Why consumers value retailers with convenient delivery options and easy returns
The Operations & Logistics Performance Dimension starts from the position that most retailers use other people’s logistics. This Dimension rewards those that have taken large-scale third-party logistics and turned them into compelling offers that meet brand promises. Next heads up the Operations and Logistics Dimension for a surefooted performance across delivery, collection and returns. The fashion retailer has long honed its logistics capabilities in order to stand out from the competition. This edition of the IRUK Top500 confirms its lead in the field.
Senior InternetRetailing researcher Martin Shaw says: “A lot of retailers really nailed delivery and others really nailed returns – Next was the only one to be great at both.”
Next topped the collection analysis while also performing strongly in bot delivery and returns. It stood out for its industry-leading midnight cutoff for shoppers ordering for next-day pick-up from store, as well as for promises that include evening delivery and same-day collection from store. It offers the option of delivering to a Next store for a friend to collect. Next is clear that offering convenient deliveries and returns makes economic sense. In its results for the year to January 2015, it said 9% of orders were placed between 10pm and midnight. It also stated that using stores to accept returns boosted its profitability.
Sainsbury’s performs strongly in the Dimension for the delivery promises it makes for both grocery and non-food products. It stands out for one-hour timed delivery slots and for a market-leading returns policy that offers a full refund for up to 12 months on non-perishable items, while a partial refund is available after 12 months. Grocers have long driven innovation in delivery, and Sainsbury’s is among the supermarkets that now offer both peak and off-peak delivery passes, enabling repeat deliveries for a fixed price.
Delivery has been a firm focus for Amazon in recent years. The retailer offers no fewer than nine delivery and collection options for UK customers, including same evening delivery and collection from Amazon Pickup points. During the last year, it has moved its focus in the UK towards faster, premium delivery services. It introduced one-hour delivery for members of its Prime subscription scheme, while raising the threshold for free delivery to a minimum spend of £10 for books, and £20 for other items.
While Amazon was strongest among all retailers in Internet Retailing’s assessment of delivery services and equal top for collection, it was overtaken by rivals on returns. One customer-pleasing service that it offers in this area is the ability for customers to check the status of refunds that are in the system.
Delivery and collection
As in the other focus areas of the IRUK Top500, the metrics that underpin the listings in this year’s Operations and Logistics Performance Dimension continue to evolve. This year, the study has assessed retailers’ delivery promises, and the convenience of the services they offer for customers, rather than measuring the effectiveness of an individual delivery.
As researchers uncover more in-depth information about individual retailers’ delivery, collection and return performance, so too they are assembling a more complete picture of the industry’s development.
Thus, it’s now possible to say that among the IRUK Top500, next-day delivery is the most commonly found delivery option – at 63% of retailers. By contrast, 44% of the Top500 offer named-day Saturday delivery, and nearly 6% offer same-day delivery. The number of retailers offering Sunday delivery has doubled in the last year, to 9%.
Researchers found that the price of standard delivery averaged £4.30 – although many made no charge at all. “We found quite a lot of retailers would offer slower delivery for free, and then more expedited delivery would cost more,” says Shaw. “That dissuades customers from using it if they don’t need it.”
Collection and returns
More retailers now offer click and collect services than did at this time last year. In the IRUK Top500 2015, when 44% of traders enabled customers to order online for collection in store, researchers saw the service as a measure of innovation in the Strategy Dimension. This year that proportion has risen to 58% – taking the service mainstream and making it one that’s now expected by customers.
It was significant that a top group of some 50 retailers were all ranked equally in the research for their collection promises. This fact will challenge researchers to develop more rigorous metrics that distinguish between the members of that leading group.
“There’s been a homogenising of the delivery offering,” says Shaw. “Shoppers might not see this in other parts of the world but in the UK it’s very competitive. Effectively, all of the Top50 retailers in this Dimension provide a convenient collections service.”
When it comes to returns, it seems the post is still the most popular returns channel, offered by 59% of the Top500. Return to store was the only other significant channel, offered by 41% of multichannel retailers. Customers can now enjoy a full refund from 64% of Top500 traders. It’s likely all this will play an important part in the shopping decision. A UPS study last year showed that 54% of customers read the returns policy before deciding where to buy, and were likely to opt for retailers that allowed them to return items for free.
The change in services offered by the largest 100 IRUK retailers
