How can your delivery strategy increase your eCommerce sales?
It’s prime time for eCommerce – and consumers have never had it so good. Thanks to Amazon Prime, consumers now live in an age where they expect to be able to not only buy pretty much whatever they want at a bargain price, but to also have it delivered almost immediately.
For retailers and brands trying to compete, this puts enormous pressure on their own logistics to try and keep up.
But keep up they must: while Amazon tends to eat all before it, any retailer looking to sell has to either use Amazon to some degree, or offer the same level of service and customer experience that Amazon does – especially when it comes to rapid delivery.
So, how can your delivery strategy increase your eCommerce sales and how can you make that happen? The short answer is “by not letting Amazon take all your business”. The long answer is more involved.
Why delivery is now a key part of eCommerce
The reason delivery has become such a key battleground in eCommerce is that shoppers are increasingly demanding and impatient. Amazon Prime has offered them a really fast service, but in the wider eCommerce world, the increasing use of smartphones, smart speakers, social media, streamed TV services such as Netflix and increasing bandwidth have all just made them more keen on instant gratification.
As online shopping has increased and the demand for instant shopping has grown, so too has the need for online merchants to differentiate themselves in such a competitive arena.
In fact, a study of more than 180,000 consumers by KPMG found that 39% of millennials preferred shops to buying online. Their reasons were their need for instant gratification and because “delivery took too long”.
With such demanding customers merchants would traditionally, this would have opted to entice shoppers by offering a good price. However, today, with the price race all but over – Amazon saw to that, too – merchants need new ways to stand out. And delivery times have become the new battleground.
What delivery strategies can be implemented?
The answer to the question “what delivery strategies can be implemented to deliver this sort of experience?” would, at first glance appear to be a simple “fast ones”. However, there is much more to creating a sales generating delivery strategy that will make you stand out.
Yes, there is a need for speed, but there is also a need for variety – as well as a balance between speed and cost, both to the merchant and the customer. Not everyone has the clout or the deep pockets to bankroll free premium delivery, but that need not be a barrier to trying.
So, what do you need to offer?
A range of options – the first step is to offer a range of delivery options for the customer and to prominently use them in your marketing. While it is tempting to offer every conceivable combination of options at the checkout stage, this can be as off-putting as not having any options at all. Instead, look to offer a sensible range of delivery options that cover all bases: same day, next day or standard, for example.
What you can offer will depend, as we shall come to shortly, pricing, but also the relationship the merchant has with its carriers and historical demand. It is also somewhat dictated by the nature of the product. Some things people want that day – say an evening gown for a surprise work dinner – while other things can often wait a few days.
Pricing – The biggest thing with offering a range of delivery options – and in using delivery to help drive sales – is pricing of that delivery. For the merchant delivery costs money. Usually, the longer and less precise the delivery time, the cheaper it is, and vice versa. This is where retailers and brands need to be clever.
For some retailers the cost of rapid delivery can be justified in terms of either gaining sales, or in not losing sales to rivals. For others, the justification is less clear, however, they still need to try and offer it to stem the encroachment onto their patch of Amazon.
For the former, the cost is just swallowed in the cost of doing business. For the latter it is worth assessing two approaches: one where you slightly inflate the price of the goods, yet appear to offer ‘free’ next day delivery; a second where you simply charge more for next day delivery, slightly less for three-day and nothing for five or beyond. There is no golden rule for what does and doesn’t work – it is wholly dependent on the goods being sold, the consumer base being sold to and what the marketing will take. The only way to know is to experiment.
It is worth noting that, even if charging for next day or even same day delivery, it is worth marketing the fact that it is available at every opportunity to tempt the customer. While they are looking longingly at the thing they want to buy, their need for instant gratification can be sated by simply paying and extra £4.99 for next day delivery… go on, you know you want to.
Tracking and other ‘add ons’ – Other ways to tempt shoppers to buy with you – and indeed to spend more on delivery – is to include a range of add-ons to the delivery process, such as free text alerts of progress, tracking tools online, specified delivery times and days and so on. While delivery is a battleground, it also comes with many flavours. Offering the ability to have more control over their deliveries, which doesn’t necessarily mean having it ASAP, but perhaps at a convenient time or even location, is another differentiator for brands.
Delivering it can cost, but again it is wise to offer it as an additional option at the point of sale – perhaps as a secondary set of ‘extra’ delivery options right at the checkout.
Subscriptions – One way to cover the cost of implementing all these nice new services, such as same day delivery, text alerts and so on – and all the while making them feel ‘free’ at the point of purchase – is to offer a membership club or scheme, where shoppers essentially subscribe to your brand and receive not only special offers, but also free next day delivery.
