state of shipping in commerce 2016 - imrg...contemporary customer journey. traditional,...
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STATE OF SHIPPING IN COMMERCE 2016
Participant Profile
ConsumerRetailer
INTRODUCTION
The world has changed. Accessibility to the internet and the insatiable mobility of commerce have inspired a new generation of shoppers. A generation that is not so easily segmented into the traditional psychographic profiles of research past but a generation united by their collective desire to experience the world on their own terms. This desire for personalisation and connected experiences have left many retailers to re-imagine their business in the context of the contemporary customer journey. Traditional, back-of-house operations, such as shipping and fulfilment, have come into the spotlight - not as traditional cost centers but as an opportunity for genuine differentiation in a competitive world.
The customer journey is ripe for disruption and increasingly linked to the product’s journey through a retailer’s fulfilment process. As a technology company, operating at the intersection of commerce and logistics - our unique position afforded us the opportunity to dive a little deeper on the industry and led directly to the research presented in this report.
We commissioned Research Now to conduct a global survey into the expectations of today’s consumers and the capability to meet those expectations by today’s retailers. The Research surveyed 4000 Consumers and 800 Retailers in Australia, France, United Kingdom and the United States (1001 Consumers, 208 Retailers in the UK). The Research explores consumers expectations - what they want now, what they want in
the future and importantly what they are willing to pay for in the UK Market. The findings are then mapped to UK retailer’s ability to connect with carriers, automate the shipping and fulfilment process, operate in the omnichannel and more.
It is our intention to build on this study every year and keep you informed as to the collective challenges we face and the opportunities that present themselves. The results are fascinating, the insights thought provoking, designed to inform retail strategy and shape the future of commerce.
We hope you enjoy the findings,
Carl Hartmann Co-Founder & CEO Temando
Introduction Shipping & Fulfilment Consumer Expectations Returns Tracking Omnichannel Summary
PART 1: PARTICIPANT PROFILE
Retailer Type
RETAILER Digital disruption has changed everything and nothing at the same time. Today’s retail environment is more complex than it has ever been, yet the same core principles apply: Fulfilment, Merchandising, Payments. All retailers are at
ENTERPRISEMIDSMALLMICRO
Micro retailers send between 5 - 20 deliveries per week.
Enterprise can send 20,000 - 100,000!
Retailer Category Surveyed
23%
21%
7%
22%
10%19%
6%
HEALTH & PERSONAL CARE
FOOD & BEVERAGES (EXCL. GROCERY)
SPORTING GOODS & HOBBIES
CLOTHING & ACCESSORIES
FURNITURE & HOME
ELECTRONICS & APPLIANCES
40% of Furniture and Homewares retailers generate 21-50% of their revenue online
different stages of their evolution and to get a clear snapshot of the industry we surveyed a broad selection of retailers and categories - excluding services and grocery.
3
Participant Profile
ConsumerIntroduction Shipping & Fulfilment Consumer Expectations Returns Tracking Omnichannel Summary
Retailer
BOOKS & STATIONERY
% of Online Sales
HEALTH & PERSONAL CARE
20%
20%
20%
19%
19%
19% 20%
20%
17%
17%
17%
17%
16%0%
6% TO 10%
1% TO 5%
24%
25%
25%
26%
25%
22%
40%
42%
7%
7%
7%
7%
11% TO 20%
8%
8% 10%
10%
10%
10%
8%
8%
MORE THAN 50%
2%
7%
8%6%
13%
13% 13%
13%
13%
100%
BOOKS & STATIONERY
FURNITURE & HOME
ELECTRONICS & APPLIANCES
CLOTHING & ACCESSORIES
FOOD & BEVERAGES (EXCL. GROCERY) TOTAL
SPORTING GOODS & HOBBIES
26%
33%
27%
28% 30%21% TO 50%
25% of retailers surveyed generated 21-50% of total revenue through online sales
4
Participant Profile
ConsumerIntroduction Shipping & Fulfilment Consumer Expectations Returns Tracking Omnichannel Summary
Retailer
35% of UK Retailers sell on eBay and 40% sell on Amazon
44% of Pure Play Retailers sell on eBay and 50% sell on Amazon
5 TO 20 PER WEEK
21 TO 100 PER WEEK
1,001 TO 5,000 PER WEEK
101 TO 1,000 PER WEEK
5,001 TO 20,000 PER WEEK
20,001 TO 100,000 PER WEEK
MORE THAN 100,000 PER WEEK
Number of ShipmentsMade Per Week
23%
27%
12%
22%
9%
5%
2%
5
Participant Profile
ConsumerIntroduction Shipping & Fulfilment Consumer Expectations Returns Tracking Omnichannel Summary
Retailer
CONSUMER ProfileEveryone is shopping online these days from the time-poor young family to the retired couple living their dream. All have unique habits, some spend more than others and most of them know how to abandon a shopping cart.
