Paul Galpin, managing director at P2P Mailing, looks at how complicated delivery options offered by online retailers can often be more hindrance than help.
E-commerce has rapidly become one of the favourite shopping channels for UK consumers with the IMRG Capgemini e-Retail Sales Index reporting that in the UK £7.9 billion was spent online during the month of December 2011, representing a year-on-year 16.5 per cent increase.
A greater number of UK consumers are spending online and they are also reported to be spending more, with the average order value having reached £155
In a bid to gain and maintain a competitive advantage, online retailers have recently been expanding the delivery options they offer clients, as the latest Snow Valley Online Retail Delivery Report highlights. The report found that 69 per cent of e-retailers offer at least two delivery options (usually standard and next day delivery), up from 54 per cent in 2005.
Anecdotal evidence from within the e-commerce logistic industry, however, indicates that special delivery options are far less popular and significant to consumers than online retailers presume. In order to investigate this, we polled a sample of 2000 UK consumers, representative by gender, region and age, during June 2011. The survery showed that premium delivery services are much less popular than online retailers presume.
Certainly, when ordering items for themselves, the vast majority of UK consumers would choose standard delivery. More than four fifths of consumers (over 86 per cent) would select standard delivery when ordering items for themselves.
When purchasing for others there is a greater sense of urgency, with more consumers selecting special delivery options. Nevertheless, although the proportion of consumers choosing next day delivery rises, it never reaches a third.
The survey also identified that value of item ordered is the most significant factor in determining consumer choice of shipping. A value above £50 appears to significantly influence consumers to select special delivery. In all, 91 per cent of consumers would select standard delivery for orders under £50, but only 58 per cent would do so for orders above £50 and 35 per cent for orders over £200.
These results demonstrate that online retailers have been operating and devising their strategies under the false assumption that consumers require and prefer next day delivery. In fact, standard delivery is the preferred delivery option by far. Although exceptions to the norm do exist, they represent a minority. By understanding that premium shipping is linked to item type and value, e-commerce retailers can hone in to more tailored strategies to offer delivery options that suit their client base and their preferences.
All e-commerce businesses know that customers are infuriated by poor delivery. These findings show that e-commerce retailers would be well advised to concentrate on ensuring that their basic fulfilment system works well, rather than trying to offer multiple delivery options which may complicate and jeopardise the efficiency of the delivery.
For SMEs in particular, it’s important that any investment adds value to the business. Misdirected resources cause wastage and ultimately impact on business growth. By analysing the preferences of their customers, SMEs can ensure that their fulfilment and delivery process offers the right options whilst working efficiently and remaining cost effective.
If consumers are habitually spending smaller sums for lower value items purchased for themselves it is likely that premium options will very rarely be used, thus providing no competitive advantage whatsoever.