How much does logistics weigh in the online shopping experience?
E-commerce represents over 12% of the retail market in the world and digital channels influence and guide over 50% of purchasing choices; in Italy, as we said a few months ago, the total revenue of online sales in 2020 is estimated at 48,25 billion euros, thanks in particular to the increase in expenditure on physical products (plus 31% in 2020, with peaks of 75% in the Health & Pharma segment and 100% in Food & Grocery). In this context, logistics and packaging play a primary role, because they are the “engine of e-commerce” and are, for customers, among the main critical factors in choosing the sites to buy from, as a study dedicated to these aspects reveals.
e-Commerce sites, logistics and packaging affect sales
To investigate the relevance of logistics and packaging for e-commerce sites is the handbook “Sustainable Logistics & Packaging for E-commerce and New Retail” made by Netcomm, which analyzes the state of the art in these areas for the e-Commerce in Italy and provides indications to companies that intend to develop their own logistic plan in the digital commerce improving the management and the offer of such services and to guarantee sustainability and competitiveness of own online activity, both in Italy and abroad.
The numbers confirm the weight of these aspects, especially in the negative sense: 34% of online buyers choose the site where to buy based on the delivery and pickup options proposed, and some parameters judged as unsatisfactory can slow down an online purchase. According to Netcomm, in fact, among the reasons that lead to the abandonment of the cart there are:
- Additional costs of shipping, indicated by 58% of respondents and first cause of failure to purchase.
- Risk of failed delivery because I was not at home, 58%.
- Risks of inconvenience in case of return, 41%.
- Delivery slots too vague, 41%.
- Few options of delivery and pickup, 34%.
The survey also highlights how the quality and speed of the first delivery are crucial to win and retain the customer, and therefore the way in which they influence the future purchases of people on the same site. This is also confirmed by the positive or negative reviews that leave customers after an online purchase, which in most cases comment on the shipping service.
Therefore, it can be said that “logistics operators and couriers have in their hands the happiness of e-commerce customers, as well as their loyalty“.
Logistics for e-Commerce
The study deepens also which are the activities and the logistic processes that enter in game in the e-commerce, and that they have “a huge value is both strategic, because it guides the choices and loyalty of the customer, and operational given the interdependence with other business functions and the high impact on the cost structure” of the online sales channel.
Among the main aspects, we find:
- The planning of the supplies, in order to guarantee the availability of the products.
- The management of payments, that they have many ties with the logistic aspects in the e-commerce (certainty recess and departure goods to harmonize).
- The management of orders, the production of accompanying documents, in particular for digital export.
- The processing of orders in stock, from pick&pack activities until delivery under management to a courier or forwarder.
- Preparation of a packaging suitable for transport and delivery, considering the different materials that make it (for example, adhesive tapes and fillers).
- Tracking of order, to inform the customer about the progress of the shipment.
- The delivery to the customer, considering expected costs and times, as well as the added value services associated with it (for example, delivery notice and payment on delivery).
- The management of customs and fiscal aspects.
- Management of any returns, partial returns and refunds.
- Customer care to support the customer during the delivery and after purchase phases (also important in the pre-acquisto phase to support the choices and the purchase of the customer, but not relevant for the purpose of this publication).
As stated by the President of Netcomm, Roberto Liscia, “logistics is one of the business areas that is undergoing the greatest transformation in the digital scenario: consumer demands, new technological applications, but also the need for scalability of business models have created a context of great ferment for companies that use and provide logistics services, generating increasingly innovative services for consumers and businesses, entry of new players and important M&A initiatives”.
The sector is also very dynamic, and “one of the most interesting trends for all the companies involved in digital commerce is sustainability, which in the logistics sector means inventory optimization, efficient transport and delivery cycles, use of smart vehicles, but also the adoption of increasingly environmentally friendly packaging”.
