Analysis

Flexible delivery is the way to a Millennial’s heart but not to their wallet

Delivery convenience matters most to shoppers aged between 18 and 34, according to research from eBay Enterprise and Imperial College Business School. The study found that 65% of UK shoppers in that age bracket are more likely to buy from an online retailer that offered convenient delivery over one that did not, with 74% saying convenience is the single most important factor when choosing between retailers.

Despite this apparent appetite for value-added delivery, the Millennials in the study group were less inclined to want to pay for it; 47% said they were unwilling to pay more for flexible delivery.

The study also found that failing to provide an adequate choice of delivery could even lose retailers business, with nearly a quarter (23%) of young shoppers claiming they would not buy from a retailer that does not offer flexible delivery. Those that do tend to attract higher-value orders, the report claims, with nearly half (47%) of survey respondents saying they recently spent more with an online retailer because of flexible delivery.

This is an issue we have covered previously on eDelivery, and is likely to come up repeatedly. Back in September we published a series of viewpoints from readers on the subject of avoiding mistakes that damage reputations, and the issue of flexibility featured there. It is also one of the keys to unlocking a potentially huge cross-border market in Europe that is currently under-exploited due to issues concerning delivery.

Enda Breslin, eBay Enterprise

Enda Breslin, eBay Enterprise

Commenting on the report’s findings, Enda Breslin, European head of business development at eBay Enterprise said: “Our research with MSc Strategic Marketing students from Imperial College Business School shows that retailers that do not offer a choice of delivery options could be leaving money on the table. Millennials’ spending power is increasing every day – by 2025 they will make up 75% of the global workforce* – so retailers should aim to meet their needs now to grow their market share in the medium term.”

The report also looked at different types of delivery, finding that next-day delivery is the most frequently used ‘flexible’ option by young shoppers in the UK (79%), followed by click-and-collect (38%). Despite a number of retailers starting to invest in collection lockers, they still have very little recognition in the UK at only 5% usage by this age group.

Dr Omar Merlo, Programme Director, MSc Strategic Marketing, Imperial College Business School said: “This consulting project with eBay Enterprise enables our students to apply the marketing tools and concepts learned on their degree to a real client brief. The MSc Strategic Marketing is an innovative programme that equips students with the most valuable skills needed in marketing today, in areas such as strategic market management, consumer behaviour, branding, social media and digital marketing.”

Striking the right balance has always been a key part of successful retail outcomes, and this is becoming increasingly apparent in the delivery space. Simply throwing options at customers regardless of cost is clearly not realistic. But with developments such as Fast Track from Argos offering same-day delivery for just £3.95, and Amazon rolling out Prime Now across the UK – offering one-hour and two-hour delivery to Prime customers in a growing list of cities – neither is doing nothing.

Retailers may need to find ways to incentivise shoppers to pick delivery methods that are the lowest-cost option to fulfil, while still presenting flexibility and choice. A key part of that will be managing capacity and avoiding self-imposed constraint issues – not allowing same-day or next-day delivery to become a drain on resources while leaving idle capacity elsewhere in the network, or ensuring that charging structures will reflect not just the cost but also the value within delivery.

Breslin advised that retailers need to think carefully about how to offer flexible delivery without eroding margins: “There’s no doubt that flexible delivery options are key to attracting the continued spend of millennials, but with few prepared to pay extra for it, retailers need to make sure that any flexible options that they offer are as cost efficient as possible. Consolidating with a small number of supply chain partners; investing in order management software; and using in-store fulfilment methods like ship-from-store to improve speed and efficiency are all ways retailers can keep costs down whilst still competing on flexibility.”

The eDelivery view:

Why does any of this matter, you may be wondering. To a lot of people the so-called Millennial generation has been written off as needy, demanding and even lazy. But the thing is, by 2050 this age group will represent more than 50% of the working population. As things stand this is a generation that wants all of the bells and all of the whistles without necessarily being willing to cough up for them.

The onus, therefore, has to be on the delivery sector to make sure there is a clear and tangible value ever-present in the delivery chain. If customers can’t see the value of something you can’t blame them for not wanting to pay for it. There is a widely held view in ecommerce circles that an app-driven, mobile-first strategy will help you stand out when trying to win over Millennial shoppers. That may be so, but as more research seems to indicate a need for flexible delivery – convenient might be a better word in the context of this generation – there is going to be increased pressure to invest in new systems or partnerships. Good luck with that if you have to include “and of course, no one wants to pay for it” in your business plan.

If the shoppers you want won’t pay for the service you are offering, some thing will have to change. It might be easier on you if you decide it’s your service that changes rather than hoping customers will.