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UK retailers are concerned about shipping costs for e-commerce

Same Day Shipping
Same Day Shipping

BII

This story was delivered to BI Intelligence "E-Commerce Briefing" subscribers. To learn more and subscribe, please click here.

Retailers in the UK are hesitating to open up e-commerce shops over concerns related to handling shipping costs — particularly for returns, according to a report from Barclaycard cited by InternetRetailing.

In fact, 22% of retailers actively choose not to sell online because of the delivery and returns process, despite the rise in e-commerce sales in the UK.

Specifically, these fears are being compounded by "serial returners" — consumers who purchase more than they actually need online with the intention of returning what they do not like or what does not fit:

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  • 19% of UK consumers order multiple versions of a product online, and then decide which items they want to keep and which they want to return.

  • 38% of these "serial returners" would be less likely to keep up the practice if retailers standardized clothing and shoe sizes, which vary across retailers.

  • Meanwhile, 57% of UK online retailers say that returns have a negative impact on the day-to-day operations of business and they have to find other ways to recover the costs of return shipping.

The e-commerce market in the UK totaled $166 billion in 2015, accounting for 27% of all retail sales, according to a separate article from InternetRetailing. That sales number is expected to grow 11% year-over-year (YoY) in 2016, meaning that businesses lagging in opening online stores will likely be negatively impacted.

One way to ease the fears of return shipping is to sell online and offer click-and-collect services, which are already widely popular in the UK. Seventy-two percent of UK shoppers are already using click-and-collect at a variety of retailers, according to a report from Cybertill cited by Forbes. This fulfillment option requires shoppers to pick up their purchased items at a physical retail location, thereby removing the need for covering return shipping on either the part of the business or the consumer.

These concerns arise at a time when consumers are becoming less willing to wait for their goods. Online shoppers are increasingly expecting their goods to arrive within one or two days, or even on the same day. And retailers who do not fulfill these demands could lose those customers.

Cooper Smith, senior research analyst for BI Intelligence, Business Insider's premium research service, has compiled a detailed report on same-day delivery that takes an exhaustive look at this market and sizes the percentage of people who will purchase goods to be delivered the same day.

The report uncovers the demographics of same-day delivery customers, the markets where these services have the best chance of taking off, and assesses how each of the many new same-day delivery entrants compares to the others. It also looks at the technology that really could make getting a package delivered to your door hours after you order it a common phenomenon.

Here are some of the key points from the report:

  • USE: BI Intelligence estimates that 2% of shoppers living in cities where same-day delivery is offered have used such services. In dollar terms, we estimate that roughly $100 million worth of merchandise will be delivered via same-day fulfillment this year in 20 US cities.

  • CONSUMER EXPECTATIONS: Consumer interest in same-day delivery is already fairly high. Four in 10 US shoppers said they would use same-day delivery if they didn't have time to go to the store, and one in four shoppers said they would considering abandoning an online shopping cart if same-day delivery was not an option.

  • DEMOGRAPHICS: The most common same-day delivery shopper fits a very specific profile — millennial, highly likely to be male, urban-dwelling, and young. The products people want delivered same-day are also fairly niche.

  • BARRIERS: Despite all the competition in the same-day delivery market, it still won't be easy to get people to pay for these services. 92% of consumers say they are willing to wait four days or longer for their e-commerce packages to arrive.

In full, the report:

  • Estimates the market for same-day delivery from 2013-2018, including the percentage of people who will use these services and the total sales volume

  • Looks at the most likely same-day delivery customers and the cities where these individuals are concentrated

  • Unpacks the kinds of goods people are likeliest to order for same-day delivery

  • Lays out how the different same-day delivery services stack up against each other in terms of prices, location, and selection

  • Considers the barriers that could keep same-day delivery from ever becoming a mainstream preference among consumers

  • Identifies the technology that could make same-day delivery cost-effective and commonplace

To get your copy of this invaluable guide, choose one of these options:

  1. Subscribe to an ALL-ACCESS Membership with BI Intelligence and gain immediate access to this report AND over 100 other expertly researched deep-dive reports, subscriptions to all of our daily newsletters, and much more. >> START A MEMBERSHIP

  2. Purchase the report and download it immediately from our research store. >> BUY THE REPORT

The choice is yours. But however you decide to acquire this report, you’ve given yourself a powerful advantage in your understanding of the shift toward same-day delivery.

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