E-commerce has become the fastest growing retail market in Europe and North America and, according to the Walker Sands 2017 Future of Retail survey, free shipping is the number one incentive for consumers to shop online. In fact, E-Commerce Times recently reported that 27 per cent of shoppers find late delivery so disagreeable, they’d rather a root canal than a late package! 52 per cent also stated they ditched their order when they realised their order didn’t include free shipment.
Along with their desire for free shipping, consumers these days are also taking an active interest in how the various products they buy are sourced and produced. This new ‘consumer conscience’ is common among the increasingly influential millennial market, which is driving brands and retailers towards a more socially responsible business model. According to Forbes, when millennials part with their cash, they’re more inclined to give their business to corporations with pro-social messages, sustainable manufacturing methods, and ethical business standards.
However, with this push towards a more socially responsible society, I find it surprising how little attention is afforded to free delivery, and the ways it impacts the logistics industry, couriers and, more generally, the environment. Despite the savings for the average consumer, free delivery is causing significant problems. Here, I’ve outlined some of the key complications arising due to free delivery.
- Crushing the competition
While the list of benefits of offering free shipping is lengthy, it’s a phenomenon that’s having a considerable negative effect on small players in the fulfilment industry, as business owners feel the pressure to compete in a race to the bottom to retain customers. For larger corporations like Amazon, who shipped five billion items via their Prime service in 2017, this can work, but it’s a tactic that can cause problems in the long-term for smaller businesses which are ill-equipped to absorb the costs of ‘free’ delivery.
- Disadvantaged drivers
The rising consumer expectation to get packages as soon as we want them has pushed the delivery model and its workers to the brink. For example, The Huffington Post recently reported that the offer of free shipping has seen a fall in courier wages and job security, as companies try to recover their costs in alternative ways. Many delivery drivers now work on flexi contracts; while this kind of contract may work for a number of employees, these drivers have to compete for jobs via an app platform. This works on a ‘first come-first served’ basis, meaning they may not get enough work. Amazon delivery contractors in the US have even been sued for failing to pay the minimum wage.
- Packages causing pollution
While conscious shopping has become more prevalent, the ease of buying and returning items online encourages shoppers to order more than they necessarily need. Without time to consolidate rush deliveries, there are more vehicles on the road.
For example, as online shopping increased in popularity last year, particularly in the UK, promotions such as ‘free shipping Friday’ gained traction. UK consumers’ post-Christmas returns on ‘take-back Tuesday’ were estimated to increase more than two-fold compared to an average day in December, totalling £2.5 billion between mid-December through to mid-January.
Ultimately, someone is picking up the tab for free shipping. A report from the 2017 Independent Transport Commission (ITC) said the industry needs to urgently challenge the consumer perception that all shipping should be free, in order for urban delivery to remain viable.
Free and fast shipping may seem like a no-brainer for the sale-savvy shopper, but it’s important that consumers know that it’s not without cost to the system or to the environment. Only then can they make a fully informed decision about how, and indeed with whom they feel comfortable spending their money.
By Mark Bellamy, director at B2C Europe