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Parcel and Postal Technology International
Delivery

Delivery issues cost UK businesses £31.5bn in lost sales, Global Freight Solutions finds

mmBy Elizabeth BakerJune 8, 20233 Mins Read
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UK businesses are losing £31.5bn (US$39.2bn) in sales annually at the checkout due to delivery-related issues – according to a report produced by delivery management company Global Freight Solutions (GFS) and retail consultant Retail Economics.

The Battling Basket Abandonment report broke down the £31.5bn (US$39.2bn) to reveal that £7.2bn (US$8.98bn) is attributed to the lack of delivery options, £4.9bn (US$6.1bn) is down to cost expectations, £4.5bn (US$6.1bn) is down to delivery speed and £4.2bn (US$5.2bn) because of the returns policy.

According to GFS, the research shows retailers to be ‘out of touch’ when it comes to meeting consumer demands for delivery options, with 83% of retailers believing they offer a wide range of delivery options yet just 48% of consumers agreeing with this.

The report found that retailers expressed confidence when it came to consumer confidence in delivery and returns policy (85%), providing reasonable and transparent delivery costs (84%), offering an easy and frictionless checkout experience (88%), and that customers are satisfied with the speed of delivery (88%). However, this confidence did not stretch to consumers as their feedback ranged from just 54% to 64%.

The report also asserts that more could be done to enhance the customer experience including expanding delivery options (45%), offering free shipping or reducing costs (44%) and reducing delivery times (42%). However, it also points to the two main barriers to being able to improve delivery options – high operational costs (61%) and working with multiple carriers (41%). A further challenge for the industry is that consumers expect at least five delivery options when getting to the checkout, but research shows only a third of retailers offer this with the average being less than three delivery options.

On a more positive note for retailers and logistics providers, the report does debunk some ‘consumer myths’, as the survey revealed online shoppers would be prepared to pay for premium delivery and return services. Three in four consumers are willing to pay extra for same-day, next-day or nominated delivery, while a staggering 95% of millennials are open to paying for premium delivery service. This is replicated with returns, however, there is a discrepancy in attitudes among the age groups as 76% of those under 45 would pay for hassle-free return options. By contrast, only 34% of those over 45 said they would pay.

Serial online shoppers, those who purchase goods at least once a fortnight, are also willing to pay for ‘hassle-free’ returns more than those who buy once a month or less.

To support the industry, the whitepaper also recommends five strategies e-commerce businesses could adopt to improve the customer experience and reduce sales lost at checkout.

Bobbie Ttooulis, executive board member at GFS, said, “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. In our experience, retailers are well aware of this but struggle to overcome the internal costs and complexities of working with multiple carriers. That’s why we’re seeing a clear shift away from traditional approaches, with retailers seeking multi-carrier partners to resolve this.”

Read more key delivery updates from the parcel and postal technology industry, here.

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