Festival season is upon us as the ecommerce market continues to heat up

Matthew Robertson, Co-CEO, NetDespatch discusses the increase in B2C ecommerce turnover in the UK and the factors influencing this.
Matthew Robertson, Co-CEO, NetDespatch

I recently read an article, published in June, that talked about the fact that business-to-consumer ecommerce turnover in the UK is expected to reach over 200 billion euros by the end of this year. Think about that for a minute, ecommerce in the UK is set to reach 200 billion euros by the end of the year!  That would mean an increase of 14.6 percent compared to the situation last year, when UK ecommerce was worth almost 175 billion euros.

This number was disclosed by Ecommerce Foundation’s report about the United Kingdom. And while the share of the British population using the internet was at 95 percent during the last three years, for this year a share of 96 percent is expected. This means that millions of people are expected to generate these ecommerce sales which represents significant growth compared to the last couple of years. 

So what is driving this growth? We hear so much doom and gloom in the news about retail, it is hard to believe the growth figures predicted.

Without a doubt, retailers are under pressure to retain their customers, grow new customers and products and services, and many are looking at how they either start or continue to digitally transform their organisations as they look to automate every part of the supply and delivery chain.  And while some retailers are still at the start of this journey, or struggling to understand what that journey looks like, many of the big online retailers, like Amazon for example, are honing it to perfection.  The key to Amazon’s overall success is understanding how customers are shopping and being responsive to changing shopping habits. Amazon is not content to follow the crowd; its culture of innovation means it will lead the pack and give customers a shopping experience they didn’t even realise they wanted.

What the ecommerce report also showed is that the annual amount spent per online shopper has increased significantly. In 2015, the average amount was 2,515 euros, while last year it was already 3,254 euros. For this year, the Ecommerce Foundation thinks the average online shopper will spend 3,620 euros.  This is leaving bricks and mortar retailers trailing behind, desperately fighting to keep pace.   But they do have one advantage over the online retailers – they can look at how they make shopping experiential and rework how the store is set out so that the shopper enjoys the experience.  For example, Sainsbury’s is building an experiential omnichannel ecosystem, with phone branches, pharmacies, opticians, dentists and even children’s learning centres in-store, alongside branded coffee shops and restaurants.

It was also interesting to read that, in the UK, home delivery during the day is still the most popular preference for online shoppers. For 61 percent of consumers this was the most preferred delivery method. Home delivery in the evening was preferred by 14 percent, while delivery to the mailbox or multi-occupancy mailbox by the mail carrier is the most ideal method for 13 percent.

But what we are seeing now is that, as ecommerce sales increase, so many retailers are starting to clamp down on their returns policies. In fact some have sent warning emails to customers about their behaviour. There are a lot of items being sent back, in fact retailers estimate that 10 per cent of items sold online and nine per cent of all items sold in store are returned by customers. A survey by Barclaycard found that 20 per cent of retailers took steps to make their returns policy more stringent in the past year, with 19 per cent planning to do so in the next 12 months.  Key factors for this were that many customers are over-ordering items, knowing they will return the majority and many retailers claim shoppers are using items and returning them, or they are returning goods without the packaging or sending them back outside the returns policy deadlines. But will more stringent returns policies actually help protect revenues or will this actually deter shoppers from buying goods?

Certainly, when we did our returns research here at NetDespatch, we found that what consumers hate about online shopping is returning parcels and the easier and more painless this is made, the more likely the consumer will opt for that brand or certainly it will impact their view of the brand.

As the ecommerce market continues to grow, automating processes, thinking about ease of returns and despatching orders to consumers as quickly and efficiently as possible will certainly make the whole shopping experience a more palatable one.  Retailers and carriers need to cut any fat out of the whole ordering and delivery process in order to compete.  To do this effectively, retailers and carriers should also get shoppers to explore other delivery options to bring down the price of parcel delivery.  In fact I was quite surprised that so many shoppers still prefer home delivery and this made me wonder if retailers both online and instore are doing enough to educate users about all the options available to them. 

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