Can retailers afford not to offer next day delivery?

In a more mature and competitive ecommerce market, retailers can differentiate themselves from their competitors by providing choice over delivery.

Long gone are the days when consumers would consider a single three or four day delivery option as acceptable, choice is now very important. If options that suit shoppers’ lifestyles are unavailable, then sales may be lost.

Over the past few years, the more forward-thinking online retailers have been gradually expanding their delivery options and the latest is House of Fraser, which has brought in two extra next day options.

With the addition of in-store collection options, this makes House of Fraser’s delivery options pretty comprehensive. The idea is that it caters to as many shoppers’ preferences as possible.

Indeed, as a recently Shutl study revealed, consumer expectations around delivery are much higher than they used to be, and a lack of choice will actively deter them from making a purchase:

Take H&M as an example. There’s only one delivery option, it takes up to five days, and it isn’t free.

Perhaps, like Poundland online, it needs to keep costs down, but this isn’t a world-beating delivery proposition. 

Whether H&M should be offering next day delivery or not may be debatable, but luxury sites catering for wealthier shoppers should certainly be providing premium delivery options.

Here, Hermes has only one option, which looks to be one or two days depending on the time of the order, It’s not explained very clearly.

 

By contrast Mont Blanc offers express delivery. After all, if people are prepared to pay more than £400 for a pen, they’ll pay a little extra for express delivery. If its a gift they need quickly, this gives Mont Blanc an advantage.

 

 

It isn’t just the luxury market though. There are a proportion of customers who are prepared to pay a premium for speed and convenience. In some case, they don’t even have to pay much extra.

Schuh’s delivery strategy has been to offer the widest possible range of options to cater for all tastes. Moreover, it offers them very cheaply.

Just £1 for next or nominated day delivery:

I asked Schuh’s Deputy Head of Ecommerce Stuart McMillan about this:

Delivery options in general are very important to Schuh, with Next Day being one of the most important. Of course, a fast, reliable and (most importantly) free standard (2-3 days) offering is going to be our highest volume service.

Perhaps the best illustration of the importance to us of next day is that the normal charge is £4.99, but we often run £1 offers as it has a positive impact on trade. We have also carried out a lot of work to improve the service.

Our logistics team have worked hard to allow us to offer Next Day for £1 in promotional periods; we’ve done some cost/benefit analysis and the numbers stack up for us. However, logistics costs inevitably attract economies of scale, if you’re not shipping high volumes you may not be able to secure the best prices from carriers.

It’s delivery options and charges help to differentiate Schuh from competitors and the retailer calculates that taking a hit on costs pays off in terms of extra sales and customer acquisition.

 

In summary

I think next day delivery will become an essential for online retailers to offer but, more broadly, it is the choice of delivery options that is important.

This means offering standard delivery, next day, same day where possible, as well as convenient options like click and collect and nominated delivery slots.

This choice allows retailers to appeal to a broad range of customers, and also to find an edge over their rivals.

More than this, customer experience is key. Delivery option are great, but fulfilment of promises is key to providing the best possible service.

As Stuart says:

Ecommerce is increasingly a triptych of product, price and service, with ‘service’ being the newest of these focus areas.

With retailers like House of Fraser, Argos and Schuh working hard to improve their delivery offering, it’s likely that this will be a key ecommerce trend over the next few years.