As online sales grow, brands differentiate with innovative offers, while at the same time aiming to keep their overheads to the minimum
Online business for some omnichannel retailers now accounts for 30-40% of sales, with John Lewis recently admitting to 42% of sales online. With such strong sales, providing the services that customers have come to expect is vital for success. The Top100 brands leading this Dimension clearly appreciate the important role that logistics plays in ecommerce and offer a wide range of delivery options, as well as efficient returns processing and novel collection services.
This year, InternetRetailing’s researchers have focused in more detail on collection, looking at cost, timeliness and convenience for customers. While same-day collection is a comparative rarity – no doubt due to the difficulties of maintaining accurate real-time store stock records – next-day collection is increasingly popular. It is offered as a premium option by almost a third of Spanish (32%) and UK (30%) brands. Spanish brands tend to have standard collection at five days, so next-day no doubt proves a popular consumer choice. In Germany and the Netherlands, standard collection is generally three days so next-day is a less attractive premium option (that’s provided by fewer than one in five brands) – although Germany leads the field for same day collections, which is offered by 17% of its top brands compared to 11% in the UK. Reserve and collect – perhaps most familiar in the UK at Argos – generally also requires real-time store stock records, and across the European Economic Area is offered by an average of 8% of top brands.
However, like same-day collection, it is most popular in Germany, provided by 22% of top brands. Perhaps one reason for this German enthusiasm is the continuing – albeit gradually diminishing – national preference for paying by invoice after online purchase. So for the retailer, reserve and collect encourages payment in store at the time of purchase. While only 8% of UK top brands offer reserve and collect, they are far more innovative when it comes to delivery. One in five offer Saturday delivery, compared with just 2% of French brands, while only UK brands (8%) offer a Sunday delivery service. Nominated day delivery services are not at all widespread in Europe: they are most common in Hungary where they are an option provided by 9% of top brands, followed by UK and Slovakian brands, both at 7%. UK brands (44%) are also most likely to provide next-day delivery. Elsewhere it is a real rarity, offered by only 6% of Finnish top brands, 4% of Danish and fewer than 3% of top brands in other EEA countries.
While Danish brands may be reluctant to offer next-day delivery, they do offer the best deals when it comes to delivery charges. Free delivery is typically available for orders of €32 or more – this is the lowest threshold in Europe – while their standard delivery cost is a median of €1.86. Polish brands are second on both counts, with a free delivery threshold of €33 and a standard delivery charge of €2.22. Irish and UK brands are at the opposite end of the scale, with free delivery threshold medians of €67 and€55 respectively. Swiss top brands charge the most for standard delivery (€5.86), closely followed by Irish brands with a median of €5.10.
Danish brands are also the most generous when it comes to pre-paid returns – which is provided by 73% of them. At the opposite end of the scale, UK brands are the most parsimonious, with pre-paid provided by only 40%. However, the UK is leading with its use of third-party return options thanks to such services as Collect+ and retailers such as Asda acting as drop off points. More than a quarter of UK top brands offer third party services, with Swedish brands in second place with 14%.
The UK has the largest market for online retail sales in Europe, closely followed by Germany and with France a long way behind in third place. Clearly the larger the market, the greater the associated service costs for delivery and returns. When online sales formed a small proportion of retail turnover, UK brands could afford to be generous with free delivery and returns but as those sales reach 40% or more, the overhead becomes significant. Where online as a proportion of total retail sales remains in single figures – as in Poland – then the cost for brands remains manageable.