Amazon has been disrupting the logistics industry for years, but its latest step may be a difficult one for retailers to follow.
From the end of November to 5 December Amazon UK ran a “free delivery week”, in which its free delivery service was extended to all orders with no minimum. The marketplace has offered free next-day delivery through its Prime subscription service as well as on orders above a certain value for some time.
Where Amazon goes, the market often follows. However, using the five other retailers ranked “Elite” in InternetRetailing’s IRUK Top500 index as a barometer, there has been little sign that other retailers are quite ready to offer free delivery without a minimum spend.
Argos
Free delivery on selected items – the option appears at checkout if available.
Boots
Free delivery within five working days when customers spend over £45 (€50 in Ireland) or the equivalent in Boots points.
Marks & Spencer
Free delivery from three to five days on orders of over £50.
Screwfix
Free next day delivery on items over £50, free Saturday and Sunday delivery on items over £100.
Tesco
No free delivery, although offered as part of £3.49 per month Delivery Saver subscription service.
According to figures from InternetRetailing’s research arm RetailX, only 15% of retailers in the Top500 offer free delivery on all orders, while 69% offer free delivery with a minimum spend.
According to Ben Nowlan, chief revenue officer at On the dot, in economic terms blanket free delivery is difficult to justify. He suggests that Amazon is probably making a loss to some extent by offering this option, but due to its robust funds can “hold [its] breath for longer” than many less well-capitalised players.
However, he says that offering free delivery on a personalised level can make a customer far more likely to return in the future. An example might be monitoring a customer’s spending over a year and, if it is over a certain amount, providing occasional free delivery as a thank you for their continued custom.
Nowlan is unable to name any retailers taking this data-driven approach in Europe, but cites Walmart as a key pioneer in the US.
Blanket free delivery on every order may be out of reach for many retailers. But there have been efforts to push customers towards more affordable options such as click and collect.
Speaking to eDelivery recently, Doddle CEO Tim Robinson claimed that there is a “disproportionate” swing towards click and collect during peak season. A write-up of the interview is available here.
He attributes this to the additional urgency as the holidays approach, noting that there is a swing back post-peak to home delivery as people are prepared to accept a less reliable option.
For retailers, too, it removes much of the risk of delivery. A Magento survey of over 300 retailers in the UK and Germany saw 65% identifying failed or late deliveries as a significant cost to their business, with 1 in 20 deliveries reportedly failing.
However, according to figures from RetailX, the overall proportion of retailers offering click and collect has risen only marginally year-on-year, from 59% in 2017 to 61% this year.
Only 40% of retailers offer click and collect on all orders while an additional 21% offer paid click and collect. But as a sign of where things are heading, amongst the five Elite retailers mentioned above, Argos, Boots, M&S, Screwfix and Tesco offer free click and collect.
More details on retailer delivery options will be available in the IREU report, coming soon on eDelivery sister site InternetRetailing.
