Creating a perfect storm in the ‘fast, not free’ delivery era

Over the past few years, offering free delivery has attracted online shoppers across the globe. That’s all set to change, however, as retailers are now finding that providing a fast delivery service can prove equally as appealing: fast, not free, is now top of the list for many consumers.

This trend was underlined by research from IMRG which found the share of consumers selecting economy services fell from 45.5% in 2015 to 38.9% in 2016. This means retailers should no longer feel like not being able to subsidise free delivery means they can’t compete; consumers are willing pay the extra costs in return for convenience. While it’s true that free home delivery attracts customers and makes them more likely to buy from the retailer, it’s a strategy that doesn’t work for everyone. It adds cost to the bottom line, and not all businesses can add it to the cost of goods and pass it along to customers while still remaining competitive. Retailers are now starting to take action to make sure their costs don’t spiral out of control. In fact, according to a global survey of more than 300 CEOs by JDA and PwC, 29% of retailers planned to increase the cost of home delivery to offset increased costs of omnichannel retail.

However, there will always be some retailers willing to cover the cost of free home deliveries. So what’s the best strategy for competing against them?

The option, like many things in retail, is to offer an alternative which will benefit the customer, but may not initially be their first choice. For example, say a shopper’s inclination is to save some money by not paying for shipping. If that’s not offered, he or she may well look elsewhere to make a purchase. Right at that point where the purchasing decision is being made, the retailer must provide an attractive alternative.

Fast shipping addresses purchasers’ need for immediate gratification and convenience. Receiving an order quickly and on time can encourage purchasing and loyalty. That is particularly true for luxury items where a purchaser may be more interested in getting the item with immediacy: While free shipping is cost effective, it is often slow.

Take advantage of Click & Collect

It’s actually possible to position fast shipping to be as desirable as free shipping: retailers are learning that shoppers are increasingly taking advantage of in store click &collect services. The convenience of shopping at home and ordering lets shoppers first locate and then secure purchases. Some stores let customers pick up merchandise within a few hours, others will send email notifications when the product is ready.

The strategy is appealing to the busy customer who may not have time to physically browse a stores’ inventories. Ordering can be done any time of day, and receipt of merchandise revolves around their schedules. Retailers can reap the benefits of added on, spur-of-the-moment purchases when the customer arrives to gather the order. Click and collect requires substantial investment by retailers to provide up-to-date, accurate inventory that is highly visible to shoppers.

Collaboration is key

Similar to the approach Amazon has taken with its lockers, stores can partner with couriers, which locate Access Point lockers outside and accessible 24 hours a day at convenience stores and similar locations. Retailers can incorporate the locker delivery addresses into their checkout processes to give consumers a local delivery location, while convenience stores benefit from an increase in foot traffic, and the potential sales opportunities which come with that.

By getting items in the hands of the customer quicker, retailers will be able to shift the focus away from a purely cost-based outlook on delivery options. This means now is the time to investigate offering ship to store and partnering with couriers and convenience stores. By speeding up deliveries, retailers could well find that sales are also picking up the pace.

Kevin Connor, director of product strategy, Retail Pro International