Offering flexible delivery is the most important factor influencing which retailers young people buy from online but few consumers are ready to pay for it, according to a new report released by eBay Enterprise today in collaboration with MSc students from Imperial College Business School.
The study of British shoppers between the ages of 18 and 34 found that almost three in four (74 per cent) consider convenience of delivery the most important factor when choosing where to shop online. Almost two thirds (65 per cent) of young shoppers would also be more likely to buy from an online retailer that offered convenient delivery over one that did not, underlining the importance of flexible delivery for retailers looking to get ahead of the competition in the run up to Christmas.
The study also found that failing to provide a choice of delivery options could even lose retailers business, with nearly a quarter (23 per cent) of young shoppers claiming they would not buy from a retailer that does not offer flexible delivery.
Not only is flexible delivery a way to compete for customers, the report finds it can also have a positive impact on basket size too, with as many as one in four (25 per cent) of young shoppers admitting to spending extra to access this option. It also correlates with higher spend, with nearly half (47 per cent) of survey respondents revealing that they recently spent more with an online retailer because they offered flexible delivery.
Commenting on the report’s findings, Enda Breslin, European Head of Business Development, eBay Enterprise said, “Our research with MSc Strategic Marketing students from Imperial College Business School shows that retailers that do not offer a choice of delivery options could be leaving money on the table. Millennials’ spending power is increasing every day – by 2025 they will make up 75 per cent of the global workforce* – so retailers should aim to meet their needs now to grow their market share in the medium term.
Dr Omar Merlo, Programme Director, MSc Strategic Marketing, Imperial College Business School said: “This consulting project with eBay Enterprise enables our students to apply the marketing tools and concepts learned on their degree to a real client brief. The MSc Strategic Marketing is an innovative programme that equips students with the most valuable skills needed in marketing today, in areas such as strategic market management, consumer behaviour, branding, social media and digital marketing.”
The report also explored consumer preference around different types of delivery, finding that next-day delivery is the most frequently used ‘flexible’ option by young shoppers in the UK (79 per cent), followed by click-and-collect (38 per cent). Despite a number of retailers starting to invest in collection lockers, they still have very little recognition in the UK at only 5 per cent usage by this age group.
Yet despite flexible options now being expected as ‘standard’, customers in this age group remain unwilling to pay extra for it, with nearly half (47 per cent) stating that they’d be unwilling to pay more for flexible delivery.
Breslin advised that retailers need to think carefully about how to offer flexible delivery without eroding margins: “There’s no doubt that flexible delivery options are key to attracting the continued spend of millennials, but with few prepared to pay extra for it, retailers need to make sure that any flexible options that they offer are as cost efficient as possible. Consolidating with a small number of supply chain partners; investing in order management software; and using in-store fulfilment methods like ship-from-store to improve speed and efficiency are all ways retailers can keep costs down whilst still competing on flexibility.”
The eBay Omnichannel Shopping Behaviour report was compiled by students studying the MSc in Strategic Marketing at Imperial College Business School. The aim of the project was to investigate the factors that influence people’s spending habits and the impact on retailers. The report analysed the purchasing behaviour of young consumers (18-34 years old) and their use of shopping channels, including online, mobile and in-store purchasing) and the usage of flexible delivery options including home delivery, click and collect, in-store reservation and collection lockers.
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