Abstract
The online retail subsector in Kenya makes a significant contribution to the growth of the economy. Not only as a gateway of trade, but also creating employment opportunities to many Kenyans. Despite the critical role that the online retail subsector can play in the country’s economy, 70% of Kenyan online shoppers are not willing to shop online again, mainly due to delivery related issues. In addition, a lack of a reliable, low-cost delivery service has been identified as another challenge facing online retailers in Nairobi. For these reasons, this study intended to establish the nature of customer satisfaction with the different elements of last mile delivery service offered by online retailers in Nairobi.
The study adopted a convergent mixed method research design, focusing on both online customers (both ‘users’ and ‘non-users’) and online retailers in Nairobi County with the aim of integrating research findings at the interpretation phase of this study. This research design was relevant to this study because different but complementary data was required to best understand the research problem that has attracted little interest in Kenya. The findings revealed that both ‘users’ and ‘non-users’ valued the same elements of last mile delivery service in case they were offered. They include attended home delivery points, afternoon delivery timeslots, same day delivery lead-times, longer but cheaper lead-times, flat rate delivery fee structure, delivery carriers run by online retailers, and returns to closest branch. However, some elements of last mile delivery service were being offered by online retailers, yet online customers did not value them. These include afternoon delivery timeslots, not having a longer but cheaper lead-time, distance-based delivery fee structure, outsourced delivery carriers and returns through delivery carriers. From both the online customers’ and online retailers’ perspectives, customers were least satisfied with returns. However, in terms of most satisfaction, the online customers’ perspective indicated they were most satisfied with the options for delivering items, e.g., at home, office, pick-up station, while from the online retailers’ perspective, customers were most satisfied with the delivery times. Furthermore, users were most satisfied with delivery options and least satisfied with returns, while non-users were most satisfied with delivery fees and least satisfied with returns. It was also revealed that satisfaction with the different elements of last mile delivery service contributed positively to overall customer satisfaction. However, the
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contribution to overall customer satisfaction could accurately be determined from the satisfaction with two elements of last mile delivery service, i.e., satisfaction with delivery options which contributed more to overall customer satisfaction and satisfaction with returns. For ‘non-users’, both online customers and online retailers agreed that returns contributed greatly to preventing online purchases. Finally, most online retailers were having difficulties in tracing customer locations during last mile delivery due to the lack of a good national addressing system. However, there were other difficulties faced during last mile delivery, such as security issues, traffic congestion, high delivery costs, unconducive county by-laws and an unreliable postal service.
This study contributes to the body of literature by extending the concept of last mile delivery service through the provision of a clear definition of last mile delivery service supported by earlier studies. The empirical analysis also explored an important but less-well understood concept of customer satisfaction using the Customer Satisfaction Index revealing that there was a significant contribution to overall customer satisfaction arising from the satisfaction with delivery options and returns. Online retailers should, therefore, focus on investing in delivery options and returns management to avoid overall customer dissatisfaction. The online retailers should also lobby relevant government agencies to improve on the national addressing system, security, roads, postal service, and county by-laws if they were to address the last mile delivery challenges they are currently facing.