How retailers get online orders to customers can make a real difference in where shoppers choose to buy. When delivery options are limited, slow or expensive, it’s easy to go elsewhere. Conversely, speedy and cheap delivery or collection can remove an important barrier to the final purchase. Importantly, retailers must ensure that their delivery promise stays profitable, while at the same time remaining attractive to customers. As many have found, this is a tricky balance to strike.
In this Operations & Logistics Dimension, RetailX researchers evaluate the promises thatTop500 retailers make around delivery, collection and returns as they build a picture of how their capabilities have developed over time. They consider how the offer varies between sectors, to what extent traders pass on the full cost of getting an item to the customer, and to what extent retailers go beyond the legal minimum requirements when it comes to returns. “RetailX adopts the perspective of the customer, the ultimate arbiter of retail performance, when making these assessments,” says Martin Shaw, head of research at RetailX.
Research findings are presented here through three questions. Firstly, what do Top500 retailers offer on delivery? Within that, the focus in on whether retailers opt for premium super-fast delivery services or for a slower but potentially more reliable and cheaper service.
Secondly, are attitudes to collection changing? That’s a question asked in the context that slightly fewer retailers are now offering collection at all, and that the number offering next-day collection and other premium services has also fallen, in some cases significantly.
The final question is, how are returns policies changing? Here researchers look at where and how shoppers can return unwanted goods to the retailer they bought from, and at the differences in service compared to 2019.
What do Top500 retailers offer on delivery?
In recent years, we’ve seen a move to enable ever-faster delivery, but is that now in retreat? RetailX research shows next-day delivery is more widely available in the UK in 2020, compared to 2019, but the options of same-day, Saturday and Sunday delivery have become slightly less available. At the same time, the cost of standard delivery has risen, although the minimum order threshold for free delivery threshold has stayed the same.
Researchers found more retailers offering next-day delivery in 2020 than in 2019. Some 61% of Top500 retailers now make this option available, up by three percentage points (pp) from 58% last year. Shoppers can opt for next-day delivery to at least the same extent as last year in all retail categories.
The fastest rate of adoption is in children’s toys (+7pp to 63% of traders in this category), jewellery (+7pp to 60%), and in home and industrial appliances (+6pp to 57%). This fast delivery option is most widely available in the cosmetics sector (+3pp, 68%) and among those selling sports and leisure clothing (+0pp, 67%) and fashion footwear (+5pp, 66%). It is least widely available among those selling stationery and craft and consumer electronics products (both 54%), homeware (51%) and trade and DIY equipment and tools (49%).
Same-day delivery remains a niche option in 2020, with slightly fewer retailers (5%) offering the service than the previous year (6%). Same-day delivery is most widely used by those selling health products (+2pp to 11%), groceries (-3pp to 10%), cosmetics, trade and DIY tools and equipment (both 9%). It is least widely used in sports and leisure footwear, clothing, and sports and outdoor equipment (all 3%) and by those selling children’s toys and accessories (-3pp to 3%). More fashion footwear retailers have taken up the service (+2pp to 5%), while fewer of those selling home and industrial appliances and stationery and craft products (both -4pp to 4%) offer the service.
The use of Saturday delivery is also slightly less popular, with 27% of retailers offering this service in 2020, down from 30% a year earlier. It has most commonly fallen off among those selling sports and outdoor equipment (-9pp to 22%), home and industrial appliances (-8pp to 23%) and sports and leisure clothing (-7pp to 19%).
Customers buying groceries (30% of grocery retailers offer the service), cosmetics (28%) and homewares (28%) are most likely to be able to order for Saturday delivery, while those buying sports and leisure footwear (21%), jewellery (21%) and sports and leisure clothing (19%) are least likely.
Sunday delivery is also less available in 2020 (11%) than in 2019 (13%). Among the different shopping categories, those selling fashion footwear (-3pp to 12%), fashion accessories (-3pp to 11%) and jewellery (-3pp to 9%) were most likely to stop offering the delivery service. Sunday delivery is most common among retailers selling groceries (+1pp to 16%) and consumer electronics (-2pp to 13%) and least common at retailers selling jewellery (-3pp to 9%), sports and outdoor equipment (-1pp to 8%), and stationery and craft (+0pp to 1%).
The cost of delivery is higher in 2020 than in 2019. This year, the median standard delivery charge at Top500 retailers is £4.50, up from £3.80 in 2019. The cheapest standard delivery charges are found at retailers selling consumer electronics (median of £2.90), stationery and craft (£2.90) and health products (£2.90). The highest costs are found among those selling fashion clothing (median £3.80, average £4.60), homewares (median £3.90, average £8.20) and trade and DIY tools and equipment (median £4.70, average £4.90).
The median minimum order value for free delivery has stayed at £40 in 2020, the same as in 2019. Standard delivery takes an average of 4.7 days.
