How will shoppers react if retailers press on with plans to raise minimum order values and charge for click and collect orders? That’s what a new study from JDA and Centiro aimed to find out, with interesting findings about the different way that consumers will respond to such a move.
A report earlier this year, from JDA and PwC, found that 39% of global retail CEOs were planning to raise their minimum order value for free online delivery, while 31% said they would charge for click and collect.
Now JDA and Centiro have asked 2,096 online UK shoppers how they respond to factors such as these, in the JDA Customer Pulse Report 2016. The study found a real divergence in the way they responded to online delivery charges.
Among those who came up against a minimum order value in order to qualify for free home delivery, 31% said they had shopped elsewhere, but 29% said they had bought more items in order to exceed the minimum order threshold.
More than half (54%) said they had used click and collect in the last year, up from 49% in 2015. However, poor delivery service generally led to customers shopping elsewhere next time. More than half (53%) said they had had a problem with an online order in the previous year, up from 47% in 2015. Of those that had had a problem, 42% cited late deliveries and 36% missed deliveries. Four out of five (80%) said they would go elsewhere if they had a poor online delivery, while 66% would do the same if they had a poor click and collect experience.
“Raising minimum order values and charging for click and collect orders is a big consideration for retailers as they look to boost the profitability of their online operations,” said Jason Shorrock, vice president, retail strategy EMEA at JDA. “However, as our research findings show, retailers must recognise that different customers are reacting differently when such restrictions are thurst upon them. This split in reactions suggests retailers need to segment their customers in order to tailor services offered to them. Last-mile delivery and collection issues continue to be major pain point for many retailers, and solving these problems is both an economic and operational challenge. Retailers are making considerable investments in their delivery and collection offerings, yet at the same time, the majority of customers still expect the fulfillment of online orders to be free of charge.”
When asked, 60% of UK adults questioned thought that the retailer should be responsible for resolving delivery problems. Only 33% thought the delivery company should. When it came to consumers’ experience of getting the issue resolved, 66% of those respondents who had encountered an issue said they had received a good experience. However, 26% stil said they had a poor experience.
“Retailers need to be more confident in their last-mile capabilities, otherwise these issues will continue to reflect poorly on the overall brand experience customers receive. This is one of the reasons we have seen the likes of Amazon bring more of its delivery function in house over the last 12 months,” said Niklas Hedin, CEO of Centiro. “Today there are greater pressures on retailers’ delivery capabilities than ever before and if customers’ expectations aren’t met, they will simply shop elsewhere in the future. Through improved visibility into delivery networks retailers can help ensure that customer promises are kept. In the future, predictive analytics will also help retailers and delivery companies pre-empt problems before they happen, taking the customer experience to the next level.”
