From ASOS to Iceland, a number of UK retailers are building a customer base on a reputation for free home deliveries. The costs involved mean not all businesses can afford to take this approach, so they must present a different offering which still brings value to customers. This is where they should consider offering affordable fast shipping instead, writes Kerry Lemos, CEO of Retail Pro International.
Kerry Lemos, Retail Pro
While it’s true that free shipping not only attracts customers but also makes them more likely to buy (and remain loyal), it’s a strategy that doesn’t work for every retailer. It adds cost to the bottom line, and not all businesses can add it to the cost of goods and pass it along to customers while still remaining competitive.
So how can they compete against behemoths that have the resources to absorb shipping costs?
The option, like many things in retail, is to offer a benefit to an alternative that is desirable to customers, but which may not initially be their first choice. So, say a shopper’s inclination is to save some money by not paying for shipping. If that’s not offered, he or she may well look elsewhere to make a purchase. Right at that point where the purchasing decision is being made, the retailer must provide an attractive alternative. Fast shipping addresses purchasers’ need for immediate gratification. Receiving an order quickly also delights the consumer in a way that could encourage purchasing and loyalty. That is particularly true for luxury items where a purchaser may be more interested in getting the item with immediacy:
While free shipping is cost effective, it is often slow. Retailers have a great opportunity to bring value to customers by speeding things up and getting items in their hands quicker. But where to begin? Here are two practical approaches they can take:
1) Offer ship to store
It’s possible to position fast shipping to be as alluring as free shipping: retailers are learning that shoppers are increasingly taking advantage of click and collect, or ship to store programs. The convenience of shopping at home and ordering lets shoppers first locate and then “lock in” purchases. Some stores let customers pick up merchandise within a few hours, others will send email notifications when the product is ready. The strategy is appealing to busy customers who may not have time to physically browse stores’ inventories. Ordering can be done any time of day, and receipt of merchandise revolves around their schedules. Retailers can reap the benefits of added on, spur-of-the-moment purchases when the customer arrives to gather the order. Click and collect requires substantial investment by retailers to provide up-to-date, accurate inventory that is highly visible to shoppers.
2) Partner with couriers and convenience stores
On a practical level, retailers can follow a strategy which represents a more organic version of Amazon’s successful work with lockers. By partnering with couriers, deliveries can be made to Access Point lockers, which are usually outside and accessible 24 hours a day at convenience stores and similar locations. E-tailers can incorporate the locker delivery addresses into their checkout processes to give consumers a local delivery location, while convenience stores benefit from an increase in foot traffic, and the potential sales opportunities which come with that.
By getting items in the hands of the customer quicker, retailers will be able to shift the focus away from a purely cost-based outlook on delivery options. This means now is the time to investigate offering ship to store and partnering with couriers and convenience stores. By speeding up deliveries, retailers could well find that sales are also picking up the pace.
