Cut-off-time - colloquially known as the 'cut-off hour' - is one of the most important factors in e-commerce logistics for sales effectiveness and building consumer loyalty. This indicator determines the hour by which orders placed have a realistic chance of being packed and dispatched the same day. It is made up of both internal operational aspects (the ability to collect and confection orders) and those related to transport (the time the courier pulls up).
When do customers buy?
For years, in most studies, one of the most frequently cited factors motivating consumers to shop online has been the 24-hour availability of this form of purchase. Depending on the industry, the distribution of daily shopping intensity varies, but the differences are not great. For example, an internal study of the neo24.pl chain indicated that the peak of traffic in the shop occurs twice a day; between 10:00 and 15:00 and between 18:00 and 23:00 [1] . In contrast, a 2019 study by payment provider BlueMedia shows that as many as 35% of shoppers make transactions between 12:00 and 18:00.
Source: https://bluemedia.pl/baza-wiedzy/badania-i-raporty/polacy-kupuja-online-w-czasie-pracy
This trend is continuing, as confirmed by InPost's internal InPost Fulfillment Survey conducted in 2021. They indicate that nearly 40% of orders are placed in the same hourly range (12:00-18:00), and that almost one-fifth of all orders 'fall' into fulfilment between 17:00 and 20:00.
Cut-off-time and consumer loyalty
On the other hand, consumer expectations in terms of delivery should be outlined. Compared to many European countries, Poles are very demanding in this respect. From the Postnord report: E-commerce in Europe 2020 [2] shows that 25% of Poles definitely expect next-day delivery. Only the Netherlands has a higher figure, and for the UK or Germany the figure is 15% and 14% respectively.
The juxtaposition of shopping hours and consumer expectations in terms of order delivery gives us a fairly clear picture of how important cut-off-time is for meeting our customers' expectations. Declaring next-day delivery realistically translates into conversions and builds consumer loyalty. MARKINBLOG reports that loyal customers spend 67% more with their supplier than new ones [3] .
Consumer loyalty can have a behavioural basis - resulting from habit - or an emotional basis - resulting from feelings towards the brand. E-commerce logistics has an undeniable impact on this form of loyalty, which has a cognitive basis, loyalty resulting from a conscious assessment of the attractiveness of the offer, the veracity of the declarations made and a rational evaluation of the experience of previous purchases.
Is it worth declaring a cut-off-time?
Declaring next-day delivery on an e-commerce site only makes sense and translates into building consumer loyalty if we can realistically guarantee that the majority of orders placed on a given day will be packed and dispatched, and if the 'cut-off time' is genuinely attractive and acceptable to customers.
Information about same-day dispatch of orders placed by 12 noon is today neither attractive nor does it build loyalty - especially when juxtaposed with consumers' declared shopping hours. If the vast majority of customers make a transaction after 12 noon, not only does such a declaration not encourage purchase, but it also does not help build loyalty, as it contains an internal, logical contradiction: 'We ship the same day, provided you order by 12 noon'. Since the statistical consumer orders at later hours, such a declaration is empty to him and does not represent much value.
Next-day delivery is also part of building a competitive advantage not only within the framework of building customer loyalty, but also helps to increase purchase conversion for incidental customers as well. All kinds of urgent purchases unquestionably involve a maximum next-day delivery. Many incidental purchases, made on impulse, are 'closed' thanks to the declaration that the product the consumer liked can be delivered to them tomorrow.
The later the cut-off-time, the greater the number of orders we can fulfil through our fulfilment in a given day and the greater potentially the number of deals we can rake in from the market. Often the deciding factor between two similar offers will not be the slight difference in price, but precisely the delivery time.
Factors influencing the setting of an attractive "cut-off time"
Logistics for e-commerce is becoming an increasingly important part of successfully acquiring and building consumer loyalty, but not every e-tailer can successfully cope with the challenges posed by modern fulfilment. The logistical handling of an online shop carried out independently by smaller entities poses many challenges. Unfortunately, not all of them can be met by such operators. Late cut-off-time is precisely one such area where "big can do more", and operators offering outsourced logistics services have a huge advantage in this field.
There are two types of factors that have a real impact on setting a possibly late cut-off time: internal and external.
Internal factors - scalability and efficiency of operations
A small entity, such as an e-commerce shop warehouse employing a few people - has very limited capacity to scale operations and, in the event of a spike in orders, its e-commerce logistics cannot cope. Large retailers and e-commerce fulfilment service providers tend to have a more sophisticated IT and warehouse infrastructure, which improves efficiency and speeds up e-commerce shop warehousing operations. A larger team of employees and flexibility in assigning tasks to them is also not insignificant, resulting in packing as many parcels as possible before cut-off-time.
External factors - handling and transport of shipments
Smaller units often do not have the support of sophisticated IT systems and warehouse automation. For these types of entities, a late cut-off-time is a kind of salvation, allowing them to confection as many orders as possible. Unfortunately, for many of them, setting a later cut-off-time is not possible, either because of the distance from the courier company's sorting plant, or because they are in a weak negotiating position and are unable to arrange late pick-ups. In such a case, they are condemned to such a cut-off time as the courier drives up, and parcels packed after his departure will not set off for their recipients until the following day.
Large online shops and companies offering outsourced logistics services are in a much better position here for several different reasons. Often, e-commerce warehouses are located in the area of large logistics centres, which are accessed by dedicated courier trucks that can pick up clustered shipments even in the evening. It is not uncommon for there to also be a sorting facility or a branch of the courier company within or near such a centre. If even an online shop's warehouse is not close to a courier branch, the number of parcels shipped by a large online shop, or the cumulative number of parcels shipped by an e-commerce fulfilment operator, is large enough to justify dedicated courier truck approaches and allow for fairly convenient late pick-up times.
For all e-tailers who place the main emphasis on business development and have decided to entrust operational issues to specialists, the parameter of the latest possible cut-off-time should be one of the main criteria when choosing a logistics operator. In this respect, the e-commerce logistics offer of the InPost Fulfillment service definitely stands out, allowing a perfect synergy of warehouse operations up to the last minute with shipments within the offer of the same company on preferential terms. All this in order to be able to realistically fulfil the declarations made to consumers, such as delivering products the very day after purchase.
[1] Source: https://ehandel.com.pl/kiedy-dokonujemy-zakupow-w-internecie,1437
[2] Source: https://www.postnord.se/siteassets/pdf/rapporter/e-commerce-in-europe-2021.pdf
[3] Source: https://blog.accessdevelopment.com/2021-customer-loyalty-statistics
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