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Paul Galpin, managing director of P2P Mailing
Many online stores offer a wealth of shipping options that, according to recent research, simply aren’t necessary. Paul Galpin explains how this knowledge can benefit e-retailers
E-commerce has rapidly become one of the favourite shopping channels for UK consumers. The IMRG Capgemini e-Retail Sales Index reports that in the UK £5.2 billion was spent online during the month of April 2011, representing a 19 percent year-on-year 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 £174.
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 percent of e-retailers offer at least two delivery options (usually standard and next day), up from 54 percent in 2005. The report also found that 25 percent offer Saturday delivery, 17 percent a choice of day, 12 percent the option to select the time of day the delivery takes place and nine percent offer same-day delivery.
Anecdotal evidence from within the e-commerce logistics industry, however, indicates that special delivery options are far less popular with and important to consumers than online retailers assume. In order to put some facts behind this perceived truth, we commissioned research into UK consumers’ actual views regarding their preferred delivery options. A sample of 2000 UK consumers, representative by gender, region and age, was polled during June 2011 and revealed that, indeed, premium delivery services are much less highly rated than online retailers believe.
Certainly when ordering items for themselves, the vast majority of UK consumers – over 86 percent –would choose standard delivery. This changes slightly when ordering electronic goods, for which 65 percent of consumers would choose standard delivery.
The survey also uncovered some interesting gender differences. Women are generally more likely to select standard delivery and particularly so when purchasing non-electronic goods for themselves, with the proportion of female consumers selecting this method never falling below 89 percent, compared with 82 percent of men. Men (82 percent) are less likely than women (91 percent) to select standard delivery option for games, DVDs and music and books – 90 percent of men compared with 95 percent of women. Both sexes were equally likely (nine percent) to choose special delivery for items of clothing.
Electronic goods represent an exception. These are generally higher value, more fragile items and the choice of delivery method reflects this. When it comes to the purchase of electronic goods, in fact, the preference for standard delivery drops to 65 percent. In particular fully 18 percent of UK shoppers would choose next day delivery for electronic goods and 15 percent prefer to use a track-and-trace facility for these items. This compares with four to nine percent of consumers choosing track and trace and one to three percent choosing next-day delivery for other types of goods.
Twenty-six percent of 23 to 35 year olds would choose special delivery for electronic goods but fewer, 21 percent, of 18 to 22 year olds prefer this method. For businesses targeting the over-56 age group it is important to note that only 13 percent of UK consumers in this particular age bracket would request next-day delivery for electronic goods, with as many as 78 percent sticking to standard shipping.
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. Thirty-one percent of consumers would choose special delivery when ordering a birthday present and 28 percent a Christmas gift.
Generally women were found to be a little more likely to choose standard delivery for gifts for others, although a couple of items stood out, suggesting that, in the instance of buying toys, women plan better and are less likely to need next-day delivery. In fact 93 percent of women order toys by standard shipping compared with 88 percent of men. Male consumers, on the other hand, are more likely to plan for mother’s and father’s day, with 70 percent using standard delivery compared with 66 percent of women.
The survey identified that the value of items ordered is the most important factor in determining consumer choice of shipping. A value above £50 appears to greatly influence consumers to select special delivery. In fact only nine percent of consumers would select special delivery for orders under £50, but 42 percent would do so for orders above £50 and 65 percent for orders over £200.
In addition, for orders over £100, the survey revealed an increase in the selection of track-and-trace, which rises from 13 percent for orders below that sum to 30 percent for orders above it. For items over this value, standard delivery finally becomes a minority option with only 40 percent of consumers selecting standard delivery for items worth between £100 and £199, 23 percent selecting next-day delivery and 30 percent choosing track-and-trace. For items over £200 track-and-trace becomes the most popular option (40 percent). Evidently where a larger sum of money is involved UK consumers prefer either to receive the item faster, or to be able to track delivery progress, thus becoming immediately aware if something goes wrong.
Conclusion Online retailers have been operating and devising their strategies under the false assumption that consumers require and prefer next-day delivery. This assumption has led them to believe that offering a range of complex and expensive premium options will provide them with the competitive advantage they need to separate themselves from other e-retailers in their segment.
But in fact standard delivery is the preferred delivery option by far. Although exceptions to the norm do exist, in particular with respect to electronic purchases and gifts, they represent a minority. Premium delivery options could prove a winning strategy for gift sellers and those specialising in electronic goods, but assuming that all consumers are drawn to premium delivery for every purchase is expensive and misplaced.
By understanding that premium shipping is linked to item value, e-commerce retailers can home in on more tailored strategies to offer delivery options that suit their customers and their preferences. Only by partnering with an expert that is able to match items sold and customer profile with cost-effective shipping options can online retailers avoid hampering their business processes with complex and ineffective delivery options and provide customers with the service they really need.
Paul Galpin is managing director of P2P Mailing