19/04/11

By Mark Lewis, CEO of Collect +

The EU 2020 strategy depends on entrepreneurs and small businesses fulfilling their potential to drive the economy forward and pull it out of its current slump. It is left to small businesses to start helping themselves in a competitive market where customers are constantly demanding more, and where innovation is crucial to their survival.

With the right tools and the right knowledge, SMEs can start to compete against their larger competitors by offering services that build customer loyalty and brand reputation. Potential customers are looking for greater choice, more convenience and better value for money — put simply, better customer service.

In particular, logistics is assumed by many to be a backroom function that few notice when it is going well, but everyone feels the pain when it goes wrong. A successful delivery or a hassle-free return may not be something customers shout about, but a bad experience certainly will be. But it is more than that. For many customers shopping online or by mail, the only interaction with a human being throughout a purchase is during deliveries and returns.

Research from IMRG, the industry body for online retail, showed that more than one in ten deliveries fail first time and the overall cost of missed deliveries is almost £1bn per year1. The research also revealed that the average trip to a parcel depot to collect a missed parcel is almost 8 miles2 and that distance will only increase if, as expected, many post offices are forced to close over the next two years3. As a SME can you risk assuming that your consumers can afford to stay at home all day waiting for your delivery? The impact failed deliveries have on brand loyalty is significant - 38% of consumers claim to have been put off a retailer due to poor delivery.4

And that is only in terms of delivery. Indeed, over half of consumers say that they have stopped using a retailer entirely as a result of a single bad returns experience and 47% say they check returns policies before making a purchase5. It is clear then, that returns can be a deal breaker in terms of getting people to buy at all as well as being crucial to securing longer term custom.

So, can a business afford not to put in place delivery options and returns policies that meet with customers’ approval?

Recent research we conducted seemed to think that no retailer can neglect this. About £1.3bn of goods are returned to retailers every year, so getting returns right is financially very important. It can mean a customer choosing a replacement over a refund, and make repeat custom more likely.

While some large businesses can and do offer quibble-free returns, SMEs that are competing on price may simply not be in a position to afford it. There is, however, another option. Small businesses can offer pre-paid returns for those that want to try clothes on and send them back if they’re not right. MandMDirect customers can choose to pay an additional £1.49 upon ordering so that they can send back items without additional expense. The cost is not so large that a customer would resent it if they decided against returning an item.

But price is not the only consideration. Over a quarter (28 per cent) of consumers claim that the Post Office itself is a problem. Going to the Post Office can be a dispiriting experience — if you can manage to fit a visit in during the standard nine-to-five opening hours. Therefore, the Post Office may not be the best option for businesses sending or receiving parcels. Many consumers simply don’t have time during office hours, or want to have to stand in line, only to be faced by complex pricing guides. The result is that many SMEs are now using alternative parcel services that answer the varied needs of consumers.

Retailers are now offering customers the option to pick up or drop off parcels at their local store, and this is something that smaller businesses may wish to emulate. For some customers, collections will still need to be arranged to send the item back. But for others, what could be simpler than taking your unwanted goods back to a store during your Saturday afternoon amble down the high street, or when returning home from work in the evening when the Post Office has already been closed for two hours? The key to succeeding as a small business in these harsh economic times is giving tailoring the customer experience to their specific needs.