E-commerce shipping left wanting

BY Australian Retailers Association
24 February 2016

A new generation of ‘want it now’ shoppers are being left disappointed according to research that reveals Australian retailers fail to meet the expectations of today’s convenience driven consumers.

The 2016 State of Shipping in Commerce report launched by Temando, surveyed more than 200 Australian micro, small, mid-sized and enterprise retailers and 1000 consumers to explore shoppers’ demands.

The report indicates there is a disconnect between the shipping experiences retailers are providing and the service levels expected by consumers.

While 80 percent of shoppers prefer a specified time slot for delivery and 75 per cent want guaranteed weekend or after hours shipping to fit in with their lifestyle, only 31 per cent and 18 per cent of retailers respectively are offering these services, and 33 per cent of consumers are willing to pay a premium for this.

In addition, 43 percent of Australians are prepared to fork out more for same day shipping, yet just half of retailers provide this, and only 54 percent are giving customers a choice at the checkout.

The majority (85 per cent) of shoppers expect to see multiple shipping options in the cart such as standard (five to seven days), express (one to three days), same day, hyper-local same day (one to three hours), and click and collect.

Most retailers (84 per cent) believe that by offering multiple shipping options, they are better served to meet customer expectations. Those who are doing so have seen an increase in sales (79 percent) and a reduction in cart abandonment (62 percent).

Seven in 10 (70 per cent) Australians are abandoning purchases because the cost of shipping is too high, and 34 per cent due to free shipping not being offered.

Not surprisingly, retailers are concerned with the cost of shipping as well, and 76 percent of micro and 74 percent of small retailers are passing on these costs to their customers, compared to 75 percent of enterprise businesses who are absorbing the expense.

This results in the larger retailers setting the benchmark for shipping costs in the market, making it hard for micro and small businesses to compete.

Carl Hartmann, CEO and co-founder of Temando, said the results confirm that choice at the checkout is a necessity, not a feature.

“The gap between consumer expectation and retailer capability is growing. The future belongs to retailers who capitalise on this opportunity and use shipping and fulfilment as a retail weapon. Only half of retailers are offering the full range of services customers expect, which opens up a potentially huge competitive advantage,” Mr Hartmann said.

Additional survey findings include:
· Delivery by drones – Nearly one third (31 percent) of all retailers reported a willingness to use drones to deliver their packages, while just under half (44 percent) of consumers are willing to accept a drone delivery
· Delivery speed – Australian retailers are well placed to enable hyper-local delivery as the majority (66 pe cent) can ship an online order within four hours, but if retailers are not shipping from the closest location or store to the customer they’re not going to achieve the desired delivery time
· Lack of total automation – A relatively small number of retailers reported having a totally automated process for booking couriers (21 percent), 34 per cent of micro-retailers have no automated backend tracking process, 31 per cent of all retailers are still manually booking carriers and half of enterprise retailers (50 per cent) are still manually processing returns

“Convenience for the customer is key and businesses have the opportunity to re-imagine their supply chain and create meaningful, cost effective customer experiences.

“Agile fulfilment remains a crucial challenge to overcome but with smart investments in technology, especially the automation of multiple shipping options, to help personalise the customer experience, many small and enterprise retailers can transform their business,” Mr Hartmann said.

The full report can be downloaded here.

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ABOUT THE AUTHOR

Australian Retailers Association

Founded in 1903, the Australian Retailers Association (ARA) is Australia’s largest retail association representing Australia’s $310 billion sector, which employs more than 1.2 million people. As the retail industry’s peak representative body, the ARA works to ensure retail success by informing, protecting, advocating, educating and saving money for its 7,500 independent and national retail members throughout Australia. For more information, visit www.retail.org.au or call 1300 368 041.

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