RILA show: Retailers need ROI in rush to same-day delivery
Companies should measure consumer revenues in regions where they offer expedited fulfillment, McKinsey speaker says.
Retailers nationwide are overhauling their fulfillment networks to meet spiraling customer demands for rapid home delivery, real-time order updates, and free product returns. And those overlapping strategies often force companies to make choices as they prioritize new investments, according to a panel Monday at the Retail Industry Leaders Association (RILA)’s supply chain conference, called LINK 2022.
One critical way to balance those sometimes-conflicting demands is for each company to make sure that it gets full “credit” for its investments, as measured by customer spending, John Barbee, a partner with the consulting firm McKinsey and Co. Inc. said during the panel “Next Week, Next Day, Next Hour: Meet Ever-Increasing Customer Demands.”
Specifically, he advised retailers that offer expedited delivery such as same-day or next-day service to measure whether they get greater conversion rates between online shopping and final purchases in those areas than in regions where they offer standard delivery terms. “That’s one way to decide how to deploy your capital as you build your network of the future,” Barbee said.
Another way that companies can target their investments to generate the greatest retail success is to look beyond pure speed and respond to customer demands for better transparency throughout the fulfillment process. For example, sheer speed may be less important than predictable, scheduled shipping for items like frozen ice cream, since an early home delivery would simply melt on a consumer’s doorstep, Barbee said.
