IMRG UK Click & Collect Review 2018 EXECUTIVE EXTRACT

Transcription

1 IMRG UK Click & Collect Review 2018 EXECUTIVE EXTRACT

2 Introduction The IMRG UK Click & Collect Review 2018 is designed to present an objective and pragmatic view of the evolving click & collect landscape from primarily a logistics perspective. However, positioning it specifically as an e-logistics innovation doesn t give the full picture because it also has a clear influence on sales conversion, customer satisfaction, operational costs and even store design and location. This is an Executive Extract of the full review which can be obtained at and which contains considerably more evidence, analysis, insight and best practice examples. The full review provides the foundation for retailer strategies and signposts areas for consideration when making decisions about the deployment of click & collect solutions in light of: Customer profile and demographic Store network footprint or required reach The desired customer experience. Darko Atijas Neopost Shipping Andy Mulcahy IMRG Mike Richmond Doddle Join our delivery experts to discuss the latest insights on Click & Collect and to share the key findings from our Click & Collect report: E-COMMERCE EXPO Delivery & Logistics Theatre Thursday 27 September, 11:45am 12:15pm ONLINE WEBINAR Thursday 11 October, 2.00pm REGISTER AT: bit.ly/imrgclickcollect 2 IMRG UK Click & Collect Review 2018 EXECUTIVE EXTRACT

3 Executive overview Over the past ten years, click & collect has evolved from a substitute service option, to become a vital strategic component of the UK e-logistic machine, without which we will be unlikely to sustain the growth of online retailing. ALL THE C S Click & collect benefits so many areas of e-retail, providing: Capacity and Contingency for the over loaded home delivery channel Cost reduction opportunities for shoppers, retailers and delivery companies Increased Choice and Convenience options for shoppers An enhanced Customer Experience for collections and returns A contribution to the reduction of urban Congestion increasingly associated with online delivery An aid to Conversion, increasing footfall and sales revenue for retailers. Click & collect is not just a delivery option, it has become a marketing channel. IMRG UK Click & Collect Review 2018 EXECUTIVE EXTRACT 3

4 The state of play Consumer awareness is firmly established at well over 90% and access, on the face of it, is not an issue with 40,000 parcel-points and parcel-lockers across the UK, putting most shoppers within a few miles of multiple locations. However, click & collect represents perhaps 10% of all online orders. Barriers to use remain and the apparent customer demand is not yet matched by the wider UK e-retail industry: Shoppers want click & collect to be at a lower cost than home delivery, however, click & collect tends to be charged at the same rate or at a premium to home delivery. Shoppers would like to select the delivery location most convenient to them but with most of the 40,000 locations aligned to carrier specific operators, the customer has to use a number of locations. Better promotion and positioning by retailers not an after-thought but promoted alongside home delivery and other delivery offers on the home page navigation bar. Differential pricing click & collect, even third-party click & collect has to be a cheaper option than home delivery. This may be basket value related to drive greater retail value and order consolidation. Greater use of agnostic networks to allow the recipient to choose their most convenient pick up / drop off location. The wider adoption and use of click & collect will enable the double digit growth UK e-retail has long enjoyed, to continue but without this we may find the UK e-logistics machine struggling to cope with consumer demand. Fig 1. Have you, or those in your household, ever used Click and Collect services? MEETING CUSTOMER EXPECTATION A clear opportunity exists for retailers to increase their delivery options with 74% of consumers saying they would like to be able to collect in-store but only 47% of UK retailers currently offering that option. Source: Temando: State of Shipping in Commerce - UK 2017 Shoppers want to have the click & collect option on all orders;. However, many retailers still do not offer a thirdparty solution putting click & collect out of reach for many of their prospective customers. Click & collect is innovating to meet the needs and expectations of the digital consumer, providing label-less, browser less and contactless collection and returns. But for the customer to get the full benefit of this requires: 28.4% 12.0% 0.7% 58.8% Yes No - but I intend to use it in the future No I don t know what that is Greater adoption by retailers so that this is a standard delivery offer that consumers recognise and actively consider on every purchase. Source: IMRG UK Consumer Delivery Review IMRG UK Click & Collect Review 2018 EXECUTIVE EXTRACT

5 Market trend Although click & collect has become more popular, not all retailers offer it as a delivery option and of those that do, not all provide more than one click & collect variant. Many still only offer the in-store option and do not extend beyond their own networks to take advantage of third party parcel-point and locker providers to extend their coverage. Using IMRG data and other volume information available to IMRG we can estimate an overall forecast for UK online order volumes despatched from UK retailers and the channels they may use over the next few years. In the chart opposite, the columns represent click & collect volumes (left axis millions of orders) and the lines represent UK total delivered orders (right axis millions or orders). These forecasts suggest a growth rate of 52% for the volume of online orders dispatched by UK retailers for delivery by UK carriers in the UK between 2017 and 2022: Home delivery volumes will increase roughly in line at 51% Click & collect volumes will increase 95% Overall, click & collect will represent about 12.5% of all retailer generated volume UK Carrier C&C Volume inc to store UK Carrier C&C Volume inc to store Estimated C&C C&C - Non Non-carrier Total C&C Total C&C Source: IMRG MetaPack Delivery Index Forecast of volume of orders dispatched from UK retailers for delivery in the UK AN OPPORTUNITY TO DRIVE FOOTFALL AND INCREMENTAL SALES Third party click & collect is predicted to be the biggest growth area in delivery solutions in the next five years with value increasing by 107% (GlobalData). For retailers struggling in the harshest market conditions for decades, this trend presents an opportunity to drive valuable footfall and incremental sales: 41% of click & collect shoppers go on to purchase additional items (GlobalData: Click & Collect in the UK ) 58% of customers collecting or returning a parcel in one of Doddle s partner locations in early 2018 went on to make an incremental in-store purchase (Data from Doddle customer feedback survey 12 March - 5 July 2018, 8000 responses) IMRG UK Click & Collect Review 2018 EXECUTIVE EXTRACT 5

6 Access A major driver for the growth in click & collect is network coverage and level of access afforded to shoppers. Should retailers wish to extend their coverage beyond their own store networks and shoppers want to collect parcels locally there is no reason why they should not be able to, as the UK now has extensive coverage of parcel shop and locker locations. A key adoption driver is the distance a shopper is prepared to travel to collect / drop off a parcel and our research shows that three quarters would consider a 2 to 5-mile round trip - an average distance of 3.8 miles, especially as many would combine the job with other activity (trip chaining). This is confirmed by independent Citizens Advice research that finds on average, consumers are willing to travel 3 miles to collect and return items. The report goes on to show that 66% of UK consumers live within one mile of 5 parcel-point / locker locations. New developments in the market will continue to add to this coverage and we expect to see an increase in the deployment of agnostic third-party parcel-points and lockers with some being located within other retailers branded stores. This type of innovation allows all retailers to offer click & collect but sharing the cost with others. 6 IMRG UK Click & Collect Review 2018 EXECUTIVE EXTRACT

7 Shopper motivation Clearly consumer demand sits behind the click & collect trend. Apart from the seasonal motivation for using click & collect we need to consider what drives UK shoppers to use the service the rest of the year and what barriers might exist. Location, Location, Location: We have already seen that consumers are willing to make a round-trip on average of 3.8 miles to collect an order. Apart from where the location is, shoppers are interested in the type of location. Most preferred is the retailer s own store but if not within reach, third-party networks close the gap. Additional delivery cost: The main reason that shoppers opt for click & collect is because it avoids the cost or costs less than home delivery and this finding is backed up by the survey results on the right. GlobalData - Click & collect in the UK also reports that To avoid paying home delivery charges was also the top reason for its respondents choosing to use click & collect (48%). Trip-chaining convenience: When it is a task that can be performed with minimal effort and little or no incremental cost as part of normal routine going to work, the school run, a shopping trip etc. As well as minimising incremental time and cost there is also a positive environmental impact for those so motivated. Touch and Try: Sometimes shoppers do prefer to see, feel, and try what they are buying, and this motivator clearly lends itself to in-store click & collect although there are independent third-party locations that provide these facilities. Returns: Third-party click & collect locations are increasingly popular as returns drop-off points because they are so local and quick to use. Many third-party click & collect networks are innovating in the returns space. For example: Label-less returns systems, Credit on receipt, Drop off and go. Fear of missed delivery: Despite all recent innovations in final mile delivery, not being at home to receive a delivery is still a primary motivator in the use of click & collect for almost a third of consumers. Speed of fulfilment: The speed in which the customer can get their order may also be a motivator, when combined with cost. Because it is the quickest way to get the items was offered as the most important driver for the use of click & collect by respondents to the Global Data Click & Collect in the UK survey. Click & collect was chosen because of... % of shoppers 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% Men Women Average Click & collect was chosen because. % of shoppers Shipping op2ons were Click & collect is more not fast enough convenient for me Shipping op2ons were not convenient I know I am not going to be at home to accept delivery Click & collect is free / cheaper than home delivery IMRG UK Click & Collect Review 2018 EXECUTIVE EXTRACT 7

8 Operational and strategic considerations (for retailers) Operational and strategic issues to consider depending on Click & Collect offering. IN-STORE Best practice for in-store click & collect now includes: Specific click & collect locations conveniently located for easy customer access Clear signage Dedicated dressing rooms Capacity and resource monitoring to identify pinch points (especially at peak) including diversion of orders to third-party locations if necessary Trained staff on hand to help if required Arrival scan to advise that the shopper has arrived and to commence order retrieval Pick-up time advice how long will the shopper have to wait Automated recovery of click & collect orders Self-serve kiosks Drive thru orders brought to the customers car Fulfil from store stock or as part of the normal fulfilment cycle, potentially from an adjacent store (requires very good inventory visibility and management): Allows same day / next day collection Keeps distribution costs down Allows unwanted orders to be returned to store stock or central distribution as part of the normal fulfilment cycle 8 IMRG UK Click & Collect Review 2018 EXECUTIVE EXTRACT

9 Operational and strategic considerations (for retailers) THIRD-PARTY Customer experience Can the customer experience be consistent with the retailer s brand? Can information about when and where customers collect from help predict future use? What type of network will suit the customer demographic? Commuter transport related locations? Is label-less dispatch available print labels in location for customers without home printers? Coverage and reach Is the network coverage sufficient to place locations within easy reach of customers? Could the network overlap with the retailer s stores and deprive them of footfall, both digital and physical? Can the network reach cross-border customers? Likely customer awareness of network brand? Cost Does the pricing model enable click & collect to be offered at a lower rate than home delivery? Are there are pricing benefits as a result of delivery consolidation? Delivery channel Does the retailer use multiple carriers /dynamic carrier selection? Does the operator deliver to its locations 7 days a week? Does the operator deliver at any particular time? What is the latest acceptance time for orders to enter the network? How and when will orders be collected or must the retailer deliver to the network? Speed of delivery how fast will orders be in location and ready to collect? Returns offer What is the speed of the returns service? Is there likely to be a high level of returns and will a two-way proposition through a common network be attractive? How are returns delivered back to the retailer? Management What tracking capability is provided? What management information is provided? Can information about when and where customers collect from help predict future use? What integration options are available to make the service available on the retailer s website and to produce labels and routing instructions? How long will integration take and at what cost? IMRG UK Click & Collect Review 2018 EXECUTIVE EXTRACT 9

10 Strategic questions What incremental costs can click & collect incur and what implications are there for store operations? Additional / alternative costs do need to be considered when deploying click & collect, subject to the options selected: In-store often free to the customer so a full understanding of incremental costs is important: Service specific staff training Store layout Dedicated collection points Shopper queuing and order retrieval systems. Parcel-Points and Parcel lockers: Integration this is the process by which the third-party operator provides information to allow the retailer to access the network and then accepts information to allow the management of parcels through its network. Promotion to get the benefit of click & collect the service will have to be widely promoted to customers by the retailer. This will involve: Training customer service teams will need to understand the solution and how to help customers get the best from it. Can click & collect lower distribution costs and drive out avoidable costs associated with home delivery? The opportunity to lower distribution costs using click & collect certainly exists. In-store click & collect can allow in-store click & collect can allow retailers to optimise their distribution operations to supply the order from existing store stock or have it delivered to the store as part of the usual fulfilment cycle, although it is important that all other in-store click & collect costs are properly accounted for. Can click & collect support cross-border online retailing? The shopper may come across the product they want, at an attractive price on a non-domestic website but with a brand they do not recognise or have experience of in terms of delivery service. However, if the shopper is familiar with the parcel-point or parcel-locker solution the retailer uses, any concerns are reduced. 10 IMRG UK Click & Collect Review 2018 EXECUTIVE EXTRACT

11 Strategic questions Can click & collect provide an opportunity for online fraudsters? CCTV in stores and parcel-points can act as some deterrent. Locker locations often have front and rear CCTV for this reason as well as for customer security and parcellockers provided by the likes of InPost and Packcity have security cameras in-built. However especially for first time customers, retailers should consider measures to mitigate this risk. Source: The State of Shipping in Commerce UK retailers surveyed. How can click & collect and virtual stores / Pop-