There has been a big change in the way shoppers view same-day deliveries. New research from the home delivery expert ParcelHero shows 56% of online shoppers believe same-day delivery options are important; as recently as 2020, it was just 33%.
The pandemic forced many people to shop regularly online for the first time. In February 2020, online sales took just 19% of the overall retail market; today they average 30% of all sales. As a result, shoppers’ expectations of online sellers have changed dramatically.
ParcelHero’s Head of Consumer Research, David Jinks M.I.L.T., says: ‘We’re now starting to see the full impact of Covid-19 on our shopping habits. Increasing knowledge of delivery options transformed consumers’ expectations of what services their favourite brands should be offering.
‘The results of our latest consumers’ survey show people increasingly want to see all their favourite stores offering the same delivery options as Amazon Prime. Online shoppers have dramatically changed their expectations. Significantly, 56% now think same-day delivery options are important (up from 33% in 2020), 62% expect next-day delivery options (up from 44% in 2020) and 55% want specific, 2-hour time slots (up from 44% in 2020).
‘This is a dramatic rise in online customers’ expectations. Prior to the pandemic, most online purchases were for non-essential items such as entertainment products and electronics. Over the last two years, online buyers have become wary of the High Street and out-of-town shopping malls. Many have switched to ordering household essentials such as groceries online, with same-day delivery options increasingly popular. Consumers now want to have all their shopping – luxury items as well as household essentials – delivered on the same day.
‘The problem for most retailers is that same-day deliveries are vastly more expensive to fulfil than next-day services. Although 64% of shoppers said they are willing to pay more for same-day deliveries, it’s unlikely this would cover the upfront cost of the huge changes in supply chains and distribution centres needed.
‘This newfound need for speed could come at a heavy price for the environment as well as retailers. In 2020, 74% of us said we were happy to wait longer for purchases if it meant the delivery method was more sustainable. In our latest survey, only 61% of purchasers were willing to wait longer for greener deliveries.
‘Understandably, home shoppers now expect faster services with increased options as they spend more time on e-commerce specialist sites such as Amazon. Who can blame them? But the transformation in same-day delivery expectations could be bad news for smaller store chains who don’t have distribution centres spread across the country.
‘The UK was a pioneer in next-day deliveries. Most orders throughout our relatively small country can be fulfilled within one working day. However, there is a vast difference between the infrastructure needed for same-day deliveries than for next-day.
‘The Warehouse Management Systems (WMS) retailers use are ideal for deliveries ranging from two weeks to next day. WMS systems can group orders and deal with them in batches – ideal for processing orders overnight. In contrast, same-day orders give just a one or two-hour window. Delivery batch sizes have to be reduced, with smaller order pools. Picks can’t be grouped and optimised in the same way that they can for next-day deliveries, which means higher costs per unit.
‘To make same-day delivery economically viable, firms need high and consistent volumes of daily orders within a reasonable radius of their distribution hub. Having vans travel miles to deliver just one or two items to a particular area isn’t viable. For many retailers, that means fulfilling their orders is impossible.
‘Amazon met the challenge by building its own delivery network, Amazon Logistics, and constructing distribution centres across the country. That’s not something most stores can do.
‘Sainsbury’s, Tesco and similar retailers are able to offer same-day within certain urban areas where their infrastructure includes distribution centres, superstores with armies of in-store pickers, or so-called “dark stores”, which only serve online orders.
‘Smaller supermarkets have options such as piggybacking onto the networks of Ocado or the food delivery specialist Deliveroo. For remaining retailers, their best option is to partner with courier and haulage firms that can offer same-day delivery via vans and motorbikes.
‘This is why many UK and international couriers are investing in their infrastructures to develop their same-day options. It’s an expensive thing to do. International delivery companies already find it less cost-effective delivering to private addresses rather than businesses, because there are fewer parcels going to one address and a far greater chance of a failed delivery because no one is at home.
‘It’s one of the reasons why the delivery giant DHL last week finalised the takeover of courier network CitySprint, which specialises in same-day services. DHL says same-day delivery is one of the fastest-growing segments of the logistics market and the deal enables it to provide a range of new delivery options.
‘There’s no doubt about it, today is the day of same-day deliveries. The question is whether shoppers are willing to pay for them. Amazon was able to build up its same-day capacity through its Prime membership programme. That’s OK if you are Amazon, but a small store chain might have trouble convincing people to splash out £79 on a membership scheme in order to fund their infrastructure growth. That’s a loyalty scheme that really tests loyalties.
‘To discover more about how retailers can adapt their existing infrastructure to meet changing customer expectations, see ParcelHero’s new study at: https://www.parcelhero.com/research/shop-of-the-future