In a groundbreaking shift, new research reveals that physical interactions throughout the customer journey contribute significantly to UK ecommerce sales. Metapack, ShipEngine, and Retail Economics found that a staggering £52 billion – nearly half – of UK online non-food sales in 2023 interacted with physical touchpoints. This highlights the growing importance of omnichannel strategies that seamlessly blend online and offline experiences.
The Ecommerce Delivery Benchmark Report 2024, commissioned by Metapack and ShipEngine’s parent company, Auctane, in partnership with Retail Economics, surveyed 8,000 consumers and 400 merchants across eight markets.
While familiar aspects like in-store browsing and returns play a critical role in the omnichannel experience, the research delves deeper, revealing the rising influence of social media and AI in the shopping journey.
The £52 billion figure reveals a fascinating evolution in consumer behaviour, and a major opportunity for brands. We’re moving beyond simply ‘online’ or ‘offline’ shopping. Today’s consumers seamlessly blend physical touchpoints, like stores, with social media discovery. They’re even showing openness to new innovations like AI for streamlining the most tedious parts of the shopping process, like delivery and returns.
Retailers who excel at crafting this omnichannel experience – where browsing trends on social media inspire in-store visits and technology streamlines logistics – will be well-positioned for success in 2024. It’s not just about convenience, it’s about fostering a dynamic, personalised journey that builds lasting brand loyalty.
– Al Ko, CEO, Auctane (Metapack and ShipEngine’s parent company)
Social Media Overtakes Websites for Product Discovery Among Digital Natives
Forget retailer websites – for Gen Z and Millennials, platforms like TikTok and Instagram reign supreme for product discovery. Across surveyed markets, a staggering 40% of digital natives (under 45) rely on social media for inspiration and product research, compared to just 35% who use retail websites. This emphasises the need for retailers to adapt their strategies and reach these audiences on their preferred platforms.
AI: A Glimpse into the Future of Customer Convenience
The rise of artificial intelligence (AI) promises to revolutionise shopping. While some UK consumers remain cautious, 30% surveyed see AI as valuable for streamlining order and delivery updates, and 27% believe it can simplify returns and exchanges. This suggests a growing openness to AI’s potential for enhancing the shopping experience. However, for retailers, clear communication and responsible implementation are crucial for building trust and ensuring AI is used effectively.
Cost-Conscious Consumers: Striking a Balance in Delivery
While physical interactions, social media, and seamless logistics drive online sales, cost sensitivity remains paramount for surveyed UK consumers, especially around delivery. A significant 42% state the cost of delivery is the most important factor to them when shopping online. The report further showcases the impact of high shipping costs: 65% of surveyed UK consumers are less likely to shop with a brand due to them, while 50% are unwilling to pay for premium deliveries. Navigating this delicate balance between cost optimization and customer satisfaction will be crucial for retailers in the year ahead.
Returns: From Friction Point to Loyalty Catalyst
Out-of-home returns are gaining momentum. 30% of surveyed UK consumers report a preference for in-store returns and 25% favour PUDO (pick-up/drop-off) locations. The research also reveals a distinct generational divide in frequency of returns: across markets, Gen Z leads the pack, returning 19% of their apparel purchases on average.
While the debate around free returns persists, with 67% of surveyed UK consumers expecting them, a 13% decrease in this sentiment year over year suggests a growing understanding of the associated costs. Notably, across surveyed markets, half of Gen Zs are willing to pay for a quick and hassle-free return, making them three times more likely than Boomers (aged 65+) to do so. Ultimately, returns present a double-edged sword: 42% of surveyed UK consumers report an inconvenient returns policy as a factor that would make them less likely to shop with a brand in the future. By embracing diverse, in-person return options, adopting a delivery ecosystem to address rising returns, and prioritising transparent policies, retailers can transform this potential churn point into a powerful customer retention tool.
Beyond Inflation: Navigating Retailer Challenges in 2024
Despite easing inflationary pressures, surveyed merchants cited a trio of concerns heading into 2024: rising overhead costs (37%), weak customer demand (31%), and intense competition (27%). In this dynamic landscape, outshining the competition will ultimately require brands to orchestrate this frictionless customer journey.
The retail landscape in 2024 demands a robust omnichannel strategy, more so than ever. With £52 billion of online sales hinging on physical touchpoints, it’s clear that the customer journey is dynamic and increasingly complex. From product discovery to delivery and returns, shoppers demand convenience and value across all channels, and they won’t tolerate friction along the way.
Successful retailers are those that can provide seamless and consistent experiences that meet customer needs wherever and however they want to shop – whether online, in-store, or a mix of both. A pure-online or single-channel approach will struggle for relevance in today’s omnichannel environment.
– Richard Lim, CEO, Retail Economics
