Leading European retailers are competing to offer ever-better delivery and returns services. Martin Shaw assesses how their offerings compare
The advent of digital technologies has changed the way customers think about getting hold of the products they want and need. The reasons for this are complex, but are underpinned by a single, deceptively simple idea: customers who can find the goods they want in the virtual world with just a few clicks increasingly expect this experience to be echoed out in the real world. It’s a transition from these customers being prepared to wait a week for a party dress to be delivered, to ordering the dress on the day of the party and expecting it to be delivered two hours hence.
Within such a retail landscape, expertise around operations and logistics has taken on a new significance, and become intrinsic to retailers’ merchandising and marketing. That’s not surprising. Get past the buzzword terminology – nominated-time delivery, next-day delivery, click and collect – and we are talking about promises made to customers. Yes, you will go the party. Or, more prosaically, your groceries will definitely be with you between 4pm and 5pm. Break such promises and customers will shop elsewhere next time.
So which European retailers are doing best at meeting customers’ expectations? In order to learn more, InternetRetailing researchers looked in detail at retailers’ fulfillment operations. Questions they asked included:
- How many days does the retailer’s standard delivery take?
- Does the retailer offer a click-and-collect service?
- Does the retailer offer a variety of delivery options?
- How sophisticated is the retailer’s returns operation?
It’s hardly a surprise to find there are many subtleties in the answers to such questions. The same retailer, for example, may offer very different delivery options in different territories. Nevertheless, there are clear leaders here, retailers that outperform the rest of the market. Broadly, and allowing for a certain amount of overlap, these are retailers we would split into two main categories:
- Large companies that enjoy economies of scale
- Retailers where reliable delivery is especially important to the business model
What leading large retailers do
Apple is a case study in how to organise deliveries and returns. Perhaps because it’s both brand and retailer, with tight control over its supply chain, the technology company can deliver items quickly and for free within seven EEA countries. Customers in these territories also have the option of specifying the date and time their products will arrive. Next-day delivery is free to customers who spend more than €40 (or a local equivalent where other currencies apply).
Turning to returns. In those countries where Apple offers free delivery, customers have the option of either returning goods to a store within 14 days or scheduling free third-party collection. Refunds are processed within five to seven days of a product being returned to the warehouse.
As you might expect, Amazon also performs strongly. In selected urban areas of the UK, it offers same-day evening delivery. Amazon seems to be using the service to persuade customers to sign up for its Prime scheme. While same-day evening deliveries cost £9.99 on a one-off basis, they’re free to Prime members, who typically pay £79 a year.
When delivery really matters
To explain what we mean by a business where reliable delivery is central to the business model, we would highlight UK florist Interflora. It’s a Top100 retailer within the Operations & Logistics Dimension, a case of a company punching above its weight. This is hardly surprising. Customers expect blooms sent for a specific date such as a birthday, wedding or for mother’s day to arrive when arranged. The company not only delivers on this promise within Europe, but across the world too, with the co-operation of thousands of local florists.
Supermarkets similarly must deliver on time. A customer waiting in for a large shop isn’t likely to want to do this twice. In part reflecting the maturity of the UK ecommerce market and, in particular, the supermarket price war of the last few years, Asda, Sainsbury’s and Tesco all perform strongly
in this Dimension.
Asda, for example, offers home deliveries in timed slots within the UK from £1 per order, although popular slots cost more. To encourage loyalty, it has a Delivery Pass service that costs £5 per month over a year. If this costs more than booking a series of standard deliveries, customers get an e-voucher for the difference. The minimum spend is £40 per order.
Sainsbury’s offers comparable levels of service. It will deliver orders costing as little as £25, although the delivery fee is hefty at £7. For larger orders, £40 and higher, the delivery charge can be as low as £1 for a designated slot. Orders of more than £100 are free if booked for delivery after 2pm between Monday and Thursday.
The performance of Tesco within this Dimension has been even more noteworthy. As well as operating in the UK, it also has stores in Poland, the Czech Republic, Hungary, the Republic of Ireland and Slovakia. Within each of these six countries, it offers similar levels of service. Not only is click and collect available in each of the territories, but so is nominated-day/-time delivery. Within the UK, it has launched Delivery Saver, which costs from just £3.50 a month, for those who want to cut delivery costs. In addition, it has no minimum basket cost, although there’s a surcharge on smaller orders.
Taking a step back, the big British supermarkets have long sold themselves as one-stop destinations. In a sense, they’re trying to recreate this for customers who choose to have their groceries delivered. This idea of convenience extends beyond groceries too. Look for information on Tesco’s website about Delivery Saver, and customers are reminded they can have groceries; electrical appliances, furniture, toys and more (Tesco Direct); clothes from F&F; and Wine By The Case delivered in the same order.
Outside the UK, French-owned hypermarket Carrefour seems to bethinking along the same lines as its UK counterparts. In Paris, it offers a one-hour delivery service. In Italy, customers can pick up grocery orders an hour after they’ve made an order, with no cost for providing such prompt service.
The examples we’ve cited above are impressive, but we should add one major caveat here. While the performance of the best of the best within this Dimension is exemplary, others lag behind. Perhaps they always will. As we have already noted, economies of scale make a big difference within Operations & Logistics.
However, that’s not the whole story. Fashion retailers also performed strongly, with Zara, for instance, offering both a variety of delivery options and convenience in terms of, for example, being able to return items to the store. Clearly, the fast-fashion retailer sees a competitive advantage in offering these services.
Finally, while this is outside the scope of our research, it may be that logistics providers will see a gap in the market in offering smaller retailers more options for getting items out to customers. If that seems fanciful, consider the number of Deliveroo cyclists delivering top-end takeaways within British, European, Australian and Asian cities these days. Deliveroo, remember, was founded as recently as 2013.