Poor delivery options are having a detrimental impact on the sales of online retailers, resulting in a loss of £31.5 billion each year, according to a report by delivery management company GFS. Titled ‘Battling Basket Abandonment’, the report highlights the significant financial impact that delivery-related issues have on e-commerce businesses. The findings are based on a survey of 2,000 adults conducted in collaboration with independent retail consultancy Retail Economics, with 24.8% of UK shoppers revealed to abandon their purchases at the checkout.
The report breaks down the £31.5 billion loss, attributing £7.2 billion to a lack of delivery options, £4.9 billion to unmet cost expectations, £4.5 billion to slow delivery speeds, and £4.2 billion due to an unfavorable returns policy. Surprisingly, over 80% of senior e-commerce and supply chain professionals surveyed believed that the delivery services they offered met customer needs. However, there was a clear discrepancy between retailer perceptions and consumer expectations, as only 48% of consumers agreed that a wide range of delivery options were available, compared to the 83% of retailers who believed they were providing such options.
Additionally, the survey revealed that shoppers expect a minimum of five delivery options at checkout, whereas retailers on average only offer three options. Retailers did express confidence in other aspects of their delivery service, with 85% believing they provide reasonable and transparent delivery costs, 84% offering an easy and frictionless checkout experience, and 88% believing that customers are satisfied with the speed of delivery. However, consumer feedback ranged from just 54% to 64% agreement on these points.
Despite the discrepancies, the report highlighted a willingness among consumers to pay extra for enhanced delivery options. Seventy-five percent of respondents stated they are open to paying for same-day, next-day, or nominated delivery, with millennials showing an even greater willingness to pay for premium delivery services. Returns also followed a similar trend, with 76% of individuals under 45 willing to pay for hassle-free return options compared to only 34% of those over 45. Frequent online shoppers also displayed a higher willingness to pay for ‘hassle-free’ returns compared to less frequent shoppers.
Retailers recognize the need to enhance the customer experience, with 45% stating that expanding delivery options would be beneficial. Other suggestions included free shipping or reduced costs (44%) and faster delivery times (42%). However, they face challenges in implementing these improvements, citing high operational costs (61%) and the complexities of working with multiple carriers (41%) as the main barriers.
Bobbie Ttooulis, GFS Executive Board Member, commented on the findings, stating that “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.” Ttooulis also highlighted the shift towards working with multi-carrier partners as a strategy to overcome the operational costs and complexities associated with offering a wider range of delivery options.
In conclusion, the report emphasizes the importance of addressing delivery-related issues for online retailers in order to improve sales performance. By offering a greater variety of delivery options, reducing costs, and enhancing delivery speed, retailers can bridge the gap between consumer expectations and their own perceptions of service, ultimately leading to increased customer satisfaction and higher sales figures.
Useful links:
Forbes: How to Stop Online Shopping Cart Abandonment
Retail Economics: Finding the Winner: Deliver and Thrive
