But is faster always better?
No, says new research from the Kellogg School. Researchers find that when customers select a purchase from a showroom and then have to be at home to accept delivery, speed doesn’t necessarily win. In this scenario, customers prioritize convenience of delivery day over speed. And the day of the week a customer enters the showroom can help the company predict which day that customer will find most convenient for delivery.
This knowledge can help home delivery retailers, which include many furniture and appliance stores, improve their operations and enhance customer satisfaction.
“When Amazon was moving toward same-day delivery, businesses were thinking, ‘Now everyone has to do this,'” he says. Sunil ChopraKellogg business professor and one of the paper’s co-authors. “But it’s not true in this case. They don’t need to go faster.”
Understanding customer preferences for delivery time
The project first came about when one of Chopra’s former students approached him to help solve a delivery puzzle at a high-end mattress company with multiple showrooms in the US, where the former student worked as head of supply chain.
Customers would come to a showroom, purchase a mattress and select a delivery day from a variety of options. There was a requirement that someone had to be home the entire day of the delivery because the exact time of delivery was set later. The company’s goal was to complete the delivery within five days. Not only was the company occasionally missing that mark, but it was considering shortening the delivery time even further.
The company then questioned how it could possibly speed up delivery with the strict requirement that a customer be at home to pick up the order.
Chopra asked his then-Ph.D., Pol Boada-Collado, to work with the company on the question. Boada-Collado collected the data from more than 30,000 sales transactions at 217 stores in 2016 and 2017, excluding informal sales periods such as Black Friday and Presidents’ Day.
He then plotted the probability that a customer would choose the first available option and got a “funny curve,” says Chopra.
Some people chose the earliest available delivery date. But many skipped it and instead chose a date that was later, sometimes by more than a week. It appeared, on initial analysis, that customers did not necessarily want the faster delivery option.
The research team, which included fellow Kellogg faculty members Karen Smilovich and Maria Ibanezboth in the business department, then tried to understand why customers would want a later delivery date.
They found a clear pattern in customer preference for delivery dates based on the day of the week the customer entered the showroom. And this preference explained why customers often did not choose the fastest possible delivery option.
Specifically, customers who shopped on the weekend were significantly more likely to want weekend delivery. So if they were in the store on a Saturday, then they would generally choose the next available Saturday, even if that meant delivery would be back a week or more (the company didn’t deliver on Sundays). In contrast, customers who shopped daily were generally more flexible.
“Most customers prefer weekends, but people who show up on weekends really prefer them, so they’re not going to deliver every day,” says Chopra. “People who show up on weekdays often have a little more flexibility.”
“This segmentation is particularly useful for designing appropriate delivery options for infrequent and large purchases such as mattresses, where retailers have little customer information,” he adds.
Configuring functions around customer preferences
After the researchers understood customer motivations, they looked at how the company could use this information to improve its operations.
The company offered deliveries from Tuesday to Saturday. The researchers were curious if offering deliveries on Sundays could reduce delivery time and improve customer satisfaction. But rather than simply adding Sunday as an option for customers, incurring additional costs, they assessed the potential benefits of shifting some of the company’s deliveries from Wednesday or Thursday (the least popular delivery days among customers) to Sunday .
They found that moving some deliveries from Wednesday to Sunday would actually improve delivery speed, although the same was not true for Thursday. Ultimately, shifting capacity from Wednesday to Sunday only bothered a few people (compared to Thursday or other weekdays), while benefiting many who wanted weekend delivery. And changing delivery days instead of adding new ones helped ensure that overall delivery costs didn’t increase.
“The change leads to customer satisfaction, and if there are days when you can reduce capacity, there’s also a potential cost savings,” says Chopra.
There are other ways the company could use the findings to reduce lead time and potentially save money, he explains. For example, it might make sense to “hide” our award-winning weekend delivery options from weekday customers, who are more likely to accept a daytime delivery option. This would keep the weekend delivery option for weekend shoppers, benefiting the store by helping it reduce delivery time.
A unique kind of shopping and delivery experience
These results apply to a specific shopping experience: a trip to the retail store followed by a home delivery.
Apart from large purchases of furniture and appliances, those that require construction, such as a garden shed or installation, such as a home cinema or an alarm system, follow a similar pattern.
However, the largest segment of home deliveries—online grocery shopping—works differently. Specifically, grocery shopping is done online, meaning the customer can be at work or on the train while dropping items into the cart.
Unlike shopping at a showroom, “when the [online] The order is placed, you can’t infer anything about customer preferences,” says Chopra. “When people show up in person, it tells you something about their preferences.”
However, the unexpected nature of the findings confirms that there are still key learning opportunities for companies seeking to optimize delivery operations. Companies may, at the very least, want to be careful not to assume that fast is always better, regardless of the type of shopping experience they offer.
“In the race to satisfy customers at a reasonable cost,” says Boada-Collado, “fastest doesn’t always win.”
