Retailers need to disrupt last-mile delivery if they want to succeed in online grocery market
Greater investment in ‘last mile’ delivery – the final leg of the online purchase journey before a product lands in the customer’s hands – is needed if retailers want to uncover new revenue streams, according to a recent report by Capgemini.
In a study entitled 'The Last-Mile Delivery Challenge: Giving retail and consumer product customers a superior delivery experience without hurting profitability', Capgemini surveyed over 2,870 consumers as well as 500 supply chain executives, and entrepreneurs and industry leaders,
The study found that 97% of organisations believe that current last-mile delivery models are unsustainable for full-scale implementation across all locations.
It also reported that three in four customers would increase spend and shopping frequency in return for timely online grocery deliveries.
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To tackle the challenge of last-mile delivery, respondents highlighted how back-room automation could potentially increase profit margins by 14% by reducing the cost of click-and-collect orders and deliveries from the store.
On top of this, half of customers said they are willing to use innovative services like smartlocks where deliveries can be made when no one is at home.
Interestingly, Capgemini also pointed out how 65% of customers use alternative grocery delivery services – such as Google Express, Instacart or Ocado – for better services than from traditional retailers.
The volume of online grocery orders is set to increase rapidly in the coming years, according to the report. Today 40% of customers already order groceries online from retailers (at least once a week or multiple times) and this is expected to grow to 55% by 2021.
Additionally, 40% of customers say that delivery services as a “must have” when purchasing food and grocery products, with 1 in 5 (20%) prepared to switch retailers if this is not provided.
Therefore, technology and automation services could play a pivotal role in last-mile delivery success.
“Today customers are neither satisfied with the quality of delivery services nor willing to bear the total cost of last-mile delivery,” said Tim Bridges, Global Sector Lead, Consumer Products and Retail Distribution, Capgemini.
“Therefore, the dilemma facing retailers is to provide last-mile delivery services that customers value, without damaging their own profitability.
“If done right, and their last-mile experience can win over customer satisfaction, retailers stand to gain loyalty, increased purchase value and frequency, while mitigating profitability risk through automation and optimization of fulfilment locations.”
Grupo Espinosa: 70 years of constant evolution
Founded in 1952, Grupo Espinosa has been relentlessly supporting the publishing industry with producing more than 100 million copies every year – whether its books, magazines, catalogues or single-order custom prints. No project is big or small for Grupo Espinosa, as the facility can scale up on demand and their turnaround times are highly competitive. Grupo Espinosa works with on-demand digital press or offset press, in paperback with glued softcover binding, PUR softcover binding, stitched paperback binding, binder’s board, hardcover, saddle stitched, Spiral or Wire-O. Equipped with the experience needed for a product to leave the plant ready for distribution, Grupo Espinosa delivers anywhere inside or outside Mexico. Traditionally starting off as a black and white printing press, Grupo Espinosa has experienced transformation first hand – from colour to digital offset printing. Currently, Grupo Espinosa is also looking at making capital investments into audio books to match with the increasing demand.
So how did a seemingly local operation in Latin America become a world-renowned printing facility trusted by hundreds of clients? As Rogelio Tirado, CFO of Grupo Espinosa for the last six years says “It all comes down to our market experience and our dedication to quality”. With nearly 70 years behind them, and located in Mexico City, Grupo Espinosa has two major locations – one spanning 75,000 square metres and the other about 45,000 square metres. Both locations are controlled by a single ERP (Enterprise Resource Planning) system ensuring speed, consistency and quality of work. Tirado says this isn’t their only competitive advantage. He adds “Our competitive advantage is the relationship we have with customers and the trust they put in us with their intellectual property”. Speaking of trust, global publishing giant Macmillan Education exclusively partners with Grupo Espinosa for their Latin America operations, as part of Macmillan’s decentralized hub strategy. Having a facility that offered the full spectrum of service – from storing digital content to printing and distributing – was one of the major requirements for Macmillan, and Grupo Espinosa was recognized as the leading printing hub for providing this 360 infrastructure. Another factor that has led to success for Grupo Espinosa is the absolute focus on quality and time. The staff are committed to providing the best quality in the best possible time, without causing wastage of resources. Sustainability is a huge factor playing into Grupo Espinosa’s operations, and they’ve created a healthy environment with the sustainable use of paper and energy resources as well as keeping their employees – most of them associated with the organisation for over 10 years – happy. He adds, “In order to be truly successful, you need to be good to the environment, employees, suppliers, and your customers. But most importantly, you need to be sustainable, you need to have proper working conditions, pay proper salaries, proper prices for paper, source the paper from sustainable sources, pay your taxes, basically be a good global corporate citizen and that's probably one of the biggest achievements that we have.”