Analysis

Enhanced logistics: ‘Top’ is redefined

Researching the next IRUK Top500 report has revealed significant enhancements in logistics practices over the graph1past year. Martin Shaw, InternetRetailing’s Senior Researcher, shares some of the findings.

In the course of re-making our index it has become increasingly clear that what qualifies a retailer as a top performer can change significantly in a year. Isolating just a few of the IRUK index’s delivery metrics below, we show how the largest 100 subset of the Top500 have enhanced their logistics practices in the last 12 months. Amongst these retailers there has been a more than 100% increase in offering Sunday and customer-nominated time delivery options.

There may be a demographic element at play here. A recent survey of 2,000 UK consumers, by Red Dot Research on behalf of Shutl, found that 60% of 18-24 year olds have higher expectations of delivery performance compared to two years ago. That’s almost twice the fraction of 45-54 year olds, 33% of whom are more demanding than they were two years ago.

The same research reports that 90% of 18-24 year olds would shop online more regularly “if they were in control of more convenient delivery options”. Ecommerce shoppers are already disproportionately young and adding more delivery convenience may be part of the strategy to gain the loyalty of the future’s big spenders.

DELIVERRYCHARGES

More IRUK 500 retailers have dropped the fee they charge customers for returns (19%) than raised it (8%) since the last measurement in late 2014. Retailers could be adapting to consumers’ approach to return policies for online sales. A UPS study released in March found that a majority (54%) of British consumers check returns policies before purchasing online and that return policies are a factor influencing their purchase decisions.
The change in delivery is in the other direction, with customers forced to pay more for standard delivery options than they were 12 months ago. Amazon made a splash in May when it doubled the minimum spend for free delivery to £20 on most orders. This move is partly explained by the pureplay giant’s promotion of its Prime membership, but our research reveals it also falls within a broader trend. Deliveries are occurring faster, to more locations and with greater flexibility than ever before, and consumers are footing at least some of the bill.

Increased logistics capacity is a key battleground for consumer loyalty, especially among younger consumers. The big increase in retailers offering Sunday and nominated-time delivery is emblematic of the way in which innovative companies seek to match a niche demand. In turn they are likely to change the expectations of a majority of consumers and we shouldn’t be surprised to see mass adoption of Sunday delivery, for example, in the coming years, but that’s speculation. The Top500 indices record the facts and you can look forward to a rigorous analysis of ecommerce and multichannel retail.

RETURNSCOST

The IRUK 500 2016 will be published in January and the European version, the IREU 500, will follow in March. To view the interactive charts of the Operations and Logistics performance dimension, go to
etail.li/iruk-logistics


ADDITIONAL INFORMATION:

Accommodating Europe
The past month has brought the migration of hundreds of thousands of Syrians to the forefront of European policy making, and governments’ announcements have made it clear that many of these new arrivals are set to join our mix of cultures, languages and (pardon my segue) retail preferences.
The ‘common market’ of the EEA is already host to some of the most demanding and mature ecommerce consumers on the planet, with retailers expected to localise – or lose out – in over 20 languages (to which we may soon add Levantine Arabic, Kurdish and Turkic dialects).
Linguistic customisation and other considerations, including the accommodation of local payment and delivery preferences, feature prominently in the upcoming European retail performance index. Performance in France means prioritising click and collect fulfilment, the French customer’s choice, while performance in Germany means accepting German Direct Debit at the checkout. Performance in Estonia means merely trading in the local language. The most flexible retailers will be named the 2016 ‘Elite’ when the index is published in March. In the meantime, despite not having completed the full report, we can reveal the preliminary analysis shows that:
■ Retailers in the European Top500 support just two (2) languages on average, with outliers supporting up to 22 languages;
■ The average retailer has localised landing pages for just 2 or 3 EEA countries, but some offer as many as 28 countries (out of the EEA total of 32 member states);
■ English is the most commonly supported language, followed by German, French and Dutch.

The inaugural IREU 500 will be published in March 2016. The report analyses retailers across six dimensions of performance.