The new age of the Customer
Providing consumers with multiple options for delivery is a growing standard embraced by leading global retailers, but few Australian retailers are following suit.
When world-class retailer Amazon, this week partners with Doddle, a niche startup that facilitates product collection and delivery at railway stations across the UK, we might now safely assume that we’re not in Kansas anymore. A big focus for the future of retailing will be giving consumers ample choices for delivery.
In a mobile technology world, consumers’ power expectations are growing – we want more and we want it for less. As we make ourselves busier, our spare time is decreases. Time is money. For customers, it’s less common that visiting a brick and mortar store is not preceded by online research on a mobile device.
The challenge is clear: How can I get my hands on a product both when I want and how I want? If retailers can instill more confidence around delivery for their customers, we can anticipate that they’ll reap the benefits in their bottom line.
Free shipping + Returns
Even a small shipping fee can be the difference between a conversion and an abandoned cart. When I’m standing in a store and I find those boots at 20% off online, you bet I’ll try my size on and buy it later online. But wait! The dreaded delivery fee. It reduces my discount. I abandon cart.
Most Australian retailers still charge fees for both delivery and returns. Some reduce this fee at a certain threshold and others allow customers to pay additional for faster shipping. But if the international market is any indication, this won’t be for long. The fastest possible free shipping and returns is rapidly becoming the competitive standard amongst omni-channel retailers such as Shopbop and Zappos. That’s free, 24/7, no asterisk.
How retailers get there, whether it’s increasing the price point to create an illusion of free, or justifying it on a larger profit margin, they will find a way. As leading overseas retailers offer fast and free shipping as far as Australia, domestic retailers find themselves searching for ways to stay competitive online. Brands such as Bonds and Lululemon already offer free shipping, regardless of order size, and many are sure to follow suit.
Unsurprisingly, pure-play retailers appear to be leading the charge in value for delivery, with most offering at the very least, free online returns. The Iconic charges a small fee for shipping below $50, but they offer free returns regardless, increasing consumer confidence and conversion. Pure-plays benefit from their own business models, which inherently necessitate a complex infrastructure that can support delivery options. For those that stock a multi-brand inventory, small value-adds like convenience serve to incentivise customers to shop online rather than in-store.
Free shipping aside, it seems consumers are willing to accept shipping costs where the cost:benefit ratio is favourable. For example, high-end pure play, Net-A-Porter, offers 2-4 day delivery for just $10. The Iconic famously pushes the ultimate convenience card: a mere $10 gets the consumer 3 hour delivery within the metro regions of Melbourne or Sydney.
Click + Collect
Where omni-channel retailers do have an edge is in the rise of “click and collect”, “ship to store”, “bricks and clicks”. Whatever we call it, a fast growing number of retailers are bypassing entirely the need for shipping by allowing consumers to pick up in-store. For Myer, click and collect accounts for 15% of its online sales and is eventually expected to hit 50%. On a resources level, click-and-collect lessens the load on online distribution warehouses and reduces shipping costs for everyone. Offering consumers this option not only affords a better brand experience, but it draws them in-store to up the chances of further purchase.
When it comes to in-store collection, little touches of convenience are key. Dan Murphy’s customers can select which bottles they want chilled at the time of collection, all within the checkout. In the US, the undisputed leaders of customer convenience, collections at stores like Container Store, Sears and Kmart are as easy as McDonalds. At select popular locations, staff will bring customers their items directly to the car. Most retailers will even offer the option for a friend or family member to “pick up in my absence”.
But really, what’s more convenient than not even paying? Dick Smith is so confident in its fulfillment, that it allows consumers to merely reserve a product to both purchase and collect in-store. The electronics retailer, which jumped on click and collect in late 2010, alerts customers via text when their item is ready for purchase and collection in-store.
Shop and Deliver
As convenience becomes a gold standard in customers’ expectations, what is less common but sure to rise in popularity is the reverse of click and collect – sometimes named throughout the industry as “shop and deliver.” This form of shopping has actually been around for decades – take wedding registries as an example – and retailers are identifying opportunities to translate it for their own businesses.
In the US, stores particularly offer this option in busy cities where customers lack cars. While Trader Joe’s lacks an online store, it makes up for it in home delivery. City customers can shop the aisles and leave the store unladen by heavy bags, only to have their order arrive at their doorstep hours later. For ten years, The Container Store has offered a “scan and deliver” service. Customers can pick up a “Go Shop” scanner, allowing them to scan items off the shelves, pay and have them delivered to their door by the end of the day. Shopaholics, beware.
It’s plain to see how the growth of eCommerce will further support this fulfilment option in brick and mortar stores over the coming years. In fashion retail, where an item or size is out of stock in-store, staff could locate online, attribute the sale to their store and offer to have it shipped free to the customer’s home. Happy customer, happy retailer.
Delivering the Goods
If omni-channel retailing is all about giving the consumer as much power and choice as possible, delivery options are soon to become a benchmark rather than a value-add. But of course, brands can’t change the way they deliver overnight. It requires ongoing and early investments in the business’ infrastructure.
Many Australian retailers tend to fall behind the global market in retail innovation. It’s the brands who are watching our overseas competitors and dedicating resources to this type of infrastructure now, who will lead the pack in providing frictionless transactions.