Australian retail is still recalibrating following the seismic shifts brought about by the Covid-19 pandemic.
By Doddle APAC CEO Justin Dery.
More business than ever before is now done online, where the margins are often weaker than in-store sales. For Australian retail particularly, this is due to obstacles including distance, low population density and high labour rates, which all add to the cost of delivery. To top this situation off, consumer expectations around delivery and returns are only increasing.
Getting to grips with the new demands and expectations of customers has never been more essential for retailers, with our research showing that an incredible 87% of Australian consumers plan to continue shopping more online post-Covid. Retailers need to understand what motivates these consumers when it comes to delivery and returns. That understanding will then help them to improve the margins on online sales with more efficient deliveries and returns and increase the lifetime value of customers by offering them better experiences in these crucial areas.
The boom in e-commerce sales over the last 12 months showed that consumers are open to new ways of shopping, including new delivery experiences. Throughout 2020, government restrictions meant most retailers had to offer contactless delivery or pick-up. The familiar concept of click-and-collect evolved to become contactless, and we saw new iterations of the idea, like drive-and-collect, in which staff deliver goods directly to a customers’ car.
We’ve found that 61% of shoppers are eager to try new delivery options, yet only 30% have been able to do so in the past year. This suggests an unfulfilled demand for alternative delivery solutions, and an opportunity for retailers to expand the fulfilment options available to consumers. Doing so could help to reduce their overall delivery costs, as consolidated deliveries are more efficient to make. Clearly, delivering 100 online orders to a store for customers to collect is far more cost-effective than delivering 100 online orders to each customer’s doorstep.
Convenience has become a primary driver for consumers in Australia and has played a significant role in the uptake of click-and-collect, with 59% of consumers who have used the service or another third-party pick-up in the past 12 months doing so because they can collect their delivery while doing other things. For these shoppers collections are “trip-chained” alongside regular trips to the post office (66%), supermarket (44%) and shopping centre (32%). This is similar to the pick-up and drop-off (PUDO) delivery model that fulfils the majority of online orders in Scandinavia, which 66% of Australians said had the potential to improve deliveries here in Australia.
Australian consumers remain incredibly sensitive to price, seeking out retailers that deploy more frequent discounts on their product ranges. Shoppers aren’t just price-sensitive about the products they buy, though – they also want them delivered at low cost too. Our latest research indicates that almost three-quarters (73%) of Australian shoppers say they are not willing to pay a premium for shipping — which might explain why Amazon’s Prime offering has so far struggled to crack our market, costing just shy of $60 annually.
Fast shipping is the leading reason for choosing a retailer to shop at for almost two-thirds (61%) of shoppers in Australia. This is a trend most prominent with shoppers aged from 18-44, 53% of whom would be more inclined to use a pick-up point if it meant a faster delivery time.
The PUDO model offers both economic and environmental benefits. Delivering parcels en masse to a PUDO location has a much lower carbon impact than individual home deliveries, with one study suggesting that this method reduces emissions by around two thirds compared to door-to-door deliveries.
Younger shoppers are more environmentally aware, with 31% of consumers aged 18-29 believing online shopping has a negative impact on the environment.
We expect sustainability to become a bigger driver of consumer behaviour given the emphasis younger generations are placing on the subject.
As a result, forward-thinking retailers are embracing ways to reduce their carbon footprint. Coles for example, recently announced its aim to cut carbon emissions 75% by 2030, driven in part by in-store initiatives like natural refrigeration solutions, and recycling the heat from its fridges to help warm stores.
Delivering on customer demands
Convenience, cost and speed are the defining motivators for shoppers in Australia, in that order. As such, home delivery is no longer the silver bullet solution for fulfilling online orders. Modern consumers are demanding choice and flexibility and appreciate the opportunity to incorporate parcel collection into their daily routines. New options like Australia Post’s Collect and Return network are ticking all the right boxes for convenience, cost and speed, enabling customers to customise where, how and when they get hold of their items. At the same time, these new methods of fulfilment are enhancing sustainability by consolidating deliveries.
As Australia’s retail industry evolves, these fundamental consumer attitudes will be underpinning change. Retailers who can address those needs through their delivery and returns propositions will ultimately reap the rewards of happier shoppers and better margins on online sales.
About Justin Dery
Justin Dery is CEO – Asia Pacific. Justin joined Doddle in 2017 to establish the first international expansion in Australia. He is responsible for managing Doddle’s regional go-to-market strategy, including managing its key partnership with Australia Post. Justin is also responsible for business development of Doddle’s proprietary technology platform with major retailers through Asia Pacific.
Prior to joining Doddle, Justin was founder and CEO of Coverpoint Marketing Group, a full-service digital and brand management agency based in Sydney.
Doddle helps carriers and retailers around the world create e-commerce delivery and returns experiences that attract customers, create differentiation and foster loyalty. Doddle uses its fulfilment experience – developed in some of the world’s toughest e-commerce markets – to help retailers and carriers devise sector leading fulfilment strategies that enhance customer experience, promote sustainable solutions and drive profitability and efficiency.
Doddle’s white-label technology powers the creation, roll out and management of a full out-of-home delivery and returns ecosystem. Each of the solutions in its platform is designed to drive loyalty, create cross-selling opportunities, promote efficiency and address the need for more sustainable supply chains.
Doddle’s expertise and technology is trusted by some of the world’s biggest retail and logistics businesses from ASOS and Amazon to Yamato and Australia Post. Headquartered in London, UK, Doddle also has regional teams in the US, Australia, Europe and Japan.
For more information, visit doddle.com.