Search

What matters most in online delivery?

By Will Gillingham

When you buy something online, which delivery option do you select? Is it the default home delivery, or has the flexibility offered by click and collect found its way into being your optimum option? Do you usually buy things the day before you need them, or do you plan ahead, prioritising the freedom of collection over speed?

It’s these questions that are the source of constant conflict in the retail sector: what is it that their customers treasure most when it comes to delivery? The speed of purchase? Not having to pay for delivery? A choice of collection?

In an attempt to give some clarity to this age-old debate, we approached our community of delivery experts for their advice and insight on the matter, and to discover how retailers should be stylising their delivery propositions. Here’s what they had to say.

Convenience is King

In the past few years, there has been (in a rather ironic turn of phrase) a race for speed. Next-day delivery has found its feet as an expected delivery option, and some retailers have broken the boundaries of not only same-day delivery, but same-hour delivery. And it’s not been without due cause – MetaPack found in a survey that, ‘When asked how likely they would be to use a one-hour delivery option, 42% of shoppers in the UK said it was likely or extremely likely’. 

But the overarching message from the delivery sector is that speed is second to another concept: convenience, and it’s this that retailers should put front and centre when deciding their delivery propositions.

Indeed, Flora Frichou, Senior Content Strategist at Trustpilot, references an opposing datapoint to the lean into one-hour delivery. She says: ‘Today, consumers want convenience. That includes being able to collect orders in-store, reschedule delivery or pick a date or time themselves. According to Retail Week, 70% of consumers want more flexible options. The more options retailers offer, the more likely it is that shoppers will pick them over another website with less choice. Free shipping is a great option to have, but a lot of shoppers are willing to pay for convenience and speed.’

Louise Robertson, Marketing Director at Localz, explains further: ‘“Fast” delivery has taken the limelight over the past few years, with Amazon Prime providing “next day”, “same day” and “within the hour” delivery slots, and retailers have tried to replicate the success. However, our research has shown that consumers almost always want convenience over speed. Consumers want control over the end destination of their parcel. They want real-time updates on the location of the item and the ability to change the time or location of their parcel. Consumer loyalty hinges on getting parcels when they want, where they want it and how they want it.’

Open sign

The sentiment is reiterated amongst the industry. Alecxa Julia Cristobal of AsiaPay discusses the way in which convenience meets customer expectations.

Cristobal: Convenience comes first when purchasing online goods. It represents the kind of service that e-markets offer and their conformity to customers’ demands. You can always procure the same products from different stores, with a large variety of choices and sealed in a fast-tracked delivery, but it will never be the same distinctive service when the customers’ expectations are met. It’s this competitive advantage that keeps the consumers subscribed on your online store.’

On the other side of the coin, convenience is also a benefit to the retailer. In the aforementioned race for speed, retailers could channel budget into speed when it could be redistributed for a better long-term return.

Gavin Masters, Industry Principal, Maginus: ‘Whilst 2019 is sure to see advancements in this area in order to keep up with the growing consumer demands, this will be tempered by increasing costs to serve and declining profit margins across the retail landscape. Shrinking delivery times are becoming the norm, with same-day or next-day delivery expected by many.

‘However, Offering the widest or fastest range of delivery options won’t necessarily ensure customer satisfaction. Instead, providing the most convenient and flexible choices will give retailers the competitive edge. In today’s climate, consumers really do value convenience because they are much more time-starved and don’t want to have to worry about rescheduling a missed delivery or waiting around for a parcel that is late arriving, but retailers and logisticians must perform a careful balancing act to ensure that service excellence doesn’t come at the cost of profit.’

However, while convenience looks ideal on paper, in practice, providing every option across the board is likely to be unfeasible except to that minority of retailers who have the resources to cater to such things.

Brian Green, Senior Director, Magento, an Adobe Company: ‘Retailers need to put the customer at the heart of the supply chain and truly evaluate how they deliver what their customer desires when it comes to delivery. The modern consumer’s need for immediacy is forcing retailers to rethink shipment options and offer a choice of delivery options as well as demand channels for a next-day and same-day delivery. However, to remain profitable, it is not always possible to offer fully fast, free, convenient delivery options. In order to satisfy customers, retailers should survey shoppers and competitors to identify the right set of choices to offer. Customer requirements will also change from day to day, purchase to purchase, so it is important for retailers to define the ‘minimum viable service’.

It’s not simply about convenience: it’s about retailers intimately understanding their own demographic of customers and their particular wants and needs.

Shoppers

Know Your Customer

Different segments of people have different preferences when it comes to delivery. Because of this, it’s up to retailers to identify their core customer base and optimise their delivery options accordingly.

This is highlighted by Mark Ruston, Principal, Retail Supply Chain at Capgemini Invent: ‘The most important thing for retailers to get right is to make sure they understand the preferences of their consumers, as different consumer demographics place different weightings on the various delivery value levers.

‘There is a current tendency in the industry to drive towards faster delivery speeds at all costs, but most research, including Capgemini’s recent survey on final mile logistics, suggest that this is not typically the top primary consumer preference. For the average consumer, they desire and have an expectation of free/cheap delivery with flexible delivery options being offered. The exception tends to be in the younger demographic groups, who tend to be less concerned about cost and flexibility and more sensitive to the speed of delivery speed. Therefore, knowing your consumers is vital in making correct online delivery propositions.’

Indeed, Bruce Fair, Chief Revenue Officer at MetaPack references MetaPack data: ‘according to our research amongst 3,500 consumers, 61% say a positive delivery experience incentivises them to shop with an e-tailer again’, and GFS go one step further by emphasising that over-promising in the delivery sector, only to under-deliver, could negatively impact a retailer’s relationship with their customers, and drive them away from their brand.

