Signed, sealed, delivered
Written by Hannah Prevett
Hannah Prevett looks at the current state of the online delivery sector and rounds up the latest innovations and key trends
Amazon has blazed a trail, not only in how customers order goods but in how they get delivered too. Its decision to launch its own delivery service and scrap free deliveries on items under £10 hit Royal Mail hard: the UK postal stalwart had recently warned that Amazon’s offering could dent its business by as much as two per cent in the short term. The message is clear: customers expect more from online delivery.
The good news is, in the main, they are happy. Figures from IMRG show that 82 per cent are satisfied with the delivery of their online shopping items. Furthermore, the stats show that if a customer is happy with delivery, they will be much more likely to return: 72 per cent have re-ordered from a retailer after a good exeperience. On the flipside, 46 per cent have backed out of a purchase at checkout stage because of concerns about delivery. And they are less enamoured with the returns process: satisfaction is much lower, standing at 68 per cent. “There’s a reason why customers are generally happier with delivery than they are with returns,” says Andrew Starkey, head of e-logistics at IMRG. “Suddenly they’re without the goods they’ve ordered, without the money they’ve paid for the goods and probably out of pocket for the cost of return. Until they get a credit, a refund or a replacement, which can take, depending on how fast the retailers is, 14-days plus, they are in that black hole of, ‘what happened to my money; what happened to my goods?’”
Despite some of the hype around same-day services, Starkey says this isn’t being driven by consumer demand. “It’s not all about speed. People think it is but the majority of UK deliveries do not go out on next-day delivery services or premium delivery services; most of them go out on two, three or four-day deliveries.” This is certainly the case at feelunique.com, the online beauty shop, where 92 per cent of deliveries are standard, free delivery, with just eight per cent of customers paying for premium services. “It’s very important for the [e-commerce] industry to have a lot of newness and a lot of exciting things to talk about so we work very hard on coming up with lots of new solutions. There is a group of individuals with certain reasons why they might need something urgently but it’s rare in our industry. It’s not like in electronics where your TV or washing machine might blow up. We’re a luxury purchase so we aren’t in that market,” says Craig Wheeler, operations director at feelunique.
One of the exceptions is undoubtedly fashion retailing where shoppers will routinely plump for next-day delivery to ensure timely delivery of clothes and accessories. At River Island, 15 per cent of domestic orders are next day. “They’ll pay for it if they want it quickly,” says Sunil Bhudia, carrier services manager at River Island. When Bhudia first started working at River Island two and a half years ago, the retailer only had one option: home delivery. There are now six. “This year has been about streamlining all of the services we did have and it took us about a year to develop click and collect,” he explains.
Click & Collect has soared in popularity since it became widely available in the last 18 months. At River Island, 40 per cent of domestic orders are Click & Collect, rising to around 45 per cent near Christmas. But this can come with its fair share of challenges, particularly in the run up to Christmas. “If Click & Collect continues to grow at the rate it is currently we’re going to struggle to meet the demand because we’ll inundate our stores with too many parcels. If orders exceed 50 per cent that’s the break point for our stores.”
Though once the sole preserve of multi-channel retailers, the appearance of services such as CollectPlus and myHermes means online retailers are now able to offer customers convenient locations from which they can collect and return their parcels. “Click & Collect is an option all retailers should be offering because it isn’t always convenient to wait in,” says Starkey. “These are all plug and play solutions: there might be a small integration cost or some integration time necessary but it’s not a big deal,” he says.
Wheeler says that the emergence of new players in this area has given pureplays the opportunity to catch up with High Street retailers who previously had the advantage of a store network. “With the roll-out of these additional collection points and the same-day offering Amazon is now rolling out, we have the ability to deliver not just to stores but to deliver to thousands of local collection points and stores. That’s putting us very much on a level-playing field, even possibly slightly ahead.”
Another key trend rapidly gathering pace amongst retailers is that for pre-delivery alerts. “Retailers should be thinking about whether they are providing services that have got this functionality because consumers like it,” says Starkey. From a technology perspective, it’s not too complicated, incorporating barcode scanning with GPS tracking.
“The technology that sits behind it basically scans the parcels through each step of the supply chain such as delivery to the local depot or the loading onto the vehicle – each one of those is scanned in a tracking event, using barcode scanning. Then you combine that with GPS-enabled route management and you’ve got a very predictable delivery,” explains Starkey.
The most advanced services will send customers a text message on the morning of delivery with an hour timeslot when they expect the delivery driver to arrive. This will then be updated as the driver draws nearer. There are also interactive features: if the customer won’t be at home they can opt to have it left with a neighbour or in another safe place, or choose another delivery date. “If it’s not convenient, customers have got a chance to do something about it. Some of these services don’t give you that chance,” he adds.
Bhudia agrees that the wind is blowing in this direction. “Customers always want to be informed. Normally, you’d expect a five per cent carded rate but we’re nowhere near that. We’re less than 3.5 per cent at the moment,” he says. One of River Island’s principal carriers is DPD, which offers one of the most sophisticated pre-delivery alert systems on the market. “It’s a more expensive service for us to use but the customer experience is better,” explains Bhudia.
While some of these features have garnered the attention of retailers and analysts, the media spotlight has more recently been trained on drones, after Amazon CEO Jeff Bezos announced that the e-tailer was exploring the possibility of using an unmanned variety for deliveries. This may be a case of style over substance, reckons Starkey. “They can only carry lightweight stuff and the range is very low, probably about five miles. It’s a bit gimmicky,” he says. Wheeler agrees that deliveries dropping from the sky are likely to remain a distant dream for the time being. “I don’t see drones going mass market. It’s too dangerous in urban areas but it is a nice idea.”