This already works really well for fashion brand ASOS – which is a master of delivery options. Its Premier Delivery is £9.95 per year and means that any orders made can be fulfilled the next day.
ASOS is also trialling a same day click and collect service on the Campus of Leeds University in the UK, catering to students. While not delivery, per se, it shows how an innovative retailer can look at new ways to use logistics to up sales to key demographics.
New machines – It might not be for everyone, but another area of differentiation that can be brought about through delivery is the use of new machines such as drones and robots. Many people are trialling them – not least Amazon and UPS – but no one has yet worked out a distinct way to make it happen. Perhaps the most ingenious – and the one that is actually a commercial success – is the takeaway delivery robots prowling the streets of, of all places, Milton Keynes. These autonomous boxes on wheels devised by the wonderfully names Starship Technologies currently deliver takeaways, but they could be tweaked to do other deliveries. In fact, the company is also trialling using them to deliver breakfasts to students. It is early days, but such technology could also drive sales.
The power of returns
It isn’t just delivery in its traditional sense where there are eCommerce gains to be made. A recent study by Klarna found that more than three quarters of UK shoppers would buy more from a retailer online if it offered free returns.
The survey found that 82% of consumers believed returns were a normal part of online shopping, while 31% would be more likely to buy something online if they could pay for it after trying it at home.
As many as 78% would buy more over time with free returns, while 86% said it would make them more loyal and likely to keep coming back.
In fact, according to Barclaycard, 89% of shoppers check a brand’s returns policy before they make a purchase online, with 69% of UK consumers expecting them for free.
Creating a returns process that is attractive enough to meet these demands is, however, not easy. If you have physical stores, then encouraging returns in person is the simplest route for the retailer – although probably a deal breaker for the shoppers.
Where physical returns aren’t possible, merchants need to look at how to make it as easy as possible online. According to Paul Durkin, director of home and efulfilment at Wincanton, an online portal that allows consumers to select specific pick-up times is an option to overcome this. It’s more convenient for the consumer and increases visibility of stock for the retailer.
It’s important to be flexible around returns. Having the option to quickly consolidate, refurbish, locally redistribute, recycle, or even resell stock internationally can keep costs down. Investing in the right technology increases visibility of products that are off of the shelf, cutting down unnecessary movements and keeping items available to customers.
The challenges of these new ways of delivering
While finding new delivery strategies and options is a must for driving eCommerce sales, it comes with challenges. Getting the price right, as we have seen, is the major challenge, but behind the scenes, managing a complex array of carriers to make such delivery options possible – and cost effective – is really tricky.
Not only does it require working with an array of carriers, it also means managing stock and orders in line with those carriers. While this can be done in-house, the sensible solution is to opt for a third-party company or software to help you manage the process. In fact, it could be considered essential today to have such systems and services in place to stay competitive.
The internet has revolutionised shopping, making it easier than ever to buy things and forcing prices to drop. The web – and allied services and tech such as Amazon, smartphones, smart speakers and streaming content services – have made consumers ever-more demanding of instant gratification.
This has made delivery one of the key battlegrounds to win custom. Until recently, this has meant offering fast or free delivery. Now it means offering fast and free delivery – and if that isn’t possible, then offering something extra that makes buying from you better than buying from your competitors.
The technology is there to make it happen, even down to the complex management of making it, but it is hard and expensive. The caveat is that, done right, it will increase sales – and that is a delivery worth counting on.
About Parcelhub – Part of the Whistl Group
Save time and money. Increase delivery performance. Enhance customer experience.
Parcelhub is a bespoke and proactive multi-carrier delivery management solution. Flexible and scalable, its services integrate seamlessly with Linnworks, providing hundreds of multi-channel retailers, global brands and wholesalers with one access point to 20+ carriers and 600+ services.
Distributing more than 6 million parcels on its own carrier contracts every year, Parcelhub’s free multi-carrier shipping software grants hundreds of national and global businesses access to ‘pooled volume’ discounted rates from its carefully selected range of carrier partners, including Yodel, Hermes, DPD, DHL, UPS, DX, Parcelforce, CollectPlus, SkyNet, ArrowXL, Interpost, Panther Logistics, Direct Link and Palletforce. Dedicated proactive parcel management comes as standard.
Parcelhub is part of the Whistl Group. Whistl is the leading delivery management company enabling customers to get their letters, leaflets or parcels to customers efficiently and cost effectively both in the UK and internationally. It is headquartered in Marlow with 8 depots and 2 fulfilment centres across the UK handling 3.8bn items a year. The company is privately held with over 1,500 employees and a turnover in excess of £600m. It has grown significantly over the years and is now expanding its presence in the eCommerce sector offering fulfilment services to customers through a seamless experience from first click to final delivery.