Are Delivery Options, Speed, & Returns costing you sales?

Category: Operations
Are Delivery Options, Speed, & Returns costing you sales?

Online retailers need to sharpen up their delivery options after ‘losing’ £31.5bn in sales annually at the checkout due to delivery-related issues. A report by GFS and Retail Economics, found 24.8% of UK shoppers abandoned their purchases at the checkout and examines why consumers are failing to complete their purchases – and what retailers need to do to avoid this.

A breakdown of the £31.5bn reveals that £7.2bn is attributed to the lack of delivery options, £4.9bn is down to cost expectations, £4.5bn is down to delivery speed and £4.2bn because of the returns policy.

Delivery options

More than 100 senior ecommerce and supply chain professionals within the UK were surveyed for the report, with more than 80% confident in the delivery services they offered met consumer needs.

However, the report has revealed huge discrepancies between consumer expectations and retailer service, as 83% of retailers believe they offer a wide range of delivery options yet just 48% consumers agree with this. The survey also indicated that shoppers expect at least five delivery options when getting to the checkout, but research shows only a third of retailers offer this with the average being three options.

This is significant as it flies in the face of the online industry norms of perhaps offering ‘Standard’, ‘Express’, and ‘Economy’ delivery and thinking that this is enough to satisfy most consumers. But it doesn’t enable me to avoid the one carrier that always performs worst when delivering to my house, or perhaps the option to collect from a local parcelshop or locker. Consumers are demanding more than ever before and, whether selling on a marketplace channel or your own website, with a robust shipping integrator it’s relatively easy today to offer a wider range of delivery offerings than ever before.

Delivery costs & Returns

Retailers are also confident they are performing well when it comes to consumer confidence in delivery and returns policy (85%), provide reasonable and transparent delivery costs (84%), offer easy and frictionless checkout experience (88%), and that customers are satisfied with the speed of delivery (88%). However, this confidence does not stretch to consumers as their feedback ranged from just 54% to 64%.

However, the report did debunk ‘consumer myths’ and offers some positive insight for the ecommerce and delivery providers as online shoppers are prepared to pay for premium delivery and return services.

Three in four consumers are willing to pay extra for same-day, next-day or nominated delivery, while a staggering 95% of millennials are open to paying for a premium delivery service. This is replicated with returns, however there is a discrepancy of attitudes amongst the age groups as 76% of under-45s will pay for hassle-free return options. By contrast, only 34% of over-45s will pay.

Serial online shoppers, those who purchase goods at least once a fortnight, are also willing to pay for ‘hassle-free’ returns more than those who buy once a month or less.

Retailers also acknowledge more could be done to enhance the customer experience including expanding delivery options (45%), offering free shipping or reducing costs (44%) and reducing delivery times (42%). However, they also pointed to the two main barriers in being able to improve delivery options are high operational costs (61%) and working with multiple carriers (41%).

The research validates, and more importantly puts a value on, what we’ve always known to be true; that lack of delivery options results in lost sales at the checkout.

In our experience, retailers are well aware of this but struggle to overcome the internal costs and complexities of working with multiple carriers. That’s why we’re seeing a clear shift away from traditional approaches, with retailers seeking multi-carrier partners to resolve this.

Bobbie Ttooulis, Executive Board Member, GFS


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