Consumer demand is shaping the delivery landscape

Delivery has become one of the key items on the agenda for e-commerce directors.

Tesco has increased its spend threshold for click-and-collect to £40 and, controversially for some, John Lewis announced it would charge for click-and-collect orders under £30. Meanwhile, deliveries to lockers and pick-up points have become commonplace whilst same-day, or even one-hour deliveries, are now emerging from some retailers, albeit at a charge.

Retailers are only too aware that after the costs of the products they sell, delivery is the second biggest area of expenditure for those with e-commerce operations, and it is also an important way in which they can differentiate themselves from the competition. So it’s crucial to strike a balance between providing customers with a raft of delivery choices and at the same time making sure that those delivery options make commercial sense, which is why we are seeing new charges being brought in, but also a broader range of options.

The MetaPack/IMRG UK Delivery Index tracks the volume of deliveries being made across the UK every month. It recorded a record high in the number of deliveries made back in December 2014; and steady growth for the first quarter of this year. By June, online order volumes were up 22% over June 2014 and this heralded a strong performance for the rest of the summer. What is most striking is that if these levels can be maintained, UK retailers will send over 1 billion orders through UK carriers during 2015 – the first time this milestone will ever have been reached.

Behind this remarkable growth is a change in consumer requirements and expectations. Enterprising retailers constantly innovate to make delivery cheaper and more convenient but they also have to negotiate the demands of different age groups, people who are working and those who are not, etc. Certainly the influence of the ‘I want it now’ generation is not to be underestimated, with young Millennials less inclined to wait longer than two days for their purchases to be delivered.

E-commerce shoppers also demand delivery services that fit around their lifestyles. In research we have just conducted amongst UK consumers, when asked about the delivery experience, 72% said that being given a time slot of when they could expect their order was important, whilst 84% said that being given a delivery date was important. The vast majority of consumers want to pay a minimum charge for delivery but they are also happy to pay a premium if it means they can receive their goods at a time and in a place that suits them best.

Purchasing from overseas doesn’t faze today’s consumer either, which presents more challenges for retailers keen to establish their cross-border credentials. When we talked to consumers last year about their e-commerce habits, more than half had purchased goods from outside the UK and 75% of them were aged between 25 and 34. What fuels their overseas purchases is lower costs or lack of availability in the UK, but they are only making these purchases because they are confident that efficient delivery mechanisms are in place.

For the retailer, delivery is something of a conundrum; on the one hand it requires careful attention to consider all the options that will most appeal to customers, and some options, such as one-day delivery may be neither logistically or financially feasible; on the other hand, there has never been a more dynamic time in the world of delivery and as we inch towards the landmark 1 billion orders in a year mark, most retailers want to get on board and share in the inevitable rewards.

By Kees de Vos, chief product and marketing officer, MetaPack