The role of Delivery & Return Policy
The other element that strongly influences on the satisfaction of the user, and that must be well managed in the within of a logistic plan of e-commerce, is the Delivery and the Return Policy (that is the politics of management of delivery and returns), to be defined according to the product category, the characteristics of each country of destination and the specific needs of the target customer segments (without neglecting the opportunity to “lean” on warehouses and logistics services of a reference marketplace, for companies that sell through such platforms).
The Delivery Policy mainly concerns the so-called last mile services, such as:
- Cost of delivery (with choice essentially between free delivery or threshold of minimum amount for free delivery).
- Delivery and pickup times (with options available, such as delivery in 24 hours, in the store, in the lockers).
- Added-value services related to delivery and collection (such as, for example, delivery by appointment or in hourly slots, delivery notice, delivery to the floor, payment in contacts or POS at delivery and so on).
The Return Policy mainly regulates:
- Chance to return or not return. This applies in particular to sectors where it is not mandatory, such as food & beverage, pharmaceuticals and perishable products for the person or with hygienic safety elements (e.g., creams), customised products and B2B sales.
- Times within which to return. In almost all countries of the world there are 14/15 days by law, but then each merchant decides its own policies, also according to the category and country.
- If and how the merchant will facilitate the return, up to make it free. Note that, by law, the shipping costs of the return would be charged to the customer, but in many areas for practice the return is free, or at the seller’s expense.
The weight of packaging: sustenability and customer care
Creating a packaging that amazes customers is the first step to seduce and retain them, reads the study Netcomm: attractive design, discount coupons and personalized thank you cards enrich the consumer experience with positive emotions that strengthen the link with the brand and facilitate the repurchase, to try again the same emotions.
Then there is another component not to be underestimated, namely the attention to environmental sustainability, which has significantly increased the demand for ecological products, also influencing online supply. Sustainability is, of course, also one of the focal points for packaging, which is no longer just a practical mission.
We can define sustainable packaging as a packaging designed to create the least environmental impact possible, while ensuring excellent performance, for example in terms of protection and/ or filling. Already important today, the attention to the environmental sustainability of packaging is expected to increase with the spread of e-commerce, representing the only physical contact with the customer in the purchase process: it is therefore an opportunity to retain it, to consolidate brand perception and to differentiate from the competition. On the contrary, if neglected, it risks becoming a double-edged weapon, and therefore we must approach packaging, considering it not as a mere cost, but as a strategic opportunity for business.
Given the progressive development of e-commerce and omni-channel distribution strategies, in fact, in addition to the classic function of protection and safety, today the packaging also has the task of representing the universe of the brand and that of “connecting point between digital narrative and sensory contact”. In other words, packaging is more and more a mean of communication for brands and stories that they want to tell, increasing their value: at the same time, the so-called unboxing experience has become a very important factor for consumers, to the point that many “they started recording videos during the opening of the packages”, which are hoarding views on Youtube and similar platforms.
It follows that “the improvement of packaging and its aesthetics have become key elements in the perception of the brand, becoming an integral part of marketing strategies aimed at differentiation and loyalty”.
A guide to e-Commerce and new retail
All the stakeholders must take note of the opportunities and the ties offered today from the logistic systems, reads in the conclusions of the study of Netcomm, because “the ground on which the success and the sustainability of every plan of e-commerce is played on”, which is designing new supply chains and business models, promoting the emergence of new actors and the development of new services.
The digital companies, who have well understood how logistics is a key element for the success of an online initiative, are dedicating important projects and large investments to the creation of logistics services that are increasingly punctual, flexible, fulfilling and sustainable, combining the needs expressed by consumers with the prospects enabled by new technologies and generating synergies for the efficiency of internal business processes.
This work, carried out with the contribution of over fifteen experts and members of the Netcomm Consortium, represents a good starting point for owners of e-commerce sites that want to deepen all the components related to the receipt of the product by consumers, one of the most important moments of their interaction with the online store, both because it is when they first get in touch with what they bought, and because the when and how they receive it deeply affect the shopping experience lived, also affecting the feedback and possibility of loyalty.