Cost tops speed and convenience as main delivery priority in 2023
New research has revealed that online shoppers’ priorities for delivery are shifting towards value over speed and convenience, with consumers in eight key international markets preferring to wait longer to receive their goods or to compromise on delivery location, rather than cost.
The findings were revealed in the ‘Ecommerce Delivery Benchmark Report 2023’, which was commissioned by Metapack’s parent company, Auctane, in partnership with ShipStation and economics consultancy, Retail Economics.
The report included a survey of more than 730 retail businesses across eight international markets, including the UK, US, Germany, France, Spain, Italy, Canada and Australia. It also included answers from a sample of more than 8,000 nationally representative consumers.
Metapack released the report earlier this week (February 7) at The Delivery Conference 2023 in London, where issues such as uncertainty over consumer spending and supply chain disruptions were discussed intensively.
Cost of delivery
The research revealed that in 2023, cost of delivery is expected to be the most important conversion factor impacting retailers. Almost 35% of consumers highlighted cost as their biggest priority for delivery, with speed and convenience becoming less important.
Operating cost pressures facing businesses may make this a difficult challenge, however. Over a quarter of retail businesses surveyed plan to increase the cost of delivery for their customers, while only 18% said they won’t increase the price of products, delivery, or returns this year.
Furthermore, almost 30% of UK consumers reported they would happily switch to parcel lockers or click and collect services for their online orders if they offered a more affordable delivery option.
Sustainability
The report also revealed that sustainability continues to be top of mind for many shoppers, with 79% stating they would consider green delivery options when ordering online. When going green, 38% of consumers are more willing to accept longer delivery times and almost 35% of consumers are likely to switch to out of home collection, rather than paying extra to offset emissions, with only 7% of shippers willing to consider the latter.
“In terms of sustainability, consumers are becoming more conscious about carbon emissions and consumption,” said Richard Lim, CEO of Retail Economics during TDC’s plenary session. “But they are not willing to wait for delivery. Consumers are willing to look at out-of-home (OOH) options in exchange for lower carbon emissions.”
Prices up, volumes down
The headline figure from the benchmark report was that in 2023 UK non-food retail sales values are expected to hit £249 billion in 2023, but the 2.6% increase, or additional £18.2 billion of spending on the previous year, will be driven by rising consumer prices, rather than rising volumes.
It found that 80% of retailers surveyed were planning to increase the price of their products, with 40% suggesting rising costs will be the biggest challenge in 2023.
Cost pressures and shifting shopping habits
Retail brands are facing rising input and operating costs and with margins under so much pressure, it’s likely that some of these costs are being passed on to consumers, especially as merchants look for ways to find savings and preserve margins.
These challenges are matched by consumer concerns about the outlook for the economy and their personal finances over the year ahead, with 66% of consumers in the UK citing inflation as their biggest concern.
As a result, 74% of UK consumers plan to change their buying behaviours, with 34% stating they would only make purchases when necessary and 29% intending to delay or reduce spending.
The changes in consumer spending will have an impact on UK retail sales volumes (units of products sold), according to the report, which are set to fall 4.9% in 2023 compared to last year. This underlines the fact that shoppers are simply having to spend more to get less for their money with retail inflation expected to hit 7.5% over the year ahead.
The research highlights that inflation is expected to add almost £260 billion ($319 billion) to retail sales in 2023 across the eight international markets included in the research.
Retailer expectations
However, many retailers remain optimistic about trading prospects in 2023, with more businesses holding a positive rather than negative view regarding the economy, and only 20% anticipating weaker consumer demand over the year ahead.
Consumer sentiment and economic projections are generally at odds with retailers’ expectations for the year ahead. Of those small enterprise retailers surveyed, 80% expect order volumes to be the same or higher (59%) in 2023, with a third anticipating order volumes to be 10% higher or more.
Top priorities
Andrew Norman, General Manager at Metapack, said: “Keeping costs down will be the top priority for both retailers and consumers in 2023. As our research highlights, everybody will be looking to get the most bang for their buck from operating costs to delivery costs and product costs. From offering a greater choice of delivery options, having a resilient carrier infrastructure, to providing delightful deliveries experiences, we believe retailers who can provide the most value will be the ones who come out on top.”
The Delivery Conference
During TDC 2023, Metapack also spoke about several updates it is making to existing products, including Delivery Tracker and its data product Metapack Intelligence to improve the delivery experience. CEP-Research sat down with Tom Forbes, Chief Customer Officer at Metapack, and SVP of Channels at Auctane, during TDC 2023 to find out more and to discuss current industry trends and challenges for 2023. The full interview is coming soon....
