How Commerce Is Shifting Towards "Uber Style" Service
The Rise Of On-Demand Customer Experience
Six months ago, on-demand, “Uber style” service (i.e. instantaneous home delivery, or subscription based B2C service models) were far from common across many industries. Services like ride sharing, meal delivery, or Amazon same-day shipping were a luxury for those willing to pay for convenience, favoring digitally savvy Gen Z and Millennial consumers, especially in crowded cities.
As Colin Crowley, Freshly’s VP of Customer Experience told me last week regarding the evolution of the meal delivery service that prepares and delivers chef cooked meals (usually in bulk to consumers’ homes):
“We have customers who use us and fit us in each of their lifestyles to lead healthier lives so they can be someone who is a young urban professional with a super busy life, or [now] people who send our meals to their elderly parents and don’t have the ability to cook all the time. The use cases are so many but they all have the common theme of helping people lead better lives in a world that’s increasingly busy.”
Busy, stressed, quarantined – or however else you want to describe the emotional or physical changes of our daily lives, customer experience is quickly shifting towards on-demand services with the goal of making consumers’ lives easier or more gratifying, at a rapidly evolving rate.
Whether it be evolving ride sharing functionalities (Lyft or Uber), meal delivery (Freshly or Grubhub) or alcohol delivery (Drizly or Doordash), entertainment streaming (HBO Max), or seemingly anything (Amazon), the pandemic has expedited the quality of service that consumers are expecting, and brands are succeeding or failing at delivering.
The inversion of service marketplaces
“That vision is very very inspiring and something we need now in our society when it’s harder and harder for people to eat healthily when life gets too complicated.” Freshly is just one example of a brand that experienced unprecedented demand through societal consumer behavior shifts brought upon by the coronavirus, yet was able to accommodate the influx.
Service marketplaces have inverted from demand-constrained to supply-constrained overnight and many weren’t as agile as Freshly.
In March, most of those marketplaces were focused on growing market share and expanding their services to more consumers in their target market. Now, suddenly, as customers have gotten used to on-demand services, they are showing up in waves — a survey on food delivery run by Brick Meets Click/Mercatus, for example, shows more than threefold customer growth relative to August 2019. The resulting increases in ordering have left such platforms scrambling to build more fulfillment capacity to accommodate this new trend of instantaneous and gratifying customer experiences.
While some of the challenges of meeting new demand are logistical, there are also reputational dangers to firms that get this moment wrong, as controversies around insensitive or unfair fees charged by companies such as UberEats and Grubhub illustrate.
What’s clear, however, is that the current dynamics are changing the way suppliers are thinking about e-commerce. Now is the time for marketplaces to help their suppliers invest in the infrastructure and business practices that will enable them to compete in a world in which having an instantaneous, “Uber style” delivery or sales presence is imperative.
Drizly is another prime example of a platform being transformed by market inversion and fluctuating consumer behavior. Since March 2020, the company has seen 500% growth rates with hundreds of thousands of new buyers joining the platform, according to the Harvard Business Review. As many brick-and-mortar stores closed or experienced inventory challenges, Drizly, an alcohol delivery service, is attempting to accommodate the influx in consumer demand and volume from a customer service perspective.
The concept of market inversion for delivery services is consistent with the experience of other mid-size delivery platforms — and even larger pioneers such as Amazon. These platforms have had to switch their focus overnight and develop expertise around the new supply-side, as well as correlating customer service constraints. Remember, as demand increases, so too do customer service inquiries.
But now, it’s worthwhile for suppliers to invest in supporting delivery directly. That’s already happening organically. With in-person retail restricted or outright eliminated, suppliers have been reimagining their digital and physical infrastructures and operations around online fulfillment.
More broadly, the crisis has presented an opportunity for “mom-and-pop shops” — including liquor stores, as seen in the Drizly example, — to modernize their technology, towards omnichannel strategies.
Omnichannel was once a competitive advantage for large customer service departments in the contact center. Now it’s a growing part of seemingly every business, regardless of industry or service size.
Shared benefits between business and consumer
When suppliers become operationally more efficient around marketplace transactions, the consumer experience on these platforms (Drizly, Freshly, Amazon, etc.) must improve too — often due to increased availability, selection, and price options. Drizly has found that having more stores to choose from and better inventory overall results in much higher conversion rates: a customer with three stores and 1,000 items to choose from spends 67% more per session than a customer facing just one store with 300 items.
With suppliers better-optimized for delivery transactions, those orders are processed more smoothly, and with fewer errors, all of which improves the customer experience. If platforms can help their suppliers invest in these improvements, it will eventually translate into stronger consumer engagement through the mediums consumers are resorting to, and long-term customer satisfaction and retention after the pandemic.
As Colin Crowley said on the topic, regarding Freshly’s omnichannel strategy moving forward:
Freshly didn’t have to drastically change their business continuity plan to accommodate consumer demand and engagement. They simply had to double down on what they were already doing.
“We have escalated pre-existing strategies and implemented them faster. We were already looking at a world where we wanted to invest a good deal in AI solutions and chatbot technology.”
“We knew coming in 2020, this was going to be the year of the chatbot where we really wanted to embrace chatbot technology to allow customers to get answers to their questions as soon as possible in very very basic use cases and be able to repurpose our agents to more complicated and evolved tasks and also more specialized areas so they could typically help customers through difficult circumstances. So that’s something we doubled down on with COVID.”
Supply chains are drastically changing as businesses are struggling to meet optimal inventory requirements. Businesses of all sizes and industries are and should be trying to focus on managing supply to instantly accommodate consumer demand, similarly to the way a customer can call an Uber instantaneously. Once we are able to start thinking about instantaneous service through the click of a button in real-time, we can further develop the channels we use to communicate with our customers to accommodate consumer engagement and volume as inquiries match the influx in demand. As customers expect more instantaneous services, consumer demand increases in on-demand services – and our ability to answer the call through new technologies should match these increased expectations, as Freshly has done.
No one’s safe from the behavioral economic consequences brought upon by the coronavirus. But adapting to the right CX strategies and consumer behavior trends will give you the best chance at being on the favorable side of financial Darwinism.
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