Matthew Robertson: Understanding the Parcel Delivery Tipping Point As You Prepare for Peak

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Global ecommerce is growing at such a rate that it is hard for the logistics and retailing industry to keep pace. Black Friday and Cyber Monday were the busiest shopping days in 2015 and with annual shopping spike dates fast approaching again I was keen to find out more about consumer parcel delivery preferences.

Without a doubt consumer confidence in online purchases is growing and we already know that an increasing amount of UK consumers took to the internet to buy Christmas presents in 2015. These developments show that carriers’ success as businesses will depend on how efficiently, economically and quickly they can deliver parcels.

First impressions count

As we move towards the peak period for 2016, it is clear that for retailers to gain the confidence of consumers, they need to fulfil orders quickly and efficiently. While consumers are increasingly judging retailers on their parcel delivery experience, is this experience really based on consumer preferences or is the industry itself driving to faster and faster delivery times?

We started ecommerce shopping with five to seven day delivery, then we moved to next day delivery, and now we are witnessing not only same day delivery but the promise of delivery within hours of orders being placed. This puts enormous pressure on everyone in the supply chain, from retailers to ecommerce technology providers to carriers.

But when is fast, fast enough?

We recently commissioned independent market research company, Opinion Matters, to survey over 1000 UK adults who regularly shop online. We wanted to understand consumer behaviour around delivery choices and in particular, we were looking to uncover the parcel delivery tipping point, where consumers are prepared to pay for their delivery choices.

Paying for parcel delivery

The results were illuminating. We asked respondents if they would be prepared to pay for a parcel and categorised purchases as Distress, Need, Want or Nice to Have. Overall we found that 88% of respondents were prepared to pay for a one to two day parcel delivery service. 65% said they would pay for a Distress Purchase with nearly one third (31%) stating that they would pay for a Need Purchase. Only 12% categorically stated that they would never be prepared to pay for a one to two day parcel delivery service.

What I found really interesting is that when it comes to online shopping convenience far outweighs price. Nearly half (47%) of respondents stated that being able to shop when they want and not when the shop is open was a top priority. 38% of respondents advised that not having to visit a physical store was a key priority, while price came third. To my mind, the results from the survey clearly highlight how important convenience is to online shoppers, more important than price in many cases.

Consumers are also willing to pay more to have greater control over the delivery timeframe. The million dollar question is how much? When we asked consumers to consider how much they would be prepared to pay this clearly depended on the importance of the item to them.

Where do we want our parcels delivered?

Another interesting trend the research uncovered is that 78% of consumers are now choosing alternative delivery options for their goods such as lockers, convenience stores, the Post Office and Click&Collect. Only 22% said that delivery to home or work is the only delivery option they consider. This is quite a sea change from a few years back when delivery to home or work was the most desired option.

The study also examined delivery expectations and how long are we prepared to wait for a parcel based on the nature of the purchase. We found that 58% of respondents expect a Distress Purchase to be delivered same day or within one day. 31% were prepared to wait two days for a Need Purchase, while 29% expect a Need Purchase to be delivered either same day or within one day. For a Really Want Purchase 81% of respondents were prepared to wait more than two days and anything up to eight days. 60% of respondents were quite happy to wait more than four days for a Nice to Have Purchase with one sixth stating they would wait eight+ days.

And finally we asked about the dream delivery experience and the three most important elements that make for a positive experience. This was all about visibility and control with 82% ranking the ability to track online in their top three. 70% of respondents wanted an exact window for delivery, and 65% wanted to be notified of the steps in the delivery journey. The research also looked at what would happen if retailers were not able to deliver items within the required timeframe and whether they would cancel their order and shop elsewhere or be prepared to wait.

Preparing for Peak

As we move closer to Christmas 2016 and prepare for the peak period, getting the delivery experience right and understanding consumer preference will be vital to the success of ecommerce services. Our research shows that there is a point where consumers are undoubtedly willing to pay for a faster delivery service and appreciate that to receive this service, a premium is required. That said the research clearly showed that flexibility and convenience are just as important to consumers as the speed of delivery.

Our research also shows that consumers are much more open to self-service options when it comes to parcel delivery, which could certainly be a way for carriers to achieve better economies of scale. Visibility and being kept informed of the steps in the journey and where their parcels are is also a key factor in making that delivery experience a dream. In order to achieve this, carriers need to be agile, they need technology and data to deliver that information, and they need a seamless process that enables parcels to glide out the door.

Good luck as you prepare for peak, I hope our research helps to inform your delivery strategy.  To download the full research report please [click here].

 

Matthew Robertson, Co-CEO, NetDespatch

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