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Study reveals Millennials expect fast refunds, older consumers are thrifty but tolerant

(Image credit: Image Credit: StockSnap / Pixabay)

This year’s Alibaba Singles Day smashed all previous records, hitting $1 billion in sales in just 85 seconds (opens in new tab). In its first hour, sales figures reached almost $10 billion, with total figures of $30 billion. New records were made on this year’s Cyber Monday, too, as online sales surpassed expectations and an unprecedented $7.9 billion was spent online, and  Black Friday generated over $6 billion in ecommerce sales – also a record (opens in new tab).

At the Singles Day launch event Daniel Zhang Yong, Alibaba’s chief executive, highlighted the spending power of younger people (opens in new tab). “People born in the 1990s have become the main consumption power. They lead a very different lifestyle, they are the generation born on the internet,” he said.

For the retailers behind these phenomenal ecommerce days, the work is just beginning as they and their shipping partners make sure that buyers receive the goods and their expectations are met. The 2018 Pitney Bowes Global Ecommerce Study reveals the huge importance consumers place on what happens after the ‘click-to-buy’ button is pressed. For the first time, the study has uncovered how this impact varies across generations, comparing the views, behaviours and preferences of three different age groups.

Baby Boomers, born between 1944 and 1964, were questioned for the study, as were consumers who fall under the category of Generation X, born between 1965 and 1979. Millennials or Generation Y were also questioned, born between 1980 and 1994. The results show that consumers across all age groups are accelerating the pace of change and are pressurising ecommerce firms to improve the post-purchase experience, but different elements of the post-purchase experience are prioritised by different age groups.

The study’s findings provide retailers with unique insight and the opportunity to become trailblazers in delivering a post-purchase experience, designed to meet the expectations of their target demographic. Fashion retailers targeting younger consumers, for example, must make sure buyers can return items in-store just as easily as returning a parcel via other means, as this is important to them. Merchants should quickly pay refunds, as this is equally important to this demographic. Those targeting Generation X and Baby Boomers are not under so much pressure to pay refunds quickly, but should offer free shipping, even if it is on condition of a minimum spend. These, and other highlights from the study, are outlined below.

Free or fast?

There is no doubt that the bar has been raised high by ecommerce giants for shorter delivery times and free delivery, and consumers now expect this from retailers large and small.  In fact, 90 per cent of online shoppers told Pitney Bowes they will leave a retailer website and shop somewhere else if popular services like ‘fast and free’ shipping aren’t offered.

Generally, free is still preferred when it comes to shipping. But does this preference actually influence where consumers shop? When questioned on the influence of a variety of factors on consumers’ choice of online retailer, millennials, like the other groups, were most influenced by free and fast shipping. This age group however, more than any other, stated that higher quality packaging and free gift wrapping are also important. The other generations – perhaps not interested in Instagramming their lives – are really not bothered by these factors.

Generation X – those aged between 39 and 53 – are highly likely to choose where they shop based on free and fast shipping, with these two factors having a greater influence over their choice of retailer than millennials’ preferences. 84 per cent state free shipping as being the strongest influence over their choice of online store, and 70 per cent say fast shipping has the strongest influence. Of all the groups in the study, the Baby Boomers are the most thrifty here, with 88 per cent choosing an online store based on their desire for free shipping compared to 67 per cent fast shipping. 

Free shipping: how long should it take?

Consumers are quite happy spending a certain amount on purchases to qualify for free shipping. Some millennials expect to pay up to $50 to get free shipping – although most expect to pay around $25 - while other Baby Boomers and Generation X shoppers are more cost-conscious, with only 16 per cent expecting to pay upwards of $50.

When it comes to what constitutes acceptable times for free shipping, all demographics in the study agree that one day or less is fast, and beyond 5 days is considered slow.

However, millennials are more tolerant and have different expectations of ‘fast’ when it comes to free shipping, which may come as a surprise. Millennials were more likely than any other age group to still consider 3-4 days as fast, with Generation X and Baby Boomers not convinced. For them, 3-4 days does not constitute fast at all, even if shipping is free.

The returners

Out of the age groups questioned in the Pitney Bowes Global Ecommerce Study, millennials have most experience in returning items. They are more likely than any of the other generations to return items ordered online to a store, reflecting their omnichannel approach to buying.

One area where the millennial demographic has less tolerance than others is when it comes to refunds. Once they have returned an item to a retailer, they expect a refund – quickly. Returns can be complex, but those ecommerce companies which excel in managing returns, keeping consumers informed and processing refunds quickly, can gain a competitive advantage. Millennials would prefer a refund to take a day or less, possibly basing expectations on the speed of refunds set by marketplaces. Older consumers have more patience here and are willing to wait longer for their refunds. 33 per cent of Baby Boomers and the same percentage of Generation X consumers say that company’s ability to process refunds even influences where they shop.

Share and share alike

An area in which millennials are keeping online retailers on their toes is in the sharing of negative experiences. Where Generation X and the Baby Boomers would write a letter, keeping the negative interaction between themselves and the retailer, the study found that 30 per cent of millennials share their bad post-purchase experience with others. They would do this by telling friends, posting a negative review or sharing it across their social networks. This potentially affects the buying decisions of their entire social networks, so those brands taking time to engage with and respond to this feedback in a transparent and honest way will see the benefits.

Thinking inside the box

The final area to highlight for retailers identifying different preferences across different demographics is the subscription service. In the US alone, the market has grown by 100 per cent a year (opens in new tab) over the past five years as time-strapped consumers enjoy the convenient, hassle-free method of receiving regular goods delivered directly to their door. The Pitney Bowes study found that millennials and households with children under 18 are both the most likely of all groups to subscribe to a subscription box service, with more than half the millennials interviewed doing so.

A chance for retailers to excel

Across all age groups, the study findings demonstrate that post-purchase action now has the potential to make or break consumers’ shopping experiences and influence their choice of retail site.

The insights reveal unprecedented opportunities for online retailers to deliver a truly differentiated consumer experience. Retailers must excel in those areas prioritised by their target demographic. If they do this successfully, they will delight their customers.

Georges Berzgal, Vice President, Europe, Pitney Bowes Global Ecommerce (opens in new tab)
Image Credit: StockSnap / Pixabay

Georges Berzgal is a marketing technology and ecommerce expert specialised in growth and expansion. He is Vice President for Europe for Pitney Bowes Global Ecommerce, and is leading in online shopping innovation for different territories.