Poor delivery options cost e-tailers billions - report

By

Nigel TAYLOR

Published
Jun 8, 2023

Online retailers need to sharpen up their delivery options after ‘losing’ £31.5 billion in sales annually at the checkout due to delivery-related issues.

That’s according to delivery management company GFS and its just-published ‘Battling Basket Abandonment’ white paper.

A number of consumer delivery issues impacting e-commerce businesses are “resulting in a huge financial ‘black hole’ for retailers”. The survey of 2,000 adults (49% male, 51% female) was produced in conjunction with independent retail consultancy Retail Economics and found 24.8% of UK shoppers abandoned their purchases at the checkout.

A breakdown of the £31.5 billion reveals that £7.2 billion is attributed to the lack of delivery options, £4.9 billion down to cost expectations, £4.5 billion to delivery speed, and £4.2 billion because of the returns policy.

More than 100 senior e-commerce and supply chain professionals within the UK were surveyed, with more than 80% “confident n the delivery services they offered met consumer needs”.

However, the report revealed huge discrepancies between consumer expectations and retailer service, as 83% of retailers believe they offer a wide range of delivery options yet just 48% consumers agree with this. 

The survey also showed shoppers expect at least five delivery options when getting to the checkout, but research shows only a third of retailers offer this with the average being three options. 

Retailers are also confident they’re performing well when it comes to consumer confidence in delivery and returns policy (85%), provide reasonable and transparent delivery costs (84%), offer easy and frictionless checkout experience (88%), and that customers are satisfied with the speed of delivery (88%).

However, this confidence doesn’t stretch to consumers as their feedback ranged from just 54% to 64%.

Yet the report did say 75% of consumers are willing to pay extra for same-day, next-day or nominated delivery, while 95% of millennials are open to paying for a premium delivery service.

This is replicated with returns, but there’s a discrepancy of attitudes among the age groups as 76% of under-45s will pay for hassle-free return options. By contrast, only 34% of over-45s will pay. 

Serial online shoppers, those who purchase goods at least once a fortnight, are also willing to pay for ‘hassle-free’ returns more than those who buy once a month or less.

Retailers acknowledge more could be done to enhance the customer experience including expanding delivery options (45%), offering free shipping or reducing costs (44%) and reducing delivery times (42%). However, they also pointed to the two main barriers in being able to improve delivery options are high operational costs (61%) and working with multiple carriers (41%).

GFS Executive Board Member, Bobbie Ttooulis, said: “The research validates, and more importantly puts a value on, what we’ve always known to be true; that lack of delivery options results in lost sales at the checkout.

“In our experience, retailers are well aware of this but struggle to overcome the internal costs and complexities of working with multiple carriers. That’s why we’re seeing a clear shift away from traditional approaches, with retailers seeking multi-carrier partners to resolve this.”