Parcel operators need to be wary of double-digit growth figures for online retail sales, whichfail to accurately reflect the opportunities for physical deliveries, according to e-retail trade
association IMRG.Andrew Starkey, delivery director for the Interactive Media in Retail Group, said UK onlinesales continued to expand strongly, with value growth up 16% year-on-year in September, but it wasimportant not to confuse value with physical volume.
“For example, there is order consolidation – with several orders in one parcel – and travel andticket transactions don’t produce packets and parcels,” he warned this week’s ‘The Future of UKPostal Services’ conference. “The biggest growth area is with multichannel retailers, and some ofthem offer ‘click-and-collect’ services, where the customer collects the item.
“So, don’t get too excited when you see growth figures of 20%, if you are making your businesscases. I would say a more realistic figure for parcel and package growth is more like 5% or 6%.”</p>
But Starkey said delivery was becoming an increasingly important part of online retail, and insome cases made the difference between sale and no sale.
“Is delivery a differentiator? Absolutely, categorically, certainly it is – and the moreforward-thinking retailers are starting to think carefully about that,” he said. “The bottom-linecost of failed on-time delivery is £800 million to £1 billion a year, and the most recent reportfrom Which, this month, based on 11,000 consumers and 78 retailers, indicated that delivery was thenumber one concern. For example, among clothes and footwear retailers, good delivery is moreimportant than lower prices.”
The growing importance of delivery has led to IMRG developing a ‘gold standard’ to identifyhigh-quality suppliers, and build confidence and loyalty among customers. It focuses on four stagesof delivery: browsing – ensuring buyers know what delivery service they will get; check-out –ensuring there are options for every delivery scenario and that there are no surprises; physicaldelivery – provision of information at each stage, in order to achieve first-time delivery; andhassle-free returns.
“We are starting to see the first retailers now passing the standard and displaying their statusas a gold supplier,” said Starkey.
Starkey said online now represented 17% of UK sales, twice as high as in Germany – the secondmost advanced market in Europe in terms of online retail.
“We also predict that by 2017 or 2020, the UK will be at 50% of sales online, with the remainderbeing influenced by online,” he added. “We will then be starting to achieve maturity, ande-retailers will be looking at ‘cross-border’ opportunities.”
Starkey said research indicated that there was an appetite across the EU to expand online sales.For example 33% of EU citizens were prepared to buy ‘cross-border’, if they think they can getbetter prices, better quality, or better service; in each category researched, at least one productwas at least 10% cheaper if bought ‘cross-border’; and, for markets other than the UK and Germany,30% of products could only be found ‘cross-border’.
“So there is definitely an appetite, and therefore an opportunity, for cross-border deliveries,but the problem is that at the moment, companies are tending to get it wrong – for example offeringdisproportionate delivery charges and limited service choice, and a lack of information on dutiesand charges. But imagine what you can do if you get it right – you can see from the example of theUK how big the potential opportunity is.”
