Five reasons why retailers are adopting on-demand delivery

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UK consumers spent nearly £80bn during the Christmas period last year, during which period there are a plethora of shopping days from Black Friday and Cyber Monday to the traditional post-holiday sales.

Retailers are gearing up right now to capitalise on this trading period for 2017, with marketing, buying and merchandising having historically been their primary focus. However, having the right delivery strategy in place is now a key battleground for retailers.

We live in the “now economy” where consumers expect fast flexible delivery options. Why wait a few days when you can have it sooner? Brands from Amazon to Argos are trying to meet expectations by offering consumers a range of same day and next day delivery. But for some people that’s still too long.

Consumers want the choice to have on-demand delivery and receive their products within the hour. On the other side of the coin, retailers large and small need to stay competitive and on-demand allows them to do that. Here are five reason why retailers are adopting on-demand delivery.  

Better customer experience:

We all know that city life comes with long hours. Londoners, for example, spend about three weeks more at work a year than the rest of the UK. People who work in London also face some of the longest commutes in the country averaging around 75 minutes per day. Busy working schedules and social commitments means consumers want flexible delivery options that work around their lifestyle, not the other way around. A recent report by Stuart found that 79% of online shoppers would switch from their favourite high street retailer if it didn’t offer their preferred delivery method. The option of on-demand delivery provide customers with a time and date that best suit them, ensuring a great customer experience that will keep them coming back over and over again.

Staying competitive:

The landscape of Britain’s high street is changing. Around 15 shops close every day and the number of new openings has fallen to the lowest level in years. As retailer’s race to stay competitive, businesses are investing in technology and approaches to logistics. Marks & Spencer for example are investing £350 million in apps, online development and its logistics chain to support sales across the company’s clothing and home space. Offering on-demand delivery isn’t restricted to large retailers, it can also be adopted by independent stores, allowing them to compete against the Goliaths of the industry.     

Changing consumer habits:

The demand for delivery options has been driven by a major shift in consumer purchasing. Web and mobile technology has given consumers the power to only be a few clicks away from purchasing something - around 30% of all items purchased across Britain are now done online, with online shoppers in the UK now spending more per household than consumers in any other country. These consumers expect a delivery experience that matches the ease and convenience of the online shopping experience.

Consumers are willing to spend more on delivery:

Half of UK consumers wish high street retailers offered better delivery services. Click and collect or next day delivery options aren’t enough to satisfy customer needs. Research by Stuart has found that on average consumers are willing to spend £168 more with their favourite retailer in the next year if it offered same-day delivery. The amount consumers are willing to pay increases in line with the speed of the service – for example our research also found that 10% of consumers were willing to pay more than £11 for delivery within the hour.

Ease of adoption:

Traditionally, retailers have struggled to adopt on-demand delivery. This is because retailers have either operated their own local delivery fleet, or relied on logistics companies to whom have found it hard to negotiate competitive rates or require significant systems integrations. This has all changed. New technologies and approaches to logistics is allowing businesses to easily add on-demand delivery to their checkouts.  

Retailers are operating in an industry that has undergone a huge digital transformation over the last decade, and where consumers are no longer limited to brick and mortar stores. The rise of mobile has given customers the ability to purchase products from anywhere and at any time. Customers will always be looking for the best deal on the item they want to buy, but the product is only half the experience consumers now expect.

The now economy shops differently, has complicated lifestyles and is accustomed to having products and services available when they want them. No high street brand has properly tapped into the market, which means the opportunity for on-demand delivery in retail is still wide open. This presents a chance for retailers to position themselves as early market leaders. The retailers who invest in on-demand delivery now have the opportunity to improve customer loyalty, attract new customers and reap the financial rewards.

For the retailers who plan to be followers, will arrive to the market late and have to play catch up to their competitors.  

David Saenz

David Saenz is Chief Operating Officer at Stuart where he drives growth of the business across Europe. Prior to Stuart, David was co-founder and CEO of Uncover, a mobile platform for restaurant reservations and payments. which was acquired by Velocity in 2015. David holds both an MBA from London Business School and a law degree from Northwestern University, and has held advisor positions at Techstars,…

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