Almost three quarters (70 per cent) of Australian online shoppers would likely switch to an alternative retailer when next shopping for products online if they had a poor outcome with ordering an item online, according to the JDA/Centiro Customer Pulse 2017 Report conducted by YouGov and co-sponsored by Honeywell. This is a rather alarming figure at a time when most retailers are consolidating their ‘bricks and mortar’ stores and continuing to invest in their online presence.
Of those respondents who had experienced a problem when making a purchase online in the last 12 months, 50 per cent of respondents had experienced late delivery, 41 per cent had missed a delivery despite being at home, 28 per cent never received an item, and 23 per cent received incorrect items. This was the second highest level of intolerance from the various country-specific surveys JDA has conducted, with only the UK (78 per cent) having less tolerant shoppers. Consumers are clearly most sensitive to online service, which suggests this is an area to which retailers need to give specific attention as they develop new ways to engage with the customer.
‘Click & Collect’ on an upward curve
The maturity of the Australian online market has fuelled a high level of Click & Collect usage, with 47 per cent of shoppers who have made a purchase online in the last 12 months having used this service. This is beaten only by the UK (54 per cent) where it is appreciably higher than in other major markets, including Germany (28 per cent) and France (36 per cent). The increased adoption by shoppers reflects their growing appetite for convenience and cost-efficient online buying. The survey shows the key drivers for Click & Collect use are avoiding delivery charges (45 per cent), convenience (37 per cent), and greater confidence of receiving items compared with home delivery (26 per cent).
However, with such a focus on Click & Collect, it is disappointing that as many as 68 per cent of Australian Click & Collect shoppers have encountered an issue over the past year. This is significantly higher than the UK (43 per cent). For those Australians who have encountered a problem, the major issues were long waiting times (27 per cent), staff in-store unable to locate items (27 per cent), and no dedicated Click & Collect area in-store (20 per cent).
“As the data shows, Australian retailers face a challenge on several fronts when it comes to online. Fulfilment and ‘last-mile’ issues continue to hinder retailers’ efforts at a time when consumers are becoming increasingly intolerant of poor service. With retailers competing ever more aggressively for sales and offering an increasing array of fulfillment options, delivering high service levels efficiently and profitably remains a challenge for many retailers, yet is expected by today’s shoppers – and across all channels. Retailers that fail to keep up with demand put themselves in serious danger of being left behind,” said Patrick Viney, vice president, industry strategy, retail, APAC at JDA.
“However, encouragingly for retailers, it does appear that their continuing investments in Click & Collect are starting to pay off. Adding to that, 41 per cent of shoppers expect the shop to be their most popular channel, so it is clear that stores are not going to be disappearing any time soon. The physical store in Australia remains vitally important to domestic retailers that are fighting the challenge presented by overseas online retailers.”
“Retailers need to be more confident in their last-mile capabilities, otherwise these fulfillment issues will continue to reflect poorly on the overall brand experience customers receive. This is one of the reasons we have seen the likes of Amazon bring more of its delivery function in-house to erode much of the market share,” said Niklas Hedin, CEO of Centiro. “Today, there are greater pressures on retailers’ delivery capabilities than ever before and if customers’ expectations aren’t met, they will simply shop elsewhere in the future. Through improved visibility into delivery networks, retailers can help ensure that customer promises are kept. In the future, predictive analytics will also help retailers and delivery companies pre-empt problems before they happen, taking the customer experience to the next level.”
“The growth in Click & Collect for retailers does require a re-think in the fulfilment methods currently used in-store and alternative methods to pick online orders more efficiently and accurately. Picking and packing is only part of the solution. Capturing and delivering accurate and timely information to customers is important when providing a memorable shopping experience. Retailers need to build flexibility and resilience in their e-commerce model, incorporating intuitive technologies that allow their staff to easily deal with higher order volumes, accurate order picks, packed, placed, and ready for convenient pick-up. There will also be challenges managing product returns due to exchanges and damaged goods. Existing technology developments and exciting new picking technologies will help enhance their customers online experience,” commented Tony Repaci, sales director of Honeywell Safety and Productivity Solutions, a provider of data capture products and productivity technology.
Acceptance for minimum order thresholds
An overwhelming majority (83 per cent) of respondents would be happy to exceed minimum order values in order to ensure they can enjoy free delivery. This is higher than the 75 per cent in the UK and could be a result of Australians regularly grouping their orders to waiver the more onerous charges and thresholds applied to international deliveries. Nearly a third of Australians online would be happy to exceed minimum order values if it resulted in them qualifying for either free same-day delivery (29 per cent) or next-day delivery (28 per cent). Worryingly, a sizeable 27 per cent of all Australians online would take their business elsewhere to a retailer that did not have a minimum order value for free delivery or Click & Collect, while 23 per cent would choose an alternative free delivery / collection option.
“Online retail continues to be extremely competitive. The winners will be those retailers that can offer a reliable and convenient fulfillment service to consumers, rather than simply focusing on speed and price. At the same time, escalating costs and ever-increasing competition is putting pressure on retailers’ already squeezed margins. Retailers must think hard about the configuration of their supply chains, and will need to become much smarter about how they use their key assets of staff, stores and inventory to fulfil customer requests intelligently. They need to think smart – finding the perfect balance between cost-effectiveness and a great customer experience,” added Mr Viney.
You can download the complete report covering returns, delivery habits, issue resolution and more online behaviour here.