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Vanishing Billions: How Inadequate Delivery Options Cost E-commerce Giants Big Bucks

Analyzing the £31.5bn Annual Loss in Online Sales due to Delivery-Related Issues

2 mins read

Key Takeaways

  • While 83% of retailers believe they provide ample delivery options, only 48% of consumers concur.
  • Millennials show high willingness to pay for premium delivery services, with 95% open to the idea.
  • Retailers attribute high operational costs (61%) and challenges with managing multiple carriers (41%) as key barriers to delivery service improvements.

Introduction

A new whitepaper, “Battling Basket Abandonment”, released on June 8, paints a grim picture for the e-commerce industry. The report reveals a staggering £31.5bn annual loss in sales at the checkout stage due to delivery-related issues. This brings to light a critical need for online retailers to rethink and improve their delivery options.

The Great Discrepancy

The report, a joint endeavor by GFS, a delivery management company, and Retail Economics, an independent retail consultancy, presents a dichotomy between retailers’ confidence in their delivery services and the consumers’ expectations.

More than 80% of ecommerce and supply chain professionals surveyed expressed confidence that their delivery services met consumer needs. Yet, only 48% of consumers felt that retailers offered a wide range of delivery options, though 83% of retailers believed they did. It appears that while shoppers expect at least five delivery options at checkout, only a third of retailers offer this, with the average being three options.

The Breakdown of the ‘Black Hole’

The £31.5bn financial ‘black hole’ can be divided into distinct categories: £7.2bn is ascribed to the lack of delivery options, £4.9bn to cost expectations, £4.5bn to delivery speed, and £4.2bn to the returns policy.

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Retailers also expressed confidence in various other aspects: delivery and returns policy (85%), reasonable and transparent delivery costs (84%), easy and frictionless checkout experience (88%), and customer satisfaction with the delivery speed (88%). However, consumer feedback for these factors was considerably lower, ranging from 54% to 64%.

Premium Delivery: A Surprising Upside

Despite the loss figures, the report dispels some consumer myths. An encouraging insight for ecommerce and delivery providers is that online shoppers are ready to pay for premium delivery and return services.

A whopping 95% of millennials are open to paying for a premium delivery service, with three out of four consumers willing to pay extra for same-day, next-day, or nominated delivery services. The trend also extends to return services. However, there’s a difference in attitudes amongst age groups, with 76% of under-45s ready to pay for hassle-free return options, compared to just 34% of over-45s.

The Two Major Roadblocks

Despite recognizing the need for improvements, retailers identified high operational costs (61%) and challenges with managing multiple carriers (41%) as the primary barriers to enhancing delivery options.

Strategies for Redemption

The whitepaper proposes five strategies for ecommerce businesses to enhance customer experience and curtail losses at checkout: expanding delivery options, offering free or reduced-cost shipping, and minimizing delivery times are among the recommendations.

Final Thoughts

The study provides a stark reminder and quantifiable evidence of the cost of inadequate delivery options in the e-commerce industry. As Bobbie Ttooulis, GFS Executive Board Member, says, “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.”

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