State of UK shipping in 2016

I have been doing some research on the state of shipping in the UK as I believe that it is a critical success factor to any online business across the world to be successful. Of course, the products you sell are key, but as you will encounter a lot of competition you will need to differentiate yourselves, and matching your customers’ expectation in terms of delivery will be key to your growth.

I have been studying 27 key UK retailers and created a model to evaluate their delivery proposition. To my suprise, House of Fraser came on top just above Amazon. But then upon reflexion, it is not that surprising. HOF have got a huge network of shops, which Amazon haven’t got, as well as, offering additional click and collect networks (Doodle, Collect+, etc). This is where I believe multichannel have the edge on pure players. Make no mistake, Amazon have recognised this strength and expanding their click and collect partnerships (latest in date is Morrisons).

Temando published a very intersting research. Here are some nuggets and interesting insights:

  • 60% of consumers abandon their shopping bag because delivery costs are too high
  • 42% of consumers abandon their shopping bag because delivery information come too late in the journey
  • 37% of consumers abandon their shopping bag because free shipping wasn’t offered
  • 27% of consumers abandon their shopping bag because shipping was too slow

Costs are always an issue but speed is a growing requirement. Over a quarter of respondents mentioned that they expect a fast and reliable delivery service. This is where Amazon have the edge. Always trying to innovate (1 hour delivery, drone delivery). Go back to your supplier and negotiate for a faster service.

Interestingly, on average 40% of retailers charge the customers the exact amount it cost them and only 2% of average make some extra margins. I actually know that some retailers will make a loss in order to optimise their conversion rate. However, 30% of retailers are concerned by the constant increase in prices from the couriers.

Another fact that is becoming key is that 78% of consumers expect their delivery to be made on the same day. Based on my research only 20% of retailers offered that service. That sounds like an opportunity!

Other important facts:

  • 86% of consumers would use time slots.
  • 88% expect a click and collect service
  • 64% expect to collect from other networks collect points
  • 84% expect express delivery
  • 71% expect weekend delivery

Now, what are the drawbacks of not offering a compelling delivery proposition?

  • Reduced customer loyalty (39%)
  • Negative brand impact (36%)
  • Increased costs of returns (31%)
  • Increased calls to call centre (22%)
  • Increased negative social media mentions (21%)

Finally, 42% of consumers would be ready to receive a drone delivery! I can’t wait for that first experience but the air space may be crammed 🙂

In summary, 2 actions you should get on with rapidly:

  1. review your delivery proposition and the ones of your competitors to ensure you are at least competitive and if possible gain a competitive advantage
  2. discuss your costs and available services with your carier

Good luck and if you need help contact me

Benoit Mercier

How important a delivery proposition is to your ecommerce strategy?

In whatever country you trade, customers always expect a faster, convenient and more reliable delivery service, from click and collect to the “we deliver in one hour”. Online retailers are always looking to push the boundaries in order to gain a competitive advantage.

An E-tailing Group study revealed that unconditional free shipping is #1 criteria for making a purchase (73% listed it as ‘critical’). In another study 93% of respondents indicated that free shipping on orders would encourage them to purchase more products.

High shipping costs were rated as the number one reason why consumers were not satisfied with their online shopping experience. In fact, shipping costs are the main reason why people prefer brick and mortar to online. Shipping costs are a major cause of basket abandonment, particularly when the full charge isn’t made clear up front.

People want free shipping, no surprise there. But how attractive is it? In fact, orders with free shipping average around 30% higher in value those that charge a few bucks for transport. Makes business sense.

1. Customers expectations

  • Clear, accurate tracking online. This can save a lot of wasted time, and reduce pressure on call centres.
  • Informative, proactive communication (text, phone or email updates). SMS notifications can be great for this.
  • Good levels of communication when problems (inevitably) occur. Even the best online retailers will experience delivery issues now and then.The key here is to communicate with customers – don’t make them work too hard to find out about their delivery.
  • Non premium rate phone numbers to call at the courier. Premium rate phone numbers for customer service are a big mistake. Don’t make customers pay when you have cocked up.
  • Greater levels of support from the retailer. As a retailer, it’s not enough to just palm delivery problems off onto the courier and have customers chasing their order up. Customers will hold the retailer, not the courier, responsible so be proactive in following up problems.

2. The boom of click and collect

According to ecommera delivery proposition, Reserve-and-collect services are becoming ever more important for ecommerce retailers as consumers increasingly expect to be able to pick up their purchases when and where they choose serve-and-collect services are becoming ever more important for ecommerce retailers as consumers increasingly expect to be able to pick up their purchases when and where they choose.

79% of consumers have used click-and-collect in the past year

  • A survey run by Econsultancy in August found that almost two-thirds of consumers (63%) have bought products online before collecting them in-store at least once in the past 12 months, while 16% use reserve-and-collect at least once a month.
  • Just over one-fifth (22%) of respondents said they had never used reserve-and-collect.
  • The survey also found that 50% of respondents had abandoned a purchase online due to unsatisfactory delivery options.
  • Argos is the UK’s third most successful ecommerce retailer and achieves 42% of total sales online. The retailer’s ‘check and reserve’ service accounted for 31% of total online sales in Q4 2012.

Another benefit if you run a multichannel business is that it generates footfall and therefore increases your chance to transform a return not into a refund but an exchange with potentially a cross sell.

If click and collect is perceived as the holy grail in terms of customer service, it is costly depending on your logistics operations. John Lewis announced that they will start charging £2 for orders under £30, as they make a huge loss on the service at present. How will their customers react from an online perspective? According to the above stats, I foresee a drop in conversion and the like of House of Fraser, Debenhams will gain a competitive advantage.

3. Amazon “one hour” service

Amazon is launching a one-hour delivery service, Prime Now, in London, offering high speed delivery on selected items to customers in east and central London. Customers, who must be Amazon Prime subscribers, can order goods to their home or office for delivery in the next hour for £6.99.

Amazon has always placed their delivery proposition at the heart of their strategy and I believe that it is one of the reason it has been so successful over the years. They are an innovative business. Is it profitable to them? Not everything that Amazon does is worth copying, but I am sure that with the army of analysts they have the conversion benefits must outweigh the potential loss. This is a geo service location only, with London being on trial. The other benefit is of course PR. It creates a lot of free buz, which is good for their brand, sales and SEO!

Overall, I feel that retailers will keep pushing the boundaries in order to gain a competitive advantage but the key is to do so with a strategy in mind and more importantly with costs well defined. The pressure is on the courier industry to come back with innovative, probably disruptive innovations, ideas and concepts that will satisfy customers and retailers needs.

Benoit Mercier