OLDER SINGLE 2%
SINGLE, LIVING ALONE 13%
YOUNG FAMILY 26%
OLDER FAMILY 9%
MIDDLE AGED FAMILY 7%
RETIRED COUPLE9%
LIVING WITH PARENTS 11%
COUPLE, NO CHILDREN 21%
I can shop when I wantThere is a better selection online
It’s cheaper onlineI can get free shippingAccess items not available where I live
What are the main reasons for shopping online?
(IN ORDER OF PREFERENCE)
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Participant Profile
ConsumerIntroduction Shipping & Fulfilment Consumer Expectations Returns Tracking Omnichannel Summary
Retailer
What Do Consumers Regularly Purchase Online?
Clothing and accessories
Electronics and appliances
Food and beverages (other than grocery)
Jewellery
Liquor
71%53%
42%41%
30%29%28%
25%25%24%23%
19%18%
8%
What Are Consumers Spending Online?
3 in 5 consumers purchase online more than twice a month
£25 to £100 per month
£25 to £100 per month
£101 to £500 per month
£101 to £500 per month
£501 to £1,000 per month
£501 to £1,000 per month
70%
76%
27%
22%
2%
2%
31%42%
of 16-24 year olds spend £101-£500 per month
of consumers spend spend between 2 - 5 hours per week browsing internet shopping sites
7
Participant Profile
ConsumerIntroduction Shipping & Fulfilment Consumer Expectations Returns Tracking Omnichannel Summary
Retailer
Books and stationery
Music / DVDs / Movies (physical)
Furniture and home
Health and personal care
Toys
White goods
Computing
Sports goods and hobbies
Hardware and garden
Jumping Ship! Why UK Consumers Abandon Shopping Carts
THE COST OF SHIPPING WAS TOO HIGH
THE SHIPPING COSTS WERE COMMUNICATED TOO LATE IN THE PURCHASE
I WAS CONDUCTING PRODUCT/PRICE RESEARCH
FREE SHIPPING WASN’T OFFERED
I DID NOT QUALIFY FOR FREE SHIPPING
THE SHIPPING WAS GOING TO BE TOO SLOW OR INCONVENIENT
I WAS ONLY BROWSING
THE PROCESS TOOK TOO LONG
60%
42%
29%
37%
30%
38%
27%
27%
73% 49%of older families abandon their purchases when the cost of shipping is too high
of over 55’s abandon when the shipping costs were communicated too late in the purchase
8
Participant Profile
ConsumerIntroduction Shipping & Fulfilment Consumer Expectations Returns Tracking Omnichannel Summary
Retailer
PART 2: SHIPPING & FULFILMENT
Has The Cost of Shipping Changed Over Time?
The rise of eCommerce has shaken Retail to its core. Enterprise Retailers with the benefit of foresight and resources are leading the way in terms of the efficiency of their operations.
Old Industry, New Opportunity
53%60%
of retailers believe shipping costs have increased over time, the majority seeing a 5 - 10% increase in costs
of Enterprise Retailers have seen no change in their shipping & logistics costs over the past 12 months
9
Participant Profile
ConsumerIntroduction Shipping & Fulfilment Consumer Expectations Returns Tracking Omnichannel Summary
Retailer
Who Covers the Cost of Shipping
Smaller retailers, dealing with tighter margins and less volume, are passing on all or part of the cost of shipping to their customers. Not surprisingly, the cost of carrier rates is a major concern for these retailers.
