I was recently reading an infographic published by global investment banking firm Goldman Sachs, which was all about millennials coming of age and what to look for or to expect in future from the ‘Facebook generation’.
According to the infographic, millennials (anyone born between 1980 and 2000) are one of the largest generations in history and are about to move into their prime spending years.
As a result, millennials are poised to reshape the economy; their unique experiences will change the ways in which we buy and sell, in particular forcing retailers to examine how they conduct their online and offline businesses for decades to come.
The first generation of digital natives
There is no doubt that millennials’ affinity for technology is reshaping the retail space. They are the first generation of digital natives and their penchant for technology is driving their shopping habits.
For example, they are used to instant internet access for price comparisons, product information and peer reviews where ever they are. They buy just as much online as they do offline (if not more). And, with all this data at their fingertips, millennials are turning to brands that can offer maximum convenience. In fact the Goldman Sachs research showed that 57 per cent of millennials will automatically compare prices online and in-store. It is therefore critical that retailers can compete not only on price but also take into account the entire online experience, of which the delivery and returns is rapidly becoming a key competitive component.
Global ecommerce is growing at a rate that is challenging for the logistics and retailing industry to match. Consumer confidence in online purchasing is growing (20 per cent up on last year), especially where millennials are concerned. We already know that more UK consumers took to the internet to buy Christmas presents in 2015 rather than venturing into store, and as the millennial generation comes of age, business success for both retailers and carriers will depend on how efficiently, economically and quickly they can deliver and return parcels.
A generation that expects instant delivery
Back in the day, ecommerce started with expectations of a five to seven day delivery (if we were lucky). We then moved to next day delivery and now we are witnessing not only same day delivery but the promise of delivery within a matter of hours. This puts enormous pressure on logistics companies. Not only do they need a seamless and fast process that enables parcels to fly out the door, they also need a fast and seamless returns process.
If you think about it, the more goods that get purchased online the greater the rate of returns, which means that the returns process has to mirror the shipping process.
Our ‘Many Happy Returns’ research study from September 2015 examined UK consumer returns habits. Millennials were found to be the most switched on when it comes to online shopping and returns. Our research showed that students were by far the biggest returner of goods with half (50 per cent) returning anywhere between 11 and 25 per cent of goods purchased. Indeed, 42 per cent of students would only purchase from a retailer with a free returns policy and who makes it easy to return goods.
Mobile is driving e-commerce
The adoption and use of mobiles means that mobile commerce is also growing. In fact, several big ecommerce leaders have shut their websites altogether and remain as app-only businesses. There are many other ecommerce companies who give more priority to mobile traffic in their decisions. It might surprise you to know that around 90 per cent of ecommerce traffic access the store from either smartphones or tablets.
There is no sign of this trend abating in the near future, especially with technologies like Mobile Pay being offered across platforms and devices. Where millennials are concerned the integration of wallet and devices is going to become even stronger in 2016 and therefore so will the integration of ecommerce and mobile.
The growth of ‘returns’ locations
I also believe that in 2016 we will not only start to see the volume of returns increase as the ecommerce deliveries increase, but also the locations where goods are returned will start to change. Although 43 per cent of the sample surveyed in our research suggested that they would be prepared to wait at home for a courier to collect, this statistic dropped to just 23 per cent of 16-24 year olds. With the younger generation it’s clear that this trend is on the turn. As a result we will soon see many and varied returns locations such as local convenience stores, railway stations, garages, locker boxes and so on.
Millennials now make up the majority of the workforce (since 2013) and there is no doubt that this demographic will have a significant impact on retail in the years ahead.
Both retailers and logistics companies need to continue to adapt for this new Facebook generation who see online as a natural choice having grown up with technology in the household. Are you ready to meet the demands of the millennial generation?
Matthew Robertson, Commercial Director, NetDespatch
Image source: Shutterstock/iQoncept