Are attitudes to collection changing?
Click and collect is slightly less easy to find in 2020 than in 2019, while it now takes slightly longer for retailers to deliver online orders to stores or other locations for collection. The more significant change is that quick turnaround times from order to collection are much less available than they were last year.
Martin Shaw, RetailX head of research, says it probably makes more sense for retailers to invest in competitive delivery options than in collection. “However convenient collection is, the consumer still has to do a lot of the legwork,” he notes. “Not so with delivery. Consumers time and again say in surveys that they like collection, but the evidence suggests that they don’t like it enough, when compared to other options, for retailers to invest in those systems as much as in delivery, which continues to become more speedy and customisable, in terms of time and location, across the Top500.”
Click and collect
More than half (54%) of Top500 retailers enable shoppers to buy online and collect in-store in 2020 – down from 56% last year. Customers are most likely to be able to collect cosmetics (63% of cosmetics retailers offer collection), fashion clothing (62%) and fashion footwear (61%). The only category where more retailers offer the service in 2020 than in 2019 is in health products (+1pp, to 47%), while significantly fewer retailers selling groceries (-6pp to 50%), sports and outdoor equipment (-7pp to 59%), and trade and DIY tools and equipment (-9pp to 50%) offer click and collect.
In 2020, 19% of leading retailers enable shoppers to collect their online orders the following day. That’s down by 7pp from 26% last year. The service has become less available across all sectors, most noticeably among those selling trade and DIY tools and equipment (-13pp to 23% from 36% last year), consumer electronics (-14pp to 21%), and sports and outdoor equipment (-14pp to 22%). At the other extreme, it is slightly less available among those selling fashion footwear and jewellery (both -3pp to 21%) and stationery and craft products (-3pp to 14%).
The availability of speedy same-day collection has fallen fast during the last year – across all sectors. 7% of Top500 retailers offer the service in 2020, down by 4pp from 11% last year. It is most reduced among those selling children’s toys and accessories (-6pp to 10%), sports and outdoor equipment (-6pp to 9%) and consumer electronics (-8pp to 8%). Availability has reduced more slowly among those selling fashion clothing (-2pp to 3%), cosmetics (-2pp to 4%) and fashion accessories (-2pp to 4%).
How long does collection take?
The standard time between placing an order and collecting the product in-store rose by four hours to a median of 73 hours – just over three days. The median time to pick-up reduced by 10 hours to 55 hours (just over two days) among those selling children’s toys and accessories but increased among those selling sports and leisure clothing (+14h to 86 hours), footwear (+16h to 86) and home and industrial appliances (+21h to 77).
Third-party collection points
Collecting online orders at a third-party collection point remains relatively uncommon in 2020 since almost two-thirds (65.8%, or 329) of retailers do not offer this service to shoppers. But 125 retailers (25%) do enable pick-up at one or more third-party services, while 37 (7.4%) offer at least two, seven retailers (1.4%) offer three, and one retailer (0.2%) offers collection via five networks. The most commonly used third-party network is Collect+, used by 68 retailers, or 13.6% of the Top500, followed by myHermes ParcelShop (46 retailers, 8.6%), DPD collection point (43, 8.6%), UPS (27, 5.4%), DHL (20, 4%), Doddle (8, 1.6%), HubBox (5, 1%), GLS ParcelShop (3, 0.6%), InPost parcel lockers (3, 0.6%), and Pass My Parcel (2, 0.4%).
How are returns policies changing?
Under UK law, consumers can return an item they bought online within two weeks for a refund. Yet many retailers go well behind this legal minimum, with the average Top500 retailer offering 70 days – or 10 weeks – for shoppers to change their mind. That’s likely to be a deciding factor for many as they consider where to buy, with how easy it is to make a return another key issue for shoppers.
Returning to different locations
Sending an item back in the post is the single most common way that shoppers can return unwanted online orders, with this option advertised by 67% of Top500 retailers in 2020. That’s followed by returning to one of the retailer’s stores (43% of multichannel retailers) which is down by a significant 5pp from 48% in 2019.
In 2020, more retailers enable their customers to make their return via a third-party location, with 25% doing so in 2020, up from 20% a year earlier. The greatest changes are to be seen in the sports and leisure footwear (+10pp to 40%), fashion clothing (+9pp to 35%), sports and leisure clothing (+9pp to 37%) and fashion footwear (+8pp to 38%) categories.
Return via pick-up from the house continues to be offered by a small but significant minority (15%) of retailers.
Significantly more retailers now underwrite the cost of sending back an unwanted online order. In 2020, 38% of retailers offered pre-paid returns. That’s up by 16pp on the 22% which did so in 2019. The trend was visible in all sectors, with the biggest rises in jewellery (+26pp to 36%), sports and leisure clothing (+23pp to 49%), and sports and outdoor equipment (+22pp to 42%).