16%82%
of small retailers are absorbing the costs of shipping, compared with 47% of Enterprise
ONLY
of Pure Play Retailers are passing on all or part of the shipping costs to their customer
MICROThe customer is not charged for shipping
The customer is charged part of the shipping costs
The customer pays the full shipping cost
The customer pays the full shipping cost plus an additional margin on top of the cost of shipping
The customer pays the full shipping cost plus an additional margin on top of the cost of shipping
The customer pays the full shipping cost plus an additional margin on top of the cost of shipping
The customer pays the full shipping cost plus an additional margin on top of the cost of shipping
21%46%
29%4%
5%
2%
0%
MIDThe customer is not charged for shipping
The customer is charged part of the shipping costs
The customer pays the full shipping cost
31%47%
19%
ENTERPRISEThe customer is not charged for shipping
The customer is charged part of the shipping costs
The customer pays the full shipping cost
47%20%
33%
SMALLThe customer is not charged for shipping
The customer is charged part of the shipping costs
The customer pays the full shipping cost
16%52%
27%
10
Participant Profile
ConsumerIntroduction Shipping & Fulfilment Consumer Expectations Returns Tracking Omnichannel Summary
Retailer
Sleepless Nights: What’s Keeping Retailers Awake
MICRO
SMALL
MID
ENTERPRISE
30% of UK Retailers are concerned with the high courier rates
Main Concerns Retailers Have In Shipping & LogisticsTop concerns per category:
The high cost of couriers are a consistent concern across all retailers, no matter the size. With most retailers passing on some or all of the courier costs, and 60% of consumers abandoning their purchases due to high shipping costs, their concerns are valid.
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Participant Profile
ConsumerIntroduction Shipping & Fulfilment Consumer Expectations Returns Tracking Omnichannel Summary
Retailer
1. COURIER RATES TOO HIGH 2. LACK OF CONSISTENCY BETWEEN COURIERS
1. COURIER RATES TOO HIGH 2. LACK OF CONSISTENCY BETWEEN COURIERS
1. COURIER RATES TOO HIGH 1. MEETING CUSTOMER EXPECTATIONS (EQUAL 1ST)
1. LACK OF CONSISTENCY BETWEEN COURIERS 2. MEETING CUSTOMER EXPECTATIONS
The agility of commerce
78%of consumers want same day shipping - efficiency is key to an exceptional customer experience
Almost 4.5 in 5 small retailers get orders out the door in under 12 hours
Half of Micro Retailers are able to ship and online order in under an hour compared to just 34% of enterprise retailers.
28% of retailers are still manually booking couriers
Only 35% of mid-level retailers have a totally automated carrier booking process
12
Participant Profile
ConsumerIntroduction Shipping & Fulfilment Consumer Expectations Returns Tracking Omnichannel Summary
Retailer
86%of consumers have used or would like to use TIMESLOT DELIVERIES
PART 3: CONSUMER EXPECTATIONS
The gap between consumer expectation and retailer capability is growing. The future belongs to retailers who capitalise on this opportunity and turn shipping and fulfilment into a retail weapon.
59%HYPER LOCAL
78%SAME DAY SHIPPING
82%
18%
96%
88%
84%
STANDARD SHIPPING
COLLECT FROM STORE
COLLECT FROM LOCKER/ OTHER COLLECTION POINT
SPECIFIED TIMESLOT FOR DELIVERY
GUARANTEED WEEKEND OR AFTERHOURS SHIPPING
EXPRESS SHIPPING
WHAT CONSUMERS
ARE PREPARED TO PAY A PREMIUM
FOR
WHAT RETAILERS ARE
OFFERING
WHAT CONSUMERS
WANT
86%
76%
71%
47%
47%
53%
55%
30%
38%
40%
45%
34%
64% 26%
28%
25%
19%
The People Have Spoken
13
Participant Profile
ConsumerIntroduction Shipping & Fulfilment Consumer Expectations Returns Tracking Omnichannel Summary
Retailer
The Importance of Shipping Options
56%
57%
66%
67%
MICRO
SMALL
MID
ENTERPRISE
73% of clothing and accessory retailers offer multiple shipping options, compared with just 50% of furniture and homeware retailers
Consumers expect multiple shipping options, but not everyone is offering them.
