Online businesses losing sales due to poor delivery options

The UK e-commerce market is huge and fast growing. In the UK, online retail sales exceeded £130 billion in 2016 - a 16 per cent increase on 2015 according to an e-Retail Sales Index from Cap Gemini and IMRG.

But some businesses are better than others are exploiting this.    A big distinguishing factor between e-commerce “winners” and “losers” is the delivery service offered. 

Online companies invest heavily in product design, advertising, search engine optimisation, website design and development, optimising the website user experience only to skimp on the delivery solution and fall at the final hurdle at checkout.

One fifth of shopping baskets are abandoned due to unsatisfactory delivery options according to the distribution company Descartes.  In other words, the average online company could improve sales substantially if they did nothing at all but improve the delivery option on checkout.  A shortage of delivery options or a lack of faith in the shipment guarantee, delivery “is the number one reason people don't buy online” Chloë Thomas, of eCommerce MasterPlan, told Marketing Donut.  According to one Mintel Report, just under a third of people would do more shopping online if delivery options were more flexible - with a higher proportion among high earners.

It is not just at the checkout stage where skimping on delivery does damage.  Inaccurate or late deliveries – or surly, frazzled couriers can do enormous damage to an online brand.    Think about it: if you an online retailer – that late, overstretched, irritated and underpaid courier might well be the only human face of your brand that the customer sees.

Research from Ecommerce Nation found that 37 per cent of online shoppers, if dissatisfied with a delivery experience, will never use the same online retailer again. At least £5,300 in lifetime value of the average customer is lost whenever a customer defects to another site due to delivery qualms, according to online parcel delivery company ParcelHero.   Conversely, 75 per cent of people are more likely to buy again from an online retailer if they are happy with the delivery – the most important factor of the whole online purchase according to E-Marketer.   

So, neglecting the delivery option or skimping on the delivery budget can be a painful false economy.  So as an e-Commerce business, what do you need to do? What delivery options can really make a difference to your online sales?   

There are three important things to try and offer: immediacy, convenience and reliability.

Seeking solutions

First, immediacy:  Customers require more and more timely deliveries.  Next-day is becoming increasingly normal and Amazon Prime has raised the bar here.   Other retailers will have to follow if they do not want Amazon to eat their lunch.  In certain industries such as groceries, electronics and fashion, same-day delivery is increasingly expected.  Some 55% of people want same-day delivery, E-Marketer found.

Second, convenience:  Customers want more precise deliveries such as 1-hour delivery slots.   It is no longer good enough to expect customers to wait in for a delivery that could come any time in an 8-hour window.   Only former nationalised monopoly utilities – where customers show inertia in switching - can get away with that these days (and even they are on borrowed time).   There is no such inertia when it comes to online retail.  Online customers vote with their feet – or perhaps their mice.   

Some customers will pay a premium for narrow delivery slots.  Hermes found that people will pay twice for a two-hour delivery window what they would for a four-hour delivery window.

Third, reliability.  This much is obvious.  Nothing causes bad will such as a delivery going astray or turning up very late or damaged.

This means that retailers with a timely, reliable and convenient delivery service can then gain an edge over the competition.  Conversely, those without this are doing themselves long term damage.

As most businesses rely on external courier services to fulfil customer orders, the delivery process can be far-removed from the control of retailers. Your business may have great staff, superb customer service, and an efficient system to get the goods out of the warehouse, but pass your brand to a delivery company to look after, and you can’t always guarantee they’ll do it justice. 

This is why some courier services are now seeking solutions to this challenge. New companies are offering retailers a professional workforce of couriers for hire – something they believe caters to the flexible, on-demand delivery service that consumers are growing accustomed to.

I believe Street Stream, a same-day on-demand courier service, offers the most viable solution. By allowing clients to choose their own fleet of his vetted couriers – on demand, when they need it, companies can have genuine control of their delivery services.

As each courier is individually vetted by us, and rated by our clients, they know that a punctual and reliable service earns them repeat business. This encourages each courier to work hard to exceed our clients’ expectations.

Meanwhile, retailers know they are getting a professional service with every delivery order. By allowing our clients to pick their own couriers, we’re effectively putting the control of delivery in the hands of businesses.

Looking at all the different aspects

While the same-day delivery market is largely dominated by retail giants like Amazon, smaller firms such as Street Stream believe they can thrive through offering a superior on-demand courier service.

Other players include the Taxi app Gett, which last year added £6 couriers to its on-demand London taxi service, and Stuart, a French-backed service launched in September which hopes to impress with its one-hour delivery service. Almost three quarters of consumers would spend more if they were offered same-day delivery, according to Stuart’s own research.

If you are serious about increasing your online sales, then it’s worth looking at all the aspects of your delivery service, to identify anything that may be putting customers off. For example, is it timing, cost, speed, lack of specific delivery time-slots, or are goods being damaged during delivery? 

Creating customer surveys to identify delivery issues, and using this feedback to inform your choice of a courier service can play a huge role in increasing website conversion rates and repeated online sales, according to Thomas.

Rival on-demand courier companies will be sparring to be the delivery arm for online retailers everywhere.  Both retailers and delivery services have to raise their game.  And for both e-Commerce businesses and their customers, this can only be a good thing.

James Middleton, founder, Street Stream
IMage Credit: Street Stream