Balancing green and speed: Home delivery insights from the pandemic era

Authors’ note: Our study examines how e-commerce retailers balanced their home delivery services between sustainability and delivery expectations during the COVID-19 pandemic. We interviewed logistics and e-commerce companies to identify industry practices and examined consumer preferences regarding home delivery with an experimental approach. Our results show that consumers prioritize delivery speed, followed by sustainable delivery options like the use of reusable packaging or the use of electric delivery vehicles.

Individualization, innovation, and sustainability issues in home deliveries

The COVID-19 pandemic disrupted the retail sector and accelerated e-commerce. The latest research from Sellerscommerce.com shows that over one-third of the global population shops online, making e-commerce a $6 trillion industry expected to reach $8 trillion within three years. In this new market environment, customer experience has become a source of competitive advantage, and home delivery significantly affects logistics and e-commerce companies because they involve numerous touchpoints. Many logistics and e-commerce companies have redesigned their service offerings to improve delivery options and satisfy increasing consumer demands.

Recent consumer research shows that most consumers would be willing to forego buying products transported by air. To fulfill customers’ expectations for flexible, fast, and low-cost (or free) deliveries, logistics and e-commerce companies are adopting new services and solutions such as same-day delivery, two-hour delivery, flexible delivery time slots, and live tracking. However, consumers are also increasingly aware of environmental issues, fostering a desire to make environmentally sustainable purchases. This inclination extends to products where consumers seek greater transparency throughout the value chain.

The push of home delivery by the pandemic has spotlighted the inefficiencies and environmental impacts of last-mile logistics services, persuading logistics and e-commerce companies to innovate and adapt. However, as last-mile distribution is a crucial driver for profitability that directly affects cost and customer experience, companies must align their distribution structure with customer requirements, as customers select the distribution option that offers them the highest individual value.

Methodological profile

Our study was conducted in Turkey, one of the fastest-growing e-commerce markets worldwide, based on the compound annual growth rate. We employed a two-stage mixed-method approach, including semi-structured interviews with experts from the country’s largest e-commerce and logistics companies and a discrete-choice experimental survey with 400 consumers. While in the first step, we aimed to reveal current practices and challenges these firms face, we wanted to quantify consumer preferences for various home delivery attributes, including delivery speed, options, vehicle type, time slots, and packaging.

The interviews with the experts showed that companies are already taking many steps in customer individualization to increase the variety of delivery speed options. Based on these results, we designed the experimental approach with predefined sets of attributes. The survey consisted of three sections to collect the respondents’ demographic characteristics and online shopping experience, pairs of choice sets, the respondents’ willingness to pay and wait longer for delivery, and the significance of environmentally friendly delivery.

Results

The company interviews strongly emphasized delivery speed and introducing sustainable practices, such as using electric vehicles and reusable packaging. During the pandemic, all companies offered same-day and next-day delivery options and contactless or no-ringing-the-bell options. Some companies provide instant delivery options and various delivery place options, such as parcel lockers and collections from stores. However, no company currently offers the possibility to select the type of delivery vehicle or packaging, which could provide an opportunity to increase sustainability in last-mile delivery.

The experimental results are shown in the Figures at the end of this article. We identified delivery speed as particularly important, with same-day and next-day deliveries being the most preferred. Home delivery, reusable packaging, and delivery by electric vehicles were also highly valued. Delivery time slots were not a significant factor, probably due to the increased popularity of remote work during the pandemic. Regarding delivery speed, same-next-day delivery was the most preferred option, followed by delivery in two to three days. Regarding delivery options, we identified a clear negative perception of parcel lockers and unattended delivery place options. This was also true for disposable packaging, which consumers perceived as providing a disadvantage.

Our findings reveal that over one-third of consumers are willing to pay for sustainable delivery vehicles. Nearly 90% of our respondents rate environmentally friendly delivery as necessary, and more than 60% state that they are willing to wait for their delivery if environmental transport is used. Moreover, about 40% of the respondents indicated they would pay more for ecological transport delivery. The fact that a significant proportion of consumers in a developing economy favor sustainability options is an intriguing research finding.

Our research also confirms delivery speed as an essential consumer factor. We also found that home delivery is the most expected service level attribute. Consumers tend to choose the more sustainable options when informed about them.

The key findings and takeaways for businesses of our study are summarized in Table 1.

About the authors

Dr. Herbert Kotzab, Department of Marketing & Logistics, Crowley Center for Transportation and Logistics, University of North Florida, Jacksonville, FL, USA, [email protected] 

Dr. Işık Özge Yumurtacı Hüseyinoğlu, Department of Logistics Management, Izmir University of Economics, Izmir, Turkey 

Dr. Carlos Mena, School of Business Administration, Portland State University, Portland, USA

(Source: Authors)

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