VERTONE Blog – What place for the delivery service in the strategy of retailers?

VERTONE Blog – What place for the delivery service in the strategy of retailers?

Representative a market of 112 billion euros in 2020 with growth of + 8.5% over one year, e-commerce continues to grow in France. And who says “e-commerce” necessarily says “delivery service”: today, more than a billion packages are distributed in France, volumes up 12% in 2020.

The health crisis and the successive periods of confinement have only exacerbated this trend: 37% of French people consider ordering online more often than before the health crisis. Delivery therefore seems to be establishing itself as an essential component of business strategy. VERTONE deciphers in this article the imperatives to be taken into account in the delivery strategy.

Amazon, at the origin of the delivery market standards

Amazon, the most visited e-commerce site in France with more than 30 million visitors per month, has made the delivery service a major competitive advantage by focusing on two dimensions: the offer and the quality of service.

In 2009, Amazon announced delivery within 1 business day, marking the start of an ongoing revolution in this service. From now on, customers have their luggage delivered to a 24-hour locker or even in the trunk of their car. With Amazon prime, customers get unlimited free shipping and those with access to Amazon now can have their Monoprix, Casino or Naturalia groceries delivered in just two hours.

At the same time, to guarantee and control the level of service, Amazon has gradually internalized delivery, through the acquisition with the purchase of Colis Privé in 2016, and the launch of their own delivery service with the creation of Amazon Logistics in 2018.

Faced with this dynamic driven by the e-commerce giant, retail players are trying to develop their offer. We are witnessing:

The delivery service: an essential investment for retailers

It is clear that the momentum driven by e-commerce players, both pure players and traditional retail players, is not tending towards a rebalancing of accounts. On the contrary, the delivery offer, more competitive but less valued, is gradually becoming an element considered as owed by customers. In good, not investing in delivery methods, price, speed of service and operational excellence could have a negative impact on loyalty and customer value.

It therefore becomes necessary to change the paradigm: by abandoning a cost approach and monitoring the profitability of the service in favor of an approach where delivery is understood as a lever for long-term value development.

Think about the delivery offer globally

In order not to lose competitiveness, the brands are working to maintain a delivery service in line with competing practices and customer expectations. This was particularly the case during successive confinements, where priority was given to offering competitive shipping costs and deadlines. Boulanger offered free standard delivery for space-saving items from € 20 of purchase, while Leroy Merlin offered free delivery on a wide range of products and delivery within one working day at € 6.90.

These examples, which illustrate the desire to make delivery accessible, nevertheless underlie a possible impact of the brand’s balances:

  • The delivery offer can influence customer purchasing behavior, to the benefit of the e-commerce site or the store.
  • The delivery offer can impact the level of attractiveness of click & collect for the customer as well as the relationship between delivery in relay point or at home.
  • More broadly, the ecosystem of carriers and supply capacity are likely to be impacted by changes in demand generated by a new delivery offer.

The overhaul of a delivery offer must therefore be considered with regard to the brand’s logistics and distribution strategies (what ambitions for the store channel, the e-commerce site? What ambitions for click & collect, the relay point, home delivery?) and must be accompanied by anticipation of logistical impacts.

In a future article, we will discuss the other two strategic issues to be addressed in our opinion: how to meet the growing demands of customers? how to address the environmental issues around last mile delivery?

An article written by Marnie Greusard and Pierre Brun

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