If you’re involved with product shipping on a regular basis, there are three key elements to consider in order to offer a successful delivery service to your clients – speed, convenience and price.
So, why are these three elements so important? The answer lies in the fact that different elements of the equation are more or less important to different people at different times. With pressure on delivery pricing becoming so great, it’s vital that online shoppers understand that they can’t have it all.
Picture yourself as the average Amazon or eBay user looking to buy a new iPhone cable. You already have one but want to purchase a second as backup so you begin searching for the most competitively-priced items available online. After comparing prices across various web stores, you opt for a €10 cable and then proceed to checkout. But before you can complete the transaction, you must choose a shipping option.
As this purchase is not urgently needed, you don’t really care when you’ll receive your product – as long as it arrives in proper working order and at a time that is convenient to you and at a price that matches your budget. The fundamentals of ecommerce delivery really boils down to time, convenience and cost!
As a general rule of thumb, consumers aren’t willing to spend more than 10% of the total order value for shipping. This is especially true when the user is indifferent towards the timing of the shipping.
Once the shipping price exceeds 10%, we believe that the consumer is better off driving to a store than buying the product online. If as a supplier, you can keep your shipping costs under 10%, you would be able to reach such consumers, who may have previously thought the shipping prices to be unreasonable.
Most would agree that when you buy a €10 cable, paying the extra €10 for delivery is too expensive. But when shipping is a mere €1 or €2, the extra cost is so much less of a burden.
In the example above, the consumer chooses a relatively cheap purchase knowing that they will suffer other implications. The delivery might take longer, but they don’t mind. While they want to buy the cable, they don’t need it right away and are willing to wait for if it means spending less on the delivery charge.
So when you think of the fundamentals of ecommerce delivery, picture it as a Venn diagram, or the fundamentals between speed, price and convenience.
Let’s say you need a new cable for your iPhone. Only this time, you work in London for 4 days of the week. Once again, the current shipping system does not work in your favour – and convenience is your only priority. In this case, locker boxes, or the UK’s Collect+, would be the most beneficial. While you are at the office or in off-site meetings all day, you can ship your product to a Collect+ at the local corner shop, and pick it up later on making the process much easier and more convenient.
Depending on the level of importance, you may or may not want to pay for certain shipping services. When you really need that iPhone cable and you’re willing to pay, you are going to want it delivered immediately. But when it’s your second or third cable, and you’re not in any rush to get it, then you may be willing to pick it up over the weekend. With every online transaction you are forced to decide what the opportunity costs are to you.
The essence of these fundamentals is that every purchase will have trade-offs between the three elements: speed, convenience, and price. Today’s online shoppers are learning that if they’re looking for low cost, they’ll have to eliminate either convenience or time.
When you choose a service like Royal Mail, you are saving money, but also costing yourself time. Despite the cost, you are prepared for the implications because you accept the fact that there won’t be any tracking on your package and there isn’t an exact arrival date. All you know is that your package will reach your letter box eventually and won’t put a dent in your paycheck.
On the other hand, the trade-off for convenience is usually price. Whether that convenience is being able to track your package or pick it up at the Collect+, you will almost always pay more to get your goods tracked, dropped off to the locker box or picked up at your nearest Doddle collection point.
If you decide that you want fast shipping, once again you’ll give up either money or convenience. Spending more for fast shipping is self explanatory, but convenience is a little more complex. Maybe you shipped your package to the nearest Doddle collection point or perhaps you used click and collect to reserve the item at an Argos store? While these were probably the quickest and cheapest options, they were also the most inconvenient for you to actually pick them up.
Choosing to have one element comes at the expense of another. Simply put, satisfying all three elements isn’t economically feasible. A fast and convenient delivery will probably be expensive; a low-cost, fast delivery will probably be inconvenient; and an inexpensive and convenient delivery will probably take longer to ship. Essentially, there isn’t a margin because it is nearly impossible to accommodate for all three elements at one time.
So when forced to weigh up the options, consumers need to understand that there will always be one element that is less important than the rest. Time, convenience and cost are the fundamentals of eCommerce Delivery – which works best is for the customer to decide.
Rory O’Connor is CEO of Scurri a single platform where e-retailers can prepare, dispatch and track shipments for customers regardless of which carriers are being used.