Giving consumers choice at the checkout is now less of a feature and more of a necessity, with 89% of UK consumers expecting to see multiple shipping options in the cart.
With 62% of all retailers giving their customers choice, it’s more important than ever to remain competitive.
14
Participant Profile
ConsumerIntroduction Shipping & Fulfilment Consumer Expectations Returns Tracking Omnichannel Summary
Retailer
ONLY 39%
BUT 59%
of UK retailers are ready to support or currently offer hyper local delivery
of consumers want it
I NEED IT NOW!More Shipping Options = More Sales. Fact.
What has been the impact of increasing the number of shipping options at checkout?
Increase in sales 74%
60%Reduction in cart abandonment
Ability to meet customer expectations 85%
Ability to meet shipping deadlines 77%
Ability to ship to a wider geographical area 72%
85% of retailers believe that by offering multiple shipping options, they are better served to meet customer expectations
15
Participant Profile
ConsumerIntroduction Shipping & Fulfilment Consumer Expectations Returns Tracking Omnichannel Summary
Retailer
The Impact of a Negative Shipping Experience
39%
36%
31%
25%
25%
22%
22%
21%
NEGATIVE IMPACT ON BRAND IMAGE
INCREASED COST OF RETURNS
INCREASED EMAIL TRAFFIC
ADVERSE COMMENTS ON SOCIAL MEDIA
How is your business affected when a shipment is lost, delayed or arrives damaged?
A product’s journey through the supply chain, in today’s direct to consumer model, is in reality, your customers
journey. Negative shipping experiences affect repeat purchase and ultimately the lifetime value of the customer.
Today’s retailers need to be conscious that the customer journey begins long before the shopping cart and exists
long after the product is delivered.
16
Participant Profile
ConsumerIntroduction Shipping & Fulfilment Consumer Expectations Returns Tracking Omnichannel Summary
Retailer
REDUCED CUSTOMER LOYALTY
POOR PUBLIC RELATIONS
INCREASED LOGISTICS COSTS
INCREASED CALLS TO CALL CENTRE
The Future is Drones, Or Is It?
24%42%
of all UK Retailers would be willing to use drones to deliver their packages
of UK consumers are willing to accept a drone delivery
Are drones really going to change the face of shipping? Not surprisingly, the older generationdoesn’t think so. 31% of those aged 55+ are not interested in using a drone service to delivertheir packages, compared with 56% of 16 - 24 year olds who are.
17
Participant Profile
ConsumerIntroduction Shipping & Fulfilment Consumer Expectations Returns Tracking Omnichannel Summary
Retailer
Returns Options Offered by Retailers
PART 4: RETURNS
What Proportion of Total Items Shipped are Returned?
The Full Circle
18
Participant Profile
ConsumerIntroduction Shipping & Fulfilment Consumer Expectations Returns Tracking Omnichannel Summary
Retailer
20% 26% 22% 26%
27% 27%31% 44% 44% 45%
42%
2%
2%
2%
2%
2% 2%
20% 33%
32% 33%
11% 10%
10%
11%
13%15% 17%
17%
17%19%
11%
0% 0% 0% 0% 0%
0% 0%0%
0% 0%
0% 0% 0% 0%0% 0%
0%
0% 0% 0% 0%
4%
5%
6%
6% 7% 7%
7%
7%
7%
8%
Return goods via mail
Retailers offeringConsumers have used
73%59%Return to store 55%48%
Drop off at a post office 37%52%Collection from original
destination address (home etc.) 44%26%Drop off at another location 31%28%
Less than 1%
11% to 15%
1% to 5%
16% to 20%
26% to 30%
6% to 10%
21% to 25%
31% to 35%
36% to 40%
65%
Mid-market retailers are the most generous with their returns
period, 10% offering returns within 3 months and 11% with no
time limit for returns.
