What: In the customers’ eyes, fast deliveries might be less important than possibility to choose the delivery date and time slot.

Why it is important: Fast and ultra-fast deliveries are costly and put organisations on strain. If it appears that this attribute is not even that important, compared to other options, to customers, this learning might bring some fresh air to department stores and help them to focalise on the quality of the delivery, not its speed.

The Covid-19 pandemic modified the way customers shop, as in 2020, online buying accounted for 18% of worldwide retail sales, from 9% in 2018. This has naturally led all retailers worldwide to rethink their omnichannel strategy and make sure they are efficient in terms of speed of delivery. This, of course, severely impacts their financial structure as fast delivery is a costly feature which needs to be integrated in a price structure which has not changed from the customers’ point of view.

MITSloan helped a grocer to make proper choices about inventory location in order to minimize time between placement of online order and its receipt. When questioning the very basis, i.e. the assumption that the delivery needed to be fast, the study showed that customers have different approaches when it comes to choosing between having to pay for delivery speed, delivery precision or delivery day choice.

The methodology was based on the past sales analysis of a grocery chain, comparing what was ordered, the available home delivery time shown to the customer and the slot finally selected. It showed that Speed is not the only or the main criteria for choice. Indeed, customers value the time slot precision (duration of the delivery time window) as well as the day choice (availability of times slots across days of the week).

On average, a customer is willing to wait 10.8 hour longer for a delivery if the time window is an hour shorter, and 7.5 hour longer is the delivery can be received on a preferred day of the week. It also goes with the order value and basket size: customers with large baskets are willing to pay more to improve delivery by one hour, for instance.

Now that panic-buying, induced by the pandemic, is over, retailers needs to analysis the data and understand the delivery attributes that drive loyalty and repeat purchase, instead of trying to align with bigger players which might not either have the right approach.

Online shoppers don’t always care about faster delivery