As part of a series of articles on how to survive as a small retailer, this article is about the benefits and pitfalls of setting up a home delivery service.
Charges
You may not get this right first time and may need to adjust the charging in the early days until you have got it right. Do not be shy about charging for deliveries but always remember that your core business is selling goods and not making a profit from the delivery service. In fact, you may need to accept that the costs of delivery may not be covered by charging and you may decide not to charge at all and take a quantified loss. Each business is different in this regard. I would recommend that most small stores do charge for deliveries, but only with the aim of just covering, or perhaps more realistically, subsidising costs. You need to look at what your competitors are doing but do not be forced into a decision based on this one criteria. If they are providing free delivery there is no rule that you should do also. Customers will compare like for like factors such as delivery charges but remember that it is just another item on their bill, albeit an important one. If your competitor is paying for the delivery costs through higher product prices you may well find that you are competitive over many products, although you are more expensive on the delivery charge.
There are many ways to charge for delivery. Many will have set fees, regardless of quantity and distance (within a set perimeter). Others will have an inner region set at a low cost (or even free) and have one or more outer regions with progressively higher charges. It is very common to offer free delivery where the shopping bill is above a certain amount of money. This makes a lot of sense but you need to ensure that the minimum qualifying spend is set at the right amount in order to prevent unacceptable losses. Once the delivery service is bedded in you could consider offering it free for a limited period, say the first couple of months. This will get customers into a delivery routine. Many will have intended to pull out once the charges kicked in, but will have come to rely on the service. This plays on our tendency to "fill time". Many customers that have saved one hour of shopping time by taking in a delivery will soon fill the hour with another regular activity and will want to carry on with the deliveries even if they are being charged for them.
Extra Sales
If you decide to try home delivery, don't forget that this is an opportunity to add new sales to the order. If possible, have the delivery vehicle loaded with some extra products that might be required, even though they were not ordered. Even if you are using a third party, such as the local video store, to deliver to your customers, there may be a way of giving them the incentive to sell your goods at the doorstep. The obvious things to go for are staple, everyday items that people often want. Another idea is to include topical products, perhaps, depending on what kind of store you have, candy apples if it is Halloween or even sunglasses if it is a sunny day.
Database
One big difference between having customers come to your store as opposed to taking deliveries to them is that you will need to keep a track of their names, address and their shopping orders not to mention other information such as personal preferences. In order to do this you will need to keep a database. How you do this depends on your inclination and your circumstances. In some cases a
listing on paper will be fine. In most cases, though, you are likely to keep the information on a computer. Many stores that don't delivery already keep a database of customers, but many others do not. You may find there are laws in your jurisdiction that govern how databases containing individual's data can be used, especially when the information is kept electronically.
Variable Products - Getting Intimate
Certain products travel better than others. I am not talking here about your ability to protect products in transit - although this is of great importance - I am referring to products that can have different affects on different people. These are products that can vary, such as fruit and vegetables . Taking bananas as an example of a variable product, some people like them yellow/brown and ripe and others prefer them green and under-ripe. Some prefer a cabbage or lettuce with more heart and others prefer them leafy. This can be a great challenge and the larger store chains always struggle with this problem. Their answer is typically to segregate products into their potential variations, so there may be a choice between ripe bananas and under-ripe bananas. Hearty cabbage may be given a
particular name (French names are popular with the marketers), while leafy cabbage may be labelled as something completely different. Although this is workable, if you happen to have a grocery store that sells fruit and vegetables, you will be at an advantage if you get to know your customers' intimate
preferences and have a good feel for the products (literally in many cases) that they like. The trick the large chains can't pull off is to get to know each customer's preferences in intimate detail. A customer may like their bananas somewhere in between green and yellow, rather than be faced with an either/or choice. Many customers will also be unhappy having to pay premium prices for pre-sorted
products. As a grocer who knows their customers' requirements in intimate detail you can choose just the right variation of product for each of your regular customers. Rather than shy away from the challenge of variable products, use it to your advantage - it is one of the few advantages you will have over your bigger and more powerful rivals.
Personal Products
Personal products such as clothing and cosmetics usually rely on complete pre-approval before being accepted by the customer. This may mean that many customers will wish to try on a garment, or smell a perfume before paying for it. The challenge of selling such personal products may be a challenge too far, especially for a small retailer. Unless you are willing to make a night of it and perhaps like the idea of party retailing then do not attempt to sell these products.
No-one At Home
You will need to establish a procedure to deal with situations where there is nobody to receive the goods you are attempting to deliver. The database of customers can be used to keep information that will help you deal with not-at-home situations. When taking on a home delivery customer, ask them what they would like you to do with goods if they are not at home. This is not always a question that customers will help you with. "Don't worry, somebody will be home" is a typical reply. You need to decide what to do when a customer gives you this answer. You can take them at their word or you could insist that they give you an alternative (nearby) address, such as next door or perhaps agree
that the goods will be taken back to the store ready for collection by the customer. There will be other requests such as "leave in the shed round the back". Keep these arrangements in your database and have the list with you when you deliver as you can guarantee that someone will not be at home at some time. You also need to establish from the start who is responsible for the ownership of
the goods in such situations. If you leave the goods with the neighbor, is the original customer
responsible for the goods or is it the retailer. If you use a third party to deliver the goods, are they responsible? Or is it the neighbor who took the goods in? In most jurisdictions this is a legal minefield and an avoidable argument waiting to happen. It is important to get this right from the start. You can negotiate separate terms with each customer. This may sound crazy, but remember you have a database and separate terms can be entered for each customer. Remember also, that separate terms will not be available from large chain stores, so this is another area where you can offer an advantage. However, if separate terms are too onerous a task, you will need to have your customers agree to set terms and this usually means it is best to get their signature before home deliveries can begin. You will now have entered into a contract with customers covering the title to goods and responsibility for defects and damages. Remember though that a contract is not an operating procedure or a bible that you must stick to. Working to contract is a trap that too many businesses, large and small, fall into. The contract is like an insurance policy. You should only point to the detail of a contract in times of
conflict or confusion. Yes, you need to work to the spirit of the contract, but no-one will mind if you work in a flexible way around it. For example, if Mrs Smith's neighbor has been looking after her shopping and Mrs Smith found a broken egg in a pack of 12 when she collected her groceries from her neighbor, you could point out that the contract makes the customer responsible for the egg, or you could be sensible and include an extra egg when you make the next delivery. This is another potential advantage you have over the larger retailers. They generally work to contract - you can use some common sense!
Home delivery is a service that may or may not be right for your small retail operation. You need to weigh up the pros and cons. If you go ahead, be prepared to be flexible in its operation. Use your local knowledge and the intimacy you have with your customers to your advantage - now get on the road!
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