Speed has been a top priority for retail delivery, with companies like Amazon pushing to get packages to arrive as soon as possible. Image: shutterstock
oneS Amazon offers faster and faster delivery – from two days to one night to the same day – and many other retailers think they need to do the same or risk losing customers.
No, new research from Kellogg School says. Researchers found that speed doesn’t necessarily win when customers pick purchases from the showroom and then need to go home to accept delivery. In this case, customers prioritize the convenience of the delivery date over speed. The day of the week when a customer enters the showroom can help the company predict the day that customers can deliver most easily.
This knowledge can help provide retailers participating in at-home delivery, including many furniture and equipment stores, improving their operations and increasing customer satisfaction.
“When Amazon moves towards the same day’s delivery to the same day, businesses are thinking, ‘Now everyone needs to do that,'” Sunil Chopra, operations professor at Kellogg, said: “But in this case, it’s not true. They don’t need to be faster. ”
Understand customer preferences for delivery time
The project first emerged when a former student of Chopra contacted him to help him solve his delivery puzzle at a high-end mattress company in the United States.
Customers will enter the showroom, purchase a mattress, and choose a delivery day from several options. Someone asked someone to go home all day during delivery, because the exact delivery time will not be set until later. The company aims to complete delivery within five days. Not only does the company miss the trademark occasionally, it also considers further reducing delivery times.
The company then questioned how it could speed up delivery by strict requirements that customers must go home to receive orders.
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Chopra asked then-doctoral student Pol Boada-Collado to work with the company. Boada-Collado processed data in more than 30,000 sales transactions at 217 stores in 2016 and 2017, excluding atypical sales periods such as Black Friday and Presidential Day.
He then plots the possibility that the client chooses the first available option and gets the “interesting shape curve”.
Some people do choose the earliest available delivery date. But many people skip it and instead choose a later date, sometimes even more than a week. After preliminary analysis, it seems that customers don’t necessarily want the fastest delivery option.
The research team includes Kellogg’s faculty, Karen Smilowitz and Maria Ibanez, both in the operations department, and next tries to figure out why customers want future delivery dates.
They found that according to the day of the week the customer entered the showroom, the customer preferred the preferred pattern for delivery date. This preference explains why customers often don’t choose the fastest delivery option.
Specifically, customers who shop on weekends are more likely to want weekend delivery. So if they are in the store on Saturday, they will usually choose the next available Saturday, even if that means delaying delivery by one week or more (the company is not shipping on Sunday). In contrast, customers who shop on a weekday are usually more flexible.
“Most customers prefer weekends, but those who show up on the weekend like them so they don’t spend a weekday delivery,” Chopra said. “People who show up on the weekdays usually have more flexibility.”
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“This segmentation is especially helpful in designing appropriate delivery options for small purchases (such as mattresses) and retailers have little information about their customers,” he added.
Working around customer preferences
After the researchers learned about the motivations of customers, they tested how companies could use this information to improve operations.
The company provides delivery Tuesday to Saturday. Researchers are curious whether providing delivery on Sunday will reduce lead times and improve customer satisfaction. However, instead of simply taking Sunday as a client’s choice, they incur additional expenses, they assessed the potential gains of moving the company from Wednesday or Thursday (the least popular time day between clients) to Sunday.
They found that transferring some delivery from Wednesday to Sunday would increase delivery speeds, although that was not the case on Thursday. Ultimately, the ability to transfer from Wednesday to Sunday will only benefit a few people (compared to Thursday or other working days) many who want weekend delivery. And transfer delivery days rather than adding new days help ensure that overall delivery costs do not increase.
“This shift drives customer satisfaction, and if there are a few days when you can reduce capacity, it can also save potential costs,” Chopra said.
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He explained that the company could also reduce lead time and potentially save money through other ways. For example, it might make sense to “hide” precious weekend delivery options from weekday customers, who are more likely to accept weekday delivery options. This will retain weekend delivery options for weekend shoppers and benefit stores by helping reduce delivery times.
Unique shopping and delivery experience
These results apply to a specific shopping experience: a trip to the retailer, followed by a courtroom delivery.
In addition to buying large furniture and equipment, those that require construction (such as garden sheds or installations), such as home cinemas or alarm systems, follow a similar pattern.
However, the biggest part of home delivery purchased at a grocery store works differently. That said, grocery shopping is done online, meaning customers may be at work or on the train while putting items in their carts.
Unlike showroom purchases, “When [online] The order has been placed and you cannot infer anything about customer preferences. “When people show up in person, it tells you their preferences.” ”
Nevertheless, the unexpected nature of the findings confirms that there are still critical learning opportunities for companies seeking to optimize their delivery operations. At the very least, companies may want to be careful not to think faster speeds are always better regardless of the type of shopping experience they offer.
“In a contest that achieves customer satisfaction at a reasonable cost, the fastest is not always a win,” Boada-Collado said.
[This article has been republished, with permission, from Kellogg Insight, the faculty research & ideas magazine of Kellogg School of Management at Northwestern University]
