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New JDA/Centiro Report Reveals More Than Three-Quarters of European Online Customers are Willing to Exceed Minimum Order Thresholds for Free Delivery

Sep 28, 2016

Yet ‘last-mile’ online fulfillment issues continue to blight retailers in the face of heightened customer expectations

Bracknell, U.K., and Scottsdale, Ariz. – September 28, 2016 – More than three-quarters (80 per cent) of European online shoppers are willing to exceed minimum order thresholds if it qualifies them for free delivery or collection, according to data from the JDA/Centiro Customer Pulse Report Europe 2016, conducted by YouGov. The survey of 8,190 adults online across the UK, Germany, France and Sweden revealed that despite this willingness to spend more with retailers, European online shoppers continue to be intolerant of poor service. Overall, nearly two-thirds (63 per cent) of respondents stated they would likely switch to an alternative retailer as a result of a poor experience with an online home delivery, or when using a Click & Collect service. UK online shoppers were the least tolerant, with nearly three-quarters (74 per cent) stating they would likely switch to an alternative retailer.

Ongoing online home delivery problems fuels Click & Collect growth

The research reveals that 1 in 2 European shoppers experienced a problem with an online order in the last 12 months. As problems with home deliveries continue, Click & Collect is gaining increasing popularity among European online shoppers. Almost half of those surveyed (49 per cent) stated they had used this service over the past 12 months, growing by 17 per cent since 2014. The French (59 per cent) and the UK markets (54 per cent) saw the highest rate of adoption of Click & Collect services over the last year.

Despite the growing popularity of Click & Collect, more than half (54 per cent) of European adults that used the service had encountered an issue. This figure is lower in the UK (45 per cent), due in part to it being a more mature market for Click & Collect. In other regions where issues were more frequent (Germany 65 per cent, France 56 per cent, Sweden 56 per cent) retailers are still learning and refining how to run an effective in-store Click & Collect service.

“The growth of online retail shows no sign of slowing down – with retailers competing ever more aggressively for sales and offering an increasing array of fulfillment options. Delivering a high level of service in an efficient and profitable manner remains a challenge for many retailers,” said Jason Shorrock, vice president, retail strategy EMEA at JDA. “As our research shows, last-mile issues continue to negatively impact the customer experience and customers are more willing to go elsewhere if their expectations aren’t being met. The good news for retailers is that customers appear to be willing to exceed order thresholds if it qualifies them for free delivery or collection. Now, more than ever, it is important for retailers to ensure they are offering outstanding customer service, or they risk damaging customer relationships and revenue.”

Differing responses to minimum order values

When ordering goods online for home delivery, cost (50 per cent) continues to be the most important factor for European online shoppers, followed by convenience (26 per cent) and speed (18 per cent). Interestingly, speed was much more important for German (21 per cent) and French (21 per cent) online shoppers than those in the UK (16 per cent) and Sweden (12 per cent).
Over the last 12 months, many retailers have introduced measures such as minimum order values and charges for Click & Collect orders, as they look to boost the profitability of their online operations. Despite the majority (79 per cent) of European online shoppers indicating they would be happy to exceed minimum order thresholds, the research shows that behavior differs by delivery option. Twenty-five per cent would do so for same-day delivery and 22% for next-day delivery, but this drops to 15 per cent for standard (3-5 days) delivery. Responses also varied by geography, with a third (33 per cent) of UK respondents exceeding minimum order values to qualify for next-day delivery, compared to just 16 per cent of French respondents.

Regarding free delivery, UK respondents had the highest expectations with almost three-quarter (72 per cent) expecting standard (3-5 days) delivery to be free. In comparison, this expectation was far less in Sweden (61 per cent), Germany (55 per cent) and France (55 per cent).

Returns remain a conundrum for European retailers

Returns continue to put stress on European retailers from both an operational and margin perspective. The research shows that 30 per cent of European online adults return items bought online twice in an average year, with a further 25 per cent returning items three or more times. Overall, 46 per cent of European online shoppers returned items as a result of them not meeting their expectations. A further 16 per cent stated they bought multiple items with the intention of returning the goods they did not want. Significantly, that figure was higher in Germany (23 per cent) and the UK (19 per cent) specifically, which indicates a possible trend towards ‘serial returners’ in those regions.

“Processing online returns continues to pose an operational and financial challenge for retailers. At the same time, the returns experience is having an increasing influence on who consumers shop with online,” said Niklas Hedin, CEO of Centiro. “A significant number of customers are now buying multiple items online with the intention of sending back those they don’t want. It will become increasingly important for retailers to identify these ‘serial returners’ – so they can better tailor their returns offering and use it as a source of greater customer engagement.”

Stores to retain a key role in online retail

According to the research, online home delivery (61 per cent will be the most popular way to shop in five years’ time. However, a significant number of European shoppers stated they will use Click & Collect (28 per cent) or use the store to shop and pick up in store (35 per cent), or shop and opt for home delivery (21 per cent).  This indicates that the store will continue to play a significant role in the retail industry in the future.

Another trend is the increased use of third-party fulfillment services to enable shoppers to pick up their goods from locations such as train stations and convenience stores. More than a quarter (27 per cent) of European adults online said they would use such services in the future, with it being especially popular in Sweden (37%) and France (36 per cent).

“It is clear that there are differing levels of maturity within the European online retail market and customer behavior varies from country to country.  For international retailers, it is important to understand these regional differences so they can tailor their approach to meet local needs.  Key to this will be mining the volume and variety of customer data to generate and use insights to serve shoppers in a much more personal and segmented manner. Aligning this insight with their supply chains will help retailers deliver a better and more cost-effective service to their customers,” added Jason Shorrock.

All figures, unless otherwise stated, are from YouGov Plc. The results are based on data from JDA’s Customer Pulse Reports 2016.  The total sample size was UK (2,096), France (2,057), Germany (2,023), Sweden (2,014). Fieldwork was undertaken between April – May 2016.  The survey was carried out online. The figures have been given an even weighting for each country to produce an average value.

About Centiro
Centiro is the leading innovator in cloud-based transportation and delivery management solutions. Centiro’s products empower companies and finer supply chains in more than 105 countries. The company has won several awards and accolades over the years and is ranked as one of the best places to work in Europe by Great Place to Work®. For further information, please visit: www.centiro.com.

About JDA Software Group, Inc.
At JDA, we’re fearless leaders. We’re the leading provider of end-to-end, integrated retail, omni-channel and supply chain planning and execution solutions for more than 4,000 customers worldwide. Our unique solutions empower our clients to reduce costs, increase profitability and improve collaboration so they can deliver on their customer promises every time. Using JDA, you can plan to deliver. www.jda.com