At every turn, families are seeing their bills escalate. Businesses are too. While cash-strapped shoppers are seeking ways to navigate the economic challenges, retailers are also grappling with higher shipping and operational bills, mindful that increasing delivery and returns charges can have a hugely detrimental impact on conversions.
Passing on the cost to loyal customers isn’t an easy decision to make. The transition from free to paid-for delivery and returns can stir up frustration among bargain-hunting customers. Striking the right balance between service and cost has therefore become a pressing concern for retailers since the cost-of-living crisis kicked in. Recent surveys highlight that delivery costs play a pivotal role in shoppers’ decision-making, emphasising the importance of transparency, authenticity, and fair pricing in today’s retail landscape.
Shoppers want bargains, but authenticity and honesty too
According to Asendia’s recent report Selling direct in the age of the conflicted shopper, delivery costs rank high among the key considerations for 43% of the 8,000 global online shoppers surveyed. Alongside overall value for money (54%) and quality of products (50%), the cost of delivery holds significant weight in shaping consumer behaviour. Additionally, authenticity emerges as a crucial factor, particularly in the post-Covid era and during economic downturns. Shoppers now demand accountability from the retailers and brands they support, with 70% of UK shoppers expressing a willingness to spend more on authentic retail brands, even when times are tough.
For UK shoppers, authenticity is defined by straightforwardly delivering promises (57%), transparency within supply chains (41%), commitment to sustainability (39%), clear brand values (39%), and actively adhering to brand values (32%). Intriguingly, 43% of respondents asserted that a brand’s authenticity would make them less sensitive to inflationary price increases, a sentiment even stronger among Gen Z (48%) and Millennials (51%).
Transparency about delivery pays dividends
These findings underscore the need for brands to optimise their delivery services, providing customers with a transparent, fairly-priced, and reassuring shopping experience. Keeping customers informed about their orders’ progress and offering budget-friendly options can nurture and strengthen consumer-brand relationships. Transparent communication about the necessity of charging for delivery can help mitigate cart abandonment after a policy change.
To address the diverse needs of customers, retailers should consider offering a range of differently-priced delivery services, especially for cross-border shipping. Asendia, for example, integrates multiple delivery options into its retail clients’ websites, enabling customers to choose a lower-cost international postal delivery service for non-urgent, low-value items. Simultaneously, faster services with enhanced tracking, notifications, and insurance cover cater to those seeking premium delivery options.
Tell your sustainable delivery story
Slowly, consumers are realising that fast and free deliveries and returns are rarely good for the planet. If shoppers can wait a little longer, or pay a little for their deliveries and returns, their favourite brands can support more sustainable ways of operating. For instance, carbon off-setting is a big trend, which – while not a long-term solution by any means – can help retailers reach their ESG goals. Options to provide low emission deliveries of parcels should also be investigated. However, this does amount to an extra supply chain cost for the retailer or logistics provider.
Emphasising sustainability initiatives can open new customer segments and fuel sales growth, as environmentally conscious consumers increasingly prioritise such options in their shopping behaviours. By embracing sustainable practices and intelligent technologies, retailers can transform hefty fulfilment costs into an opportunity to resonate with eco-conscious buyers.
It is also possible to unlock hidden value via the realm of re-commerce platforms. Retailers can seize the chance to sell clearance stock and returns to business buyers, contributing to the thriving circular economy. Simultaneously, this move helps reduce carrying costs, and streamlines operations, a win-win scenario for retailers looking to bolster their bottom line.
Talking to logistics partners is a great place to start, as many 3PLs are able to advise and help set up returns consolidation through their networks, and manage re-use, re-sale, donations, or disposal of stock.
The balancing act between convenience and costs remains an ever-present challenge. As inflation rates continue to fluctuate, and with Christmas peak spending on the horizon, retailers would be wise to explore resource optimisation through inventory recovery solutions rather than resorting to harsh shipping and returns policies that could alienate potential buyers.
Delivery deals as marketing tools
Against this backdrop, there is an opportunity to harness special delivery services as sales incentivisation tools. The annual delivery subscription model works well for the big players like Amazon with Prime and Next with nextunlimited, but is more challenging for small brands to operate cost-effectively.
Instead, running flash “free delivery” marketing campaigns or providing discounted delivery as a loyalty reward can be effective strategies for brands looking to build stronger relationships with their customers. The savviest brands do a great job of capitalising on delivery services and the associated communications, to cultivate customer loyalty and trust.
Clearly, the delicate balance between service and cost is paramount in the current retail landscape, where consumers navigate the cost-of-living crisis and retailers grapple with higher operational expenses.
By offering transparent and fairly-priced delivery options aligned with customer values, retailers can foster lasting relationships with their customers. This way they can ensure shopper satisfaction while safeguarding their own financial viability in these challenging times.