Are retailers providing cost-effective delivery choices?

You’re offering Saturday delivery, so if your loyal customer orders before 4pm on Friday, she’ll get her designer T-shirt in plenty of time for a special night out. You had better hope the small print doesn’t put her off, though. “Our Saturday delivery service costs £10. Our courier will deliver your parcel between 7am and 9pm. A signature may be required on receipt.” Oh, hold on. She’s cancelling the order and blaming you for ruining her hot date. Suddenly she doesn’t feel quite so loyal, and who can blame her?

The harsh reality is that thousands of consumers want to shop regularly online, but they feel let down by the lack of convenience when it comes to delivery. And so often the carriers
need a signature for proof of delivery, meaning goods end up being sent to distant depots.

“Today’s online shoppers would like to choose Saturday, named day or am/pm delivery windows, and the fallback option of parcels being left in a designated ‘safe place’,” says Iain Beveridge, vice-president of operations at GSI Commerce, which has clients including Peacocks and Early Learning Centre.

“Some retailers and carriers are working towards making these service improvements possible, but there are obstacles. It costs a bit more to offer am/pm delivery because a driver is covering the geography twice in one day instead of once.”

He thinks retailers and carriers are “their own worst enemies” for insisting on sticking to the proof of delivery model regardless of the value of some products. “A quick win would be to switch most deliveries to non-signature and take details of an agreed safe place at the time of ordering, for use by the carrier if no one is in,” he says.

High-value electrical goods require real flexibility when it comes to home delivery, as ‘knock and drop’ isn’t an option. Comet’s in-house operation aims for quality and reliability above and beyond cost efficiency, says Comet director of services Toby Lousada.
The range of delivery options includes next-day and timed slots for large items such as fridges and washing machines, but prices do reflect the cost of a
two-man team, specialist installation and removal and disposal of packaging. Whereas a standard delivery any time between 8am and 6pm, seven days a week, costs £19.95, customers can pay a bit more – £24.95 – for morning (8am to noon), midday (10am to 2pm) or afternoon (2pm to 6pm) delivery.

For smaller items such as laptops and toasters, standard delivery (weekdays, 7am to 6pm) is £5.82, and there’s a popular morning option too, with a drop between 7am and noon on weekdays costing £7.79. A Saturday option between 7am and 6pm costs £11.69.

“We’ve responded to customer-driven requirements, and we already have the scale of 300,000 deliveries a year to get the costs to the lowest point possible without jeopardising our high customer service standards,” says Lousada. “We have invested in training our drivers on technical installation skills and customer service skills, and although price and choice are important, we know that what matters most to our customers is that we do what we say we’re going to do – turn up on time and do a good job.”

Ultimate goal

Beveridge is certain that if retailers clubbed together and built some scale into more sophisticated delivery models, the costs for regular parcel deliveries would come down, and first-time deliveries – the ultimate goal of any home shopping operation – would happen far more often.

Home Delivery Network (HDNL) chief executive Brian Gaunt is on just such a mission to generate scale in customer-focused delivery operations, believing that it will lead to far greater convenience for British shoppers, and persuade them once and for all that buying goods online needn’t be a headache.

“At the moment retailers feel they must charge a premium for the more convenient delivery options, but if we could drive volume in these areas, they wouldn’t need to,” says Gaunt.

For instance, HDNL delivers 340,000 parcels a day on weekdays, but only 30,000 on Saturdays. If figures were ramped up for Saturday deliveries, there would be no need to charge much extra for the service. Already HDNL can deliver on a Saturday for less than £5 a delivery, yet etailers that offer the service are typically charging £10
or more.

“They’re either incurring extra cost to get their product out for a Saturday, or they’re making a margin,” says Gaunt. It would clearly be frustrating if retailers were more interested in making a profit from these delivery options than bettering the image of home shopping as a mainstream service, he feels.

Research carried out by PricewaterhouseCoopers for HDNL both last year and this year has provided insights into what services online shoppers would like to see available, and how much they would be willing to pay for greater convenience. Breadth of delivery options was considered very important by the panel of 1,000 internet shoppers questioned. “They want convenience and ease, and we found that 26% of customers would buy more if more delivery options were available,” explains Gaunt.

He says the fact that a quarter were willing to pay between £4 and £10 for next-day delivery, and 28% would be willing to pay about £5 for an evening or Saturday delivery, should make compelling reading for all committed etailers. Yet only 30% of the 95 retailer websites explored as part of the survey were offering Saturday delivery.

“Our business has invested heavily in systems and delivery options to help online brands deliver greater convenience, but we can only hope to drive higher levels of online shopping if that convenience is offered, and at the right price,” says Gaunt. “We have a number of innovative, forward-thinking clients whose first-time delivery success rate is well above average because they are very good at offering choice and building additional service elements into their websites.” One client, Direct Wine, owner of the Laithwaites Wines and The Sunday Times Wine Club brands, has just moved to offering Saturday deliveries and is trialling evening delivery with HDNL, for instance.

James Roper, chief executive of etail body IMRG, says: “A named half-day is a very hot idea for shoppers, and will appeal as long as there’s no big price tag. We don’t charge people to enter shops, so why should we charge to use a website?”

IMRG is presently developing a Gold Standard, part of its IDIS and ISIS accreditation scheme, which will fly the flag for first-time delivery success, making the service options offered by individual etailers far more transparent.

Simple solutions

GSI Commerce says clients that collect mobile phone numbers to text or safe-place details, or provide ‘track and trace’ and ‘collect in-store’ options, can hone down failed deliveries to just 2% or 3%. “Rather than sit back and wait for more complex delivery structures to bed in, many of us are getting on with introducing simple and cost-effective alternatives,” says Beveridge.

But making the necessary changes can take time. One multichannel retail director who asked not to be named says: “We know that capturing details of a safe place isn’t difficult, but many companies like us are waiting for the next stage of web development to get signed off by the board, so we’re being held back.”

Consumers want a range of options and, slowly, they’re getting them. What does seem pointless is for carriers to innovate and strive to keep delivery prices keen if retailers don’t try to do the same.