Ecommerce Is More About Delivery Than The Actual Product

Though Amazon.com, Inc. AMZN is increasingly synonymous with the ecommerce market, its vast expanse and unlimited opportunities within the segment is enabling hundreds of small- and mid-tier businesses to move their businesses online. But ecommerce is seldom a level playing field, as companies have to contend with customer expectations that have risen considerably over the last decade – thanks in part to Amazon's relentless pursuit of improving its customer service. 

For an ecommerce company, the first touchpoint with its customer base is when users open the website to browse through the inventory to place an order. Apart from making sure it stocks the product in question, the company will also have to make the buying experience both seamless and pleasant. For instance, the buyer should be given details on the number of days it will take the product to ship and the day when it will arrive at the buyer's doorstep. 

"Logistics plays an important part here, as for the order to be delivered, the company must know the past performance of the shipper and its logistics partners," said Naman Vijay, the CEO and co-founder of ClickPost, an India-based logistics intelligence platform. "Data plays a key role in ecommerce. When a user buys something, the ecommerce site captures the order information including what is bought, its worth, the payment method, and the offers availed – data that can be used to create a customer profile."

This data can help companies retain customers and also reduce the number of people dropping out mid-way – a ubiquitous problem within the ecommerce segment. By leveraging user history to understand buying characteristics, companies can incentivize customers by providing discounts and offers, and push them towards buying the product in question.

Once the product is bought, the onus is on the ecommerce company to create a last-mile delivery experience that is convincing enough for customers to return in the future. Vijay explained that giving customers visibility into their product movement across the supply chain is critical to providing a fabulous delivery experience.

That apart, a solid return policy is essential. "Most companies have a fixed return policy ranging between 15 to 30 days. These return policies create a better impression on the end customer, because if he gets a return policy that makes it easy for him to return a product, he would think of buying again from that ecommerce company," said Vijay. 

However, in the context of returns, it is essential for the ecommerce company to capture data on why the customer is returning a product. There could be a variety of reasons like a mismatch between expectations and reality, late delivery, damaged product, or even because the customer found a cheaper alternative elsewhere. 

"Catching the intent of the return and building some intelligence on top of it is key. An ecommerce company could offer such customers the possibility of an exchange, extra credits to spur their next purchase, or help them look for a different product that suits their taste," said Vijay. "This would help preserve the customer relationship, rather than just having customers returning the items and not buying from the company again."

The process of returns should also be made as easy as possible. For instance, customers cannot be asked to ship the products on their own, or be asked to travel a distance to deposit the product at a returns kiosk. Ideally, the ecommerce company should arrange logistics personnel to collect it from the place of delivery – helping customers maintain the trust they have over the brand. 

The advent of new-age last-mile mobility models will also have a sizable impact on reducing delivery times in the future. Drone technology is of particular interest, as it can drastically cut delivery times – especially in an urban setting that suffers from excessive road congestion. 

"There are two trends that can be seen today within ecommerce – one is about expediting the last-mile delivery network, and the other is to bring inventories closer to the end customer, as the faster you can ship a product, the faster it can get delivered," said Vijay. "For example, if a customer buys a product online from Nike, rather than dispatching it from their central warehouse, if they could dispatch it from the store nearest to the customer, the delivery will be much faster."

But in the overall scheme of things, the additional delivery costs incurred during this shift need to be borne by the companies themselves, rather than them looking to trickle it down to their customer base. Vijay contended that though customers would be willing to pay a bit more on delivery if the product is valuable or needed immediately, it is impractical to expect people to spend $15 in delivery costs for a $10 product.

"Companies could look at using a mix of logistics options like courier partners, hyperlocal partners, point-to-point delivery networks, smart lockers, or even companies that provide localized drone services," said Vijay. "Ecommerce is not just about the product itself, but also about how companies make the shopping experience as flexible as possible. Meanwhile, companies must also focus on their cost parameters and unit economics, to make sure they find a way to make money while providing a great customer experience."

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