Retailers VS Consumers: What Delivery Options do Shoppers Actually Want?

April Davis By April Davis | 27 Feb 2019

Online retailers might not be as switched on to their customer’s needs as they think they are…

Power Retail’s latest Spotlight Series report, ‘Last Mile Delivery: A Race Against Time?’ has revealed a disconnect between what retailers think their customers want from their delivery experience and what they actually want.

The study, which draws on 1,519 interviews from Australian online shoppers and 88 in-depth interviews with Aussie online retailers, has identified a huge gap between consumer and retailer expectations when it comes to delivery pricing.

According to the report, 49 percent of retailers believe online shoppers would be happy to pay up to $20 extra on a $200 purchase to receive their order within three hours. In reality, only 24 percent of consumers are willing to splash the extra cash for a speedy delivery service. This difference in opinion also applies for deliveries arriving between three and five hours of a purchase being made, with 39 percent of retailers claiming consumers would pay and only 17 percent of shoppers agreeing. However, as the delivery time increases, the gap between retailer and consumer expectations shrinks. When asked if they thought customers would be willing to pay extra for next day delivery, five percent of retailers said yes. In comparison, four percent of shoppers said they would fork out extra if it meant unwrapping their purchase the next day.

“Consumers are willing to pay more for faster delivery, however, the amounts they are prepared to pay varies across different consumer segments,” says Mark Fletcher, the Insights Manager at Power Retail and author of the business’s latest report.

“Customers today are more aware of market conditions than retailers might think. Yes, they want fast, free and hassle-free delivery, but they’re also not unreasonable. For the most part, they understand that fast delivery comes at a price. The question is, are they willing to pay for it?”

According to Fletcher, Australian shoppers typically view three to six days as the standard delivery timeframe, which can increase depending on the product and the level of urgency. He also notes that multichannel retailers are lagging behind their pureplay counterparts.

“Across all delivery options, pureplay retailers are experiencing faster growth in transaction value than cross-channel ones are, which means they’re missing out on valuable growth opportunities,” he says.

Delivery has long been a debated topic in the local retail sector, with retailers and delivery experts having different opinions on what options should be available to consumers. For the most part, the industry seems to agree that best practice is to provide as many options as possible.

Speaking to Power Retail last year, George Plummer, the CEO of StarShipIT said that while speedy delivery options like one and three-hour shipping might one day be achievable, viable alternatives could be just as well received by consumers.

“Ultimately, the consumer wants choice at the checkout, and the ability to pay for a faster delivery service. Even if not one-hour, [provide] a standard and express option, as well as delivery windows, alternate pickup choices, and a great return process,” he said.

Rob Hango-Zada, the CEO of Shippit, is also confident that consumers are more interested in convenience than they are in speed.

“Our data shows the percentage of priority bookings over the last year has only slightly increased. Conversely, standard bookings (two to four business days) have increased significantly during the same time period, meaning customers are opting to wait a bit longer for the more cost-effective option if they know when it will be delivered,” he said.

“When it comes to what customers are willing to pay for, we see customers moving beyond the instant gratification route and more toward a preference of predictability and reliability.”

The third instalment in Power Retail’s Spotlight Series, ‘Last Mile Delivery: A Race Against Time’ will be out soon, and will contain more valuable insights into last mile delivery expectations in Australia. For more insights into the Australian e-commerce sector, the Spotlight Series also showcases Buy Now, Pay Later and Amazon Australia: Year One. 

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