What do shoppers really think about delivery subscriptions?

By: Mike Cooper

More and more retailers are offering delivery subscriptions, but you may be wondering, ‘Is that something my customers want or need?’

Fortunately, this research can tell you.

This article looks at what research can tell us about which online retail offerings, and which shopper demographics are receptive to online delivery subscriptions.

Online retail delivery subscription

Online shoppers have high expectations when it comes to the delivery of their order, and rightly so. In recent years we’ve seen a number of changes and innovations in the market, including in some retailers like ASOS, Missguided and Amazon the introduction of ‘unlimited’ delivery subscription packages, designed to increase customer loyalty and order frequency.

We receive feedback from around 4,000 online shoppers every day through our ongoing Have Your Say programme, which features guest questions from our retail clients. So, we set out to discover what online shoppers really think about these subscription packages? Who is most likely to purchase a subscription, and why?

This research was carried out by sampling 487 participants, through Yodel’s ‘Have Your Say’ customer feedback survey run by Maru/eDR.

Five facts about shoppers’ attitudes towards delivery subscriptions:

Our research shows that:

  • Almost three quarters (72%) of online shoppers are aware of annual delivery subscriptions, but only a third (36%) have signed up to one
  • Of the shoppers surveyed who have a delivery subscription, 78% use Amazon Prime, while just over a quarter (27%) have a subscription to a grocery store and 11% to a fashion brand
  • We found that 40% of all online shoppers would be interested in purchasing an annual subscription for next day delivery — however, this figure increases to a staggering 68% for the under 35s
  • The top four key messages that will tempt online shoppers to sign up to a delivery subscription are ‘Next Day Delivery’, ‘Convenience’, ‘Value’ and ‘Free Returns’
  • £9.99 is the price that drives the greatest interest and the highest potential revenue

Targeting women under 35

Image source: Farshore.com

Our insight team found that women are browsing and buying fashion online the most frequently, with 42% doing most of their fashion shopping online, compared with just 36% of men. Women also had a higher online fashion spend, on average admitting to spending £165 on clothes in the last six months, compared to £150 for men.  These findings suggest that women are the best target for annual delivery subscriptions for online fashion retailers.

In addition to the gender divide, there is also a clear distinction across age groups, with younger respondents tending to spend more online. Shoppers under the age of 35, reported an average online fashion spend of £200 in the past six months, while just one-third of the over 55s surveyed regularly purchase clothing online.

Our research demonstrates that the demand for fashion delivery subscriptions is significantly higher among younger trend followers. Under 35s are more likely to sign up to a ‘premium’ subscription if standard delivery won’t produce their fashion fix fast enough. Whether it’s new outfits purchased at the eleventh hour for special events, or last-minute presents for friends and family, we found that delivery subscription services are the perfect fit for millennials’ busy and often unpredictable lifestyles.

What is the sweet spot on price?

In today’s uncertain economic climate, it should come as no surprise that price is the main deciding factor when purchasing a delivery subscription. Almost two-thirds (61%) of our respondents put it at the top of their list of considerations, above convenience and speed of service.

If a customer is repeatedly shopping with you, then it makes financial sense for them to purchase a delivery subscription, although our research highlighted that next day delivery is also key to attracting their interest. Our research shows that £9.99 is the threshold for online shoppers when considering a delivery subscription. A third (34%) of respondents agreed that they would be ‘very likely’ to subscribe to a next day delivery model at the £9.99 price point.

Interestingly, we found that marginally raising the fee to £12.99 halved the level of interest to just 17%. With £9.99 delivering the highest subscription revenue for retailers – it comes as no surprise that several leading online fashion retailers (ASOS, Boohoo and New Look) have already opted for this price point.

If you’re charging a higher fee for your delivery subscription service, it needs to be substantiated by a broader offer. Next is a good example of this, offering unlimited annual delivery for £20. Next can justify this due to its broad range of products, from clothing to homeware, making it easy for customers to break even by making five or more purchases over the course of a year.

If you have the product range and you’re keen to lower customer acquisition costs, increase order frequency and build customer loyalty then this tactic could be right for you. It’s certainly one we expect to see other multi-category retailers adopt.

From fashion to beauty?

Delivery subscriptions are an area that is set to expand over the next five to ten years, with retailers such as Amazon leading the way in encouraging customers to adopt this type of service.

What is particularly interesting is the way in which these subscriptions are becoming more prevalent across different verticals. FeelUnique is one of the first beauty retailers to enter the delivery subscription market. It has done well to capitalise on the growing online beauty trend, and subscriptions will help to build brand loyalty in the face of increasing online competition.

In terms of what is next for the market, there is huge scope for other category-specific FMCG suppliers, such as wine merchants and pet food specialists, to offer delivery subscriptions of their own.

24-hour culture and immediate gratification is driving delivery subscriptions

The need to satisfy shoppers’ ‘have it now’ culture is a huge driving force behind the uptake of delivery subscriptions.

Our research has identified a clear generational divide between those purchasing subscriptions, heavily weighted towards the under-35s — millennials who are used to doing everything, from shopping to socialising, at the touch of a button. It’s this generation who are most likely to sign up to a delivery subscription that offers a fast, seamless service, rather than wait three to four days for their order to arrive.

When it comes to value, £9.99 is demonstrably the optimum price point to attract the maximum number of subscribers. If you charge a higher fee, you need to ensure you are offering something more to justify it. Overall, it is essential that you provide a delivery subscriptions package that mirrors the offering of your competitors. 

Customer awareness of delivery subscriptions is currently high, so if you have repeat customers and push the messages of value and convenience at the right price point, then uptake of these types of services is sure to follow.


By: Mike Cooper, CEO, Yodel


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Download the full report from Yodel for more insights on delivery subscriptions

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