of UK Retailers accept returns within 1 month
47%of Enterprise Retailers do not allow goods purchased online to be returned in-store
HEALTH & PERSONAL CARE BOOKS & STATIONERYFURNITURE & HOMEELECTRONICS & APPLIANCESCLOTHING & ACCESSORIES FOOD & BEVERAGES (EXCL. GROCERY)
SPORTING GOODS & HOBBIES
When The Shoe Doesn’t FitWhy People Are Returning Online Purchases
43% of UK Retailers are still manually processing returns
61%
39%
22%
21%
SIZE WAS INCORRECT
THE GOODS ARRIVED BROKEN
I CHANGED MY MIND
45%THE GOODS DID NOT LOOK THE SAME AS THEY DID ONLINE
61% of consumers have returned an item due to incorrect sizing. Retailers could look to reduce this number by adding sizing information in product descriptions, e.g. ‘product is true to size’ or ‘product is a small make - we suggest you order a size larger’.
With 39% of consumers having to return broken items, retailers need to ensure they’re packaging fragile items correctly. By using multiple carriers or specialist services, risks can be mitigated.
19
Participant Profile
ConsumerIntroduction Shipping & Fulfilment Consumer Expectations Returns Tracking Omnichannel Summary
Retailer
THE COST OF RETURN WAS FREE
27%96%93%
of Enterprise Retailers have no automation of backend tracking processes - everything is manual!
of consumers want to track deliveries easily online, but only 65% of retailers are offering this
of consumers want visibility of the expected shipping date, but only 60% of Enterprise Retailers are offering this
Mobility has ushered in a new era of transparency. From the moment an online order is placed, ownership is transferred to the consumer and the want it now generation expect to be kept in the loop.
PART 5: TRACKING
VISIBILITY OF THE EXPECTED SHIPPING DATE
EMAIL COMMUNICATION THROUGHOUT THE SHIPPING PROCESS
65% 96%
45%
42%
TRACKING DELIVERIES EASILY ONLINE
TRACKING DELIVERIES ON MOBILE DEVICES
ABILITY TO MAKE CHANGES TO YOUR SHIPPING WHILE GOODS ARE IN TRANSIT
TEXT/SMS COMMUNICATION THROUGHOUT THE SHIPPING PROCESS
CONSUMERS WANT
RETAILERS OFFER
86%
92%
81%
26%
93%
71%
64%
59%
A Moving Target
20
Participant Profile
ConsumerIntroduction Shipping & Fulfilment Consumer Expectations Returns Tracking Omnichannel Summary
Retailer
PART 6: OMNICHANNELMore Than Just A Buzzword
97%of consumers would
shop in store and ship goods home
88%of consumers want to be able to collect
instore
While Enterprise Retailers have more stock and stores to manage, they’re clearly MISSING OUT on a GOLDEN
OPPORTUNITY to utilise their physical footprint and maximize efficiencies in their supply chain.
SHOP IN-STORE AND SHIP TO CUSTOMER
40%
SHIP DIRECTLY FROM STORE
ACCEPT RETURNS IN-STORE
VIEW IN-STORE INVENTORY ONLINE
BUY ONLINE AND PICK UP IN-STORE
ENTERPRISEMIDSMALLMICRO
38%
25%23%
21%
31%
29%
27%
27%
27%
31%
44%
18%
20%
39%
39%
34% 34% 33%31%
21
Participant Profile
ConsumerIntroduction Shipping & Fulfilment Consumer Expectations Returns Tracking Omnichannel Summary
Retailer
Where Do Retailers Ship From
25%27%
ONE WAREHOUSE 38%
38%
46% 48%
ONE STORE
20%
20%
8%
8% 7%
0%
MULTIPLE STORE 4%
6%
SUPPLIERS
DROP SHIPPERS/THIRD PARTY LOGISTICS PROVIDERS
MULTIPLE WAREHOUSES 60%
10%
9%
11%
11%
14%
14%
13%
13%
0%
ENTERPRISEMIDSMALLMICRO
22
Participant Profile
ConsumerIntroduction Shipping & Fulfilment Consumer Expectations Returns Tracking Omnichannel Summary
Retailer
35%33%
of Retailers accept returns instore
of Retailers offer Click & Collect
ONLY
ONLY
7 in 10 UK consumers would utilise a home delivery service if the goods were too heavy but only 30% of furniture and homewares retailers offer this service
View in-store inventory online
61% of retired couples would have an item delivered to their home if it was not in stock in-store
61% of mid-level retailers and
73% of enterprise retailers AREN’T shipping from their stores
of consumers want SAME DAY SHIPPING - hyper-local delivery is key
Omnichanel Preferences:
Inventory visibility and accessibility is the great enabler of contemporary commerce
MICRO
21%ENTERPRISE
27%SMALL
18%MID
29%
23
Participant Profile
ConsumerIntroduction Shipping & Fulfilment Consumer Expectations Returns Tracking Omnichannel Summary
Retailer
78%
SUMMARY
Shipping and fulfilment has evolved from a back-of-house operation into a key competitive advantage of today’s leading merchants. Progressive merchants understand the power of a brand to inspire deeply personalized experiences and the value of shipping as the only tangible element of a digital customer journey. New technologies are democratizing experiences reserved previously for the realm of enterprise, allowing SME’s to level the playing field, and focus on lifetime customer value.
It’s an exciting time to be in retail and our research highlights the opportunities that exist to drive real value, both in terms of increased revenue and bottom line efficiencies. Consumers, conditioned by instantaneous nature of mobility, are demanding choice and shipping options that match their busy lifestyles. Only offering Standard Shipping to online
customers may be detrimental to businesses in competitive categories. Convenience is key - weekend, time slot delivery and 1-3 hour shipping are gaining momentum and should be treated as demand generators in 2016.
To meet the expectations of today’s consumers, businesses have the unique opportunity to re-imagine their supply chain and create meaningful, cost effective, customer experiences. The omnichannel and agile fulfilment remain key challenges to overcome with smaller retailers maximizing their operations and footprints more effectively than enterprise. Shipping from stores or multiple warehouses that are closer to customers, enables hyper-local delivery, combined with transparent tracking, convenient returns, and a trusted technology partner will set retailers up for success in 2016.
Intelligent Shipping for the Future of Commerce
Temando’s intelligent multi-carrier shipping platform allows retailers to optimise their existing business systems with powerful shipping and fulfilment technology. For the first time, retailers have the tools to optimise shipping based on carrier, price, location, inventory and much more.
Harness the power of shipping and fulfilment and turn it into a retail weapon.
email: [email protected] web: temando.com
Participant Profile
ConsumerIntroduction Shipping & Fulfilment Consumer Expectations Returns Tracking Omnichannel Summary
Retailer
A Neopost Company
ABOUT TEMANDO
temando.com researchnow.com
ABOUT RESEARCH NOW
Temando is a technology company specializing in the production of Shipping Software Solutions for the Retail and Logistics Industries. The company’s integrated shipping solutions enable merchants to access a multi-carrier platform to streamline their fulfilment process, reduce cost and increase sales. The company give their clients the ability to easily quote & book, track shipments, calculate duties and taxes, produce compliant shipping documentation & manifests, all from a single platform.
Temando exists to connect the world’s logistical resources into a single intelligent platform and make commerce universally accessible to everybody.
Headquartered in Australia with offices in Brisbane, Sydney, San Francisco, London, and Manila, with over 50,000 registered users globally, Temando is one of the fastest growing tech companies in the APAC region, as recognized in the Asia Pacific Deloitte Technology Fast 500.
Research Now is the global leader in digital data collection to power analytics and insights. It enables data-driven decision making for clients who listen to and interact with the world’s consumers and business professionals through Research Now’s online panels, as well as mobile, digital and social media technologies. The company
operates in 38 countries, from 24 offices across the globe, and is recognised as the market research industry’s leader in quality, scale and customer satisfaction.