logistics solutions that align with both businesses and governmental environmental policies. When asked specifically about their online delivery methods in a recent MetaPack report, a third of shoppers valued sustainable delivery methods. 47% are even willing to wait a little longer to support responsible retail and greener courier operators.

57% of UK consumers worry that online shopping presents a significant threat to the environment.

(Internet Retailing)

Online retailers are realising that demonstrating their environmental credentials is no longer optional. Those offering green initiatives are leading the pack and gaining huge competitive advantage. Sustainability is a key differentiator in 2021.

However, the overwhelming majority of buyers believe that the retail companies should absorb the cost of sustainable deliveries. Today’s consumers expect free delivery, free returns and with the growth of ‘same day’ or ‘instant’ 1 – 2 hour deliveries, they expect orders to arrive faster than ever, too. This may be free to the consumer, but it comes at a substantial cost to the retailer and the environment.

So how do successful retailers beat the rising costs in an eco-friendly way?

Educate customers about their sustainable choices.

Increasingly aware of the environmental impact of their behaviours, customers are voting with their feet – or rather, their fingers. Multiple pieces of industry research commissioned in the last 12 months have shown that the COVID-19 led industry growth will not subside. 31% of shoppers confirm that they will be making fewer visits to bricks and mortar stores with two thirds stating that they will continue to shop sustainably in future. To ensure the customer remains in control of their order, it is crucial that eco-friendly options are not only offered, but are also explained at the checkout.

Retailers with out of home delivery options, consistency outperform their segment.

(MetaPack. 2021)

75% of online retailers agree that it’s important to create scalable, flexible, greener logistics – with particular focus on the provision of sustainable last mile logistics solutions. 73% plan to invest in the use of EV’s and 15% are considering eHGV’s; capitalising on the expanding network of commercial EV charging parks on the city outskirts for their fleet parking. What better way to advertise your brand’s ethical, environmental efforts than the EV fleets themselves acting as mobile billboards?

Micro Hub Cargo Bike

Prime real estate owners in smart cities are also identifying new opportunities, redeveloping their under-utilised space, creating central urban hubs as micro fulfilment centres. Perfect for short-range final mile and portering services, the urban logistics hubs can substantially lower emissions providing centralised storage and electric charging stations for micro mobility solutions, such as eBikes and cargo bikes.

Reduce missed deliveries.

In their 2020 study, MetaPack surveyed internet retailers in the US, UK, Germany, France and the Netherlands. 64% reported that their customers’ post-purchase experience was a top priority for 2021. It is certainly indispensable when it comes to online business growth.

In an industry where competition is high and customer retention is falling, brand loyalty can be lost, rapidly through inaccurate delivery lead-times. 81% of purchasers reporting a negative delivery experience in 2020 – 5 times that of 2019. As a consumer, little is more frustrating than waiting at home for an order that may or may not arrive between the hours of 07.30 and 18.00.

The increasing density of parcel lockers are providing a sustainable and convenient delivery solution, which could solve this issue for retailers and consumers alike. Perhaps we will soon see no more, ‘we’re sorry to have missed you’ cards; consumers will be notified that their parcel is securely delivered for them to collect within a certain-day window.

InPost Parcel Locker

These secure pick up, drop off lockers are becoming a common sight on Europe’s high streets and central transport hubs. Taking London as an example, two thirds of the population live within a five-minute walk of a high street, 90% are within a 10-minute walk and almost half do not leave their local areas on a daily basis. Within the UK alone, it is projected that there will be over 45,000 smart lockers within the next 3-5 years, offering a handy, environmentally friendly delivery solution.

For retailers, the autonomous alternative to home delivery offers a great way to provide accurate delivery information to customers and provide operational, economic and environmental advantages. Environmentally one vehicle that delivers to one location substantially reduces traffic-related emissions, noise pollution and congestion, whilst improving the health of the urban communities.

Recurrent journeys are far easier for schedule. Not only does this improve logistics efficiencies, parcel lockers help retailers remain competitive by improving cost-efficiencies – missed deliveries, multiple courier attempts and increased customer service contact all escalate costs.

Fewer, seamless returns.

Seamless returns have a big impact on the overall online experience. This is particularly relevant when it comes to clothing when multiple sizes and styles are purchased with the full intention of the buyer returning much of the order – and doing so at the retailer’s expense.

Throughout 2020, many brands invested heavily, streamlining their returns process. Online portals offer a range of options including no label, printer-free returns through a network of PUDO locations, such as convenience stores and lockers. Both of these solutions can result in two thirds less harm to the environment, as they operate just one delivery/collection. According to research undertaken in 2020 by returns platform, Rebound, 82% of the 1,000 consumers surveyed said that they would always return items sustainably, if it were an option.

Returns are very high with many businesses forced to monitor the reasons for refunds. Some are avoiding returns altogether having responded to customer feedback for better product imagery and better descriptions.

In much the same way as you would expect a premium brand to provide a premium experience, those delivering online orders must provide a good delivery experience; living up to the buyers expectations.

Overall delivery experience has long been of primary importance to online shoppers, and it is now essential when it comes to retailer operations, business growth and brand loyalty. The trailblazing retail leaders have capitalised on this key differentiator, offering a range of green delivery choices, accurate delivery time frames and a seamless returns process.

Sustainable last mile logistics solutions provide operational and economic benefits to the retailers and the ‘feel good factor’ to consumers, but they also bring considerable environmental benefits. The World Economic Forum estimates that by 2030, green deliveries could decrease CO2 emissions by 30%, reduce congestion by the same percentage and lower delivery costs by 25%. Whereas, Retail Times reports that EV’s lower transport-related emissions by as much as 27%.

Globally, consumer demand for sustainable last mile solutions are soaring. The green delivery sector expected to grow by 78% by 2030. Retailers must be able to demonstrate that sustainability is top of their agenda to remain competitive – it is a worthwhile long-term investment to ensure brand loyalty and a higher lifetime customer value.

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