Dan Ennor, Commercial Director, GFS: ‘There is no definitive way of answering which delivery option matters most. What matters is finding the delivery proposition that works for your brand and your customers. There has been a trend in recent years for retailers to flock towards ‘next day or no cost’ delivery but operational and commercial common sense tells us that there is no such thing as ‘free delivery’ for retailers. The online supply chain has a finite capacity for an ‘everything tomorrow’ approach and retailers need to consider this before jumping to ‘free delivery’ as a first port of call.

‘There is a real danger of retailers over-promising and under-delivering when the average shopper doesn’t necessarily want a premium delivery option all the time. Every shopper is different, and every delivery may have unique requirements depending on what it contains, and why and when it was ordered. All of this should be taken into account as part of a robust delivery strategy.’

Row of shoppers

One particularly pertinent danger when speaking of ‘over-promising’ is the bed of competition which has been imposed by retailers such as Amazon. Their resource, coupled with their ubiquity, has caused many customers to see them as a template for how all retail should work, which can put pressure on other retailers. However, through understanding your customer, these problems can be navigated.

Gabriel Fabreschi, Business Developer for the UK/Nordic Market, Lengow: ‘We’ve seen the “Amazon Effect” impact consumers, retailers and logistics alike. Online delivery is led by demanding consumers, who expect faster, more convenient and on-time deliveries. Retailers endlessly strategise new ways to meet consumer expectations and logistics companies are looking toward new technologies to increase efficiency and reduce costs.

‘Retailers must know their market to determine whether speed, convenience, free delivery or choice matters most. For example, cross-border consumers prefer scheduled, convenient deliveries — indicating consumers aren’t willing to sacrifice quality for speed. Free shipping is undoubtedly crucial for all consumers, irrespective of their generation or market, and is proven to drive sales for retailers.

‘Retailers should, therefore, look to provide a varied choice in delivery options to consumers, in a bid to match expectations.’

Convenient delivery options need to go hand in hand with knowing the customer to ensure a fine balance is struck through the delivery proposition. But executing these things in silence would negate the potential they had for success: to truly get ahead in delivery, retailers need to have established a solid mechanism for communicating with the customer about the state and location of their delivery.

Phone

Communication

There are two aspects to communicating the delivery of an item – the pre-purchase and the post-purchase. The pre-purchase, in this case, equates to how easy it is to find delivery information on the website (both in the case of delivery and returns), and post-purchase concerns the physical delivering of the item. Both of these need to be clearly communicated to yield the best results.

Tobias Buxhoidt, Founder and CEO of parcelLab references data garnered in regard to returns information. He says: ‘The recent UPS Pulse of the Online Shopper study revealed that 67% of shoppers check an ecommerce website’s return policy before they make a purchase. Where possible, that means free in terms of both delivery and returns.

‘An example of the importance of quick delivery was seen recently when Holland and Barrett cancelled its next-day service. The result was that its conversion rate fell instantly.’

Buxhoidt also references the need for communication during the actual delivery segment of the purchase. Buxhoidt: ‘A critical factor often overlooked is communication during the delivery and returns process. By taking control of this, online retailers can emphasise their brand values during these messages, helping build a key point of differentiation beyond speed and cost. They can also ensure they make the delivery and returns experience as good as possible for shoppers, by carefully guiding them through each phase. What’s more, they can use post-purchase as a promotional channel, sharing offers and complementary purchases to drive sales.’

And there you have it – the delivery trifecta, if you will; a combination of convenience, communication, and intimately knowing your customer are all you need to refine and perfect your delivery strategy.

However, there’s one final thing which is of concern to customers in 2019, which, if overlaid on the delivery strategy, could further build brand loyalty: the environment.

Talking

Environmentalism

Environmentalism is a continually recurring topic in retail, and one which has been identified as a top trend of 2019. It’s no wonder, therefore, that Paul Durkin, Director of Home & eFulfilment, Wincanton has highlighted an environmental awareness as one of the most important aspects of delivery.

Durkin: ‘Thanks to increasing awareness of sustainability and the environment, today’s consumers are becoming more inclined to ‘think green’ when it comes to delivery. A recent consumer survey by Wincanton revealed just 6% of UK consumers actively chooses to buy from retailers that deliver in electric vehicles. However, a much larger 32% say they would consider buying from a retailer that uses electric vehicles in the future. This demonstrates a growing appetite for more environmentally friendly deliveries and something retailers must consider if they want to remain competitive. 

‘When it comes to convenience, opinions are split; nearly half (48%) of customers said they would sacrifice convenience for a delivery that is more environmentally friendly. This suggests choice and convenience are still major factors for the customer when they are shopping online, but its clear retailers need to actively demonstrate their green credentials to customers. This is becoming an increasingly important factor in the customer journey and if it matters to the them, it should matter to the retailer too.’

Green puzzle

In Summary

While speed seems to grab the limelight in current discussions on delivery, it’s actually convenience rather than an instantaneous service which customers look for, and what retailers should be refining their propositions to cater for.

In order to truly provide convenient options for customers, however, extensive research should be obtained about how the customer base would like things to be delivered, and these options should then be communicated clearly to any potential purchaser.

Finally, with half of all customers being concerned with the environment to the point where they would sacrifice convenience to ensure their purchase is environmentally-friendly, retailers should look to optimise their delivery services with sustainability at heart. In adhering to these things, retailers can truly look to get ahead this year.

Will Gillingham, Content Manager, IMRG

IMRG Retail membership banner

Join thousands of other Online Retail professionals

Get unique insights straight to your inbox for free, and improve your understanding of online retail. Subscribe to Online Retail Weekly now.

Data Summit 2019 scroll banner