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The Cost Of Stunning Success Online? Slower Shipping

Online retail has really been flexing its muscles this holiday season — so much so that some retail operations are having trouble keeping up. For example, the average order-to-delivery time among 62 retailers studied by Kurt Salmon Associates, for the two weeks following Cyber Monday, was 6.9 days, 20% slower than last year’s average.

Other research points to a slowdown spurred by the 2015 digital deluge. The percentage of online buyers reporting that all the items they ordered were delivered on time trended steadily downward between Dec. 1 and Dec. 10, 2015, according to Bizrate Insights’ survey of more than 130,000 shoppers.

“On-time delivery is quite important to maintaining customer loyalty, especially when there is a holiday or event deadline,” said Hayley Silver, Vice President at Bizrate Insights in a statement. “The 2% drop that we see across this 10-day period alone equates to tens of thousands of disappointed gift buyers.”

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Fastest Shippers Pull Ahead Of The Pack

Other key findings from Kurt Salmon, which studied online orders from 62 retailers across a range of verticals, include:

• The fastest retailers delivered on average in 2.8 days, the same as the top performers in 2014;

Zappos led the list, delivering in one day, followed by Lowe’s, Barney’s and Burberry with two-day delivery times;

90% of retailers offered a way for customers to get free shipping, up 15% from 2014; and

64% offered free shipping on everything, up nearly 50% from 2014.

Higher-than-anticipated e-Commerce sales volumes have stressed carrier networks. For example, 9% of packages sent via UPS Ground encountered some type of unexpected shipping delay. “While these are typically small delays and pale in comparison to some retailer-caused delays, they point to a larger problem — a carrier network at capacity,” said Steve Osburn, Retail Strategist at Kurt Salmon in a statement.

One way that carriers such as UPS, FedEx and even the U.S. Post Office deal with the surge in holiday deliveries is by expanding their fleets with rental vehicles. For example, Enterprise Truck Rental’s demand spikes by about 20% during the holiday season, according to a recent Washington Post article. The article also quotes UPS spokeswoman Kara Ross: “Ever since the rise of e-Commerce, we have deployed rental vehicles as a cost effective method to flex our delivery fleet.”

In-Store Pickup Popularity Grows

For retailers and consumers who want to avoid the risks and costs of shipping, buy online/pick up in-store (BOPUS) represents an attractive alternative. This year, 35% more retailers offered BOPUS or reserve-in-store opportunities, and many retailers expanded existing services to additional doors.

But as with delivery times overall, there’s a growing disconnect between the leaders and the herd. Top performers Target, Macy’s and Lowe’s provided good communication after the purchase, had the order ready in less than two hours, and made the pickup experience quick and easy. Most important, the experience was consistently painless across all of the chain’s tested stores.

Yet many retailers are still struggling with the mechanics of BOPUS. Only 40% of these transactions were error-free this year, compared to 91% of delivered orders in the study and 98% of delivered orders during the rest of the year. This represents a major gap between brand promise and fulfillment, occurring at a critical time of year and in an area that’s very important to customer perceptions.

“You only have to look back to 2013 to find out what could happen if the order volumes exceed retailer and carrier capacity,” said Osburn. “That was the year that 15% of the packages Kurt Salmon ordered at the last minute did not make it under the tree in time.”

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