Breaking New Ground: What shoppers want
Martin Shaw analyses the data to compare the delivery services customers say they would like with those retailers currently offer
IT’S HARD TO predict which of the many competing delivery methods and technologies now available in the retail logistics industry will be taken up by consumers. In an effort to shed new light we’ve combined the findings of two separate studies by UPS and Barclays , both asking customers what they think of the delivery options on offer and which they’d like to use, with our own IRUK research in order to understand the differences between what consumers say they want, against what retailers offer.
Our findings illustrate the disruptive influence of new technologies, and the way consumers respond to them. The chart below plots on the vertical axis the services that the largest 100 IRUK 500 retailers offer against, on the horizontal, those that consumers say they’d prefer. Green dots show delivery channels and blue dots represent other services that some consumers consider important to making a purchase.
Services offered by retailers were researched in collaboration with Oracle-Micros for the IRUK 500 Index. Consumer preference data is taken from The Pulse of the Online Shopper, a March 2015 report by UPS, and The Last Mile, a September 2014 report by Barclays.
THE POWER OF HOME DELIVERY
Our findings are perhaps surprising. Maybe click and collect or drone delivery will take off in coming years – after all, it only takes an annual growth rate of 7% to double in 10 years – but the era of mass acceptance is not yet here. As yet, it seems, the benefits to be gained by offering collection services are still marginal, since consumers right now prefer home delivery and overwhelmingly vote for this option. The survey data implies that shoppers either don’t know about alternatives to home delivery, or they don’t believe they would make a difference to their lives.
Some 74% of consumers prefer direct delivery to other options, the UPS study found, while, according to Barclays, 70% want Sunday delivery. This latter is perhaps wishful thinking: IRUK 500 research shows only 9% of the largest 100 UK retailers currently offer delivery on Sundays.
The importance of free returns also comes through from the research. More than half (54%) of UK respondents to the UPS survey said they check returns policies before they buy – and are more likely to buy when returns are offered. In all, some 59% of the largest 100 actually offer free returns. Perhaps the policy of free returns has more of an impact on the initial decision to buy than some companies expect.
The graph also raises questions about consumer expectations and preferences. One of Steve Jobs’ favourite sayings is said to have been the (perhaps apocryphal) Henry Ford quotation: “If I’d asked people what they wanted, they would have said a faster horse.” Perhaps consumers don’t know what they want from new technology because they don’t yet know what it could do for them.
The same could be said of emerging delivery methods: locker collection at train stations might suddenly become popular as shoppers better understand that it’s available and how it works. It’s hard to predict the pace of change, and consumer polls are likely to underplay the potential.
This is a snapshot. But where is the market going? What technologies or services could usurp the current way of doing things?
LOOKING TO THE FUTURE
Personalisation is already a big theme in ecommerce but it promises to become still more important, especially for multichannel retailers. Our most recent IRUK 500 Dimension Report, on Mobile and Cross-channel, explored how retailers are using mobile apps, RFID, beacons, geo-fencing, tie-ups between store loyalty cards and online accounts, and predictive analytics to personalise the customer experience.
Stores that know more about customers can send out reminders when they haven’t bought something they usually do, and notify app users when customers are walking past a sale. This is relevant to fulfilment: by better tracking products and more accurately predicting buying habits, retailers can maintain lower inventories in the store.
This, together with the growing popularity of click and collect, could continue to drive the high street’s out-performance of shopping centres, a trend seen in recent years.
Advocates of 3D printing promise a return to cottage industries, with customised consumer goods being produced in the local store or even the customer’s own home. Retailers that previously specialised in selling small quantities of a large number of goods will manufacture on-site, or sell digital schematics to make at home. Traditional delivery, at least for these products, will fade away.
Although the technology is unproven for many commonly sold products, should it succeed it does seem likely that a part of the current logistics supply chain would become redundant.