Dispelling the ‘free and fast’ myth is the first step to a smarter strategy.
It’s easy to get caught up in the hyperbole regarding the meteoric rise of e-commerce. But for thousands of independent online retailers, the last 12 months have been a rollercoaster, not a procession.
Retailers have endured a constant battle to maintain service provision, mitigate supply risks, manage inventory levels and stave off the threat of new market entrants, not to mention protecting their staff through a health crisis.
For these retailers, future success is anything but guaranteed and their situation is being made all the more difficult by the ‘Amazon effect’ – the notion that all e-commerce must now meet the dizzying standards of fulfilment convenience enabled by this retail behemoth.
Just last month, Shopify became the latest marketplace to publish research citing customers’ seemingly implacable desire for improved delivery options.
If you’re an online retailer, you could be forgiven for thinking that achieving e-commerce profitability under these conditions looks like a pretty thankless task.
So let’s take a step back for a second and try to unpack what customers actually want versus what they’d be happy to see if it were possible. After all, in a perfect world, who wouldn’t enjoy free, instantaneous, environmentally sustainable fulfilment to any location?
In truth, there’s plenty of evidence to suggest that free delivery matters more and more, but comparatively little to support claims that rapid delivery is now a prerequisite of success.
‘Free’ matters because online shoppers don’t like encountering surprises at the checkout stage. Because in the world of e-commerce it only takes a few clicks for a customer to move to another marketplace. Because offering free delivery now has an algorithmic impact, making your products more visible in marketplace searches.
‘Fast’ matters if a customer is buying something urgent. For example, a replacement router or piece of computer kit might fall into this category. But when you think about it, surprisingly few products meet this criteria. Either we can wait 24 to 48 hours for them to arrive, or else we need them instantly and hence are more likely to go out to our nearest high street.
Our own research shows that just 14% of people expect products to show up within 48 hours, while the majority of online shoppers are perfectly content with delivery times of two to three days – so long as they don’t have to pay the costs of delivery.
Speed is simply not seen as a unique selling point, especially if consumers are footing the bill. And for all of the recent retail innovations we’ve seen, same-day delivery remains extremely expensive.
In contrast, a lot of items rely upon consistency of delivery.
Every online retailer needs to consider the question of ‘guaranteed or expected’ in relation to their product offering, particularly if they’re in the subscriptions business, where a failure to provide consistency will almost certainly result in a lost customer.
Visibility also matters more and more to customers – the ability to track an item throughout the fulfilment process, giving them the reassurance that it is coming, and ensuring they’re at home when it arrives.
Online retail margins are smaller than people think, particularly once marketplace or customer acquisition costs are accounted for. And right now there’s a danger that the Amazon effect is giving retailers a false impression of what their customers really value around last-mile delivery.
So, before you rush into offering free and fast delivery that you can’t necessarily afford, take a moment to first think carefully about your product set and audience needs, and you’ll be a step closer to a delivery strategy that works for everyone.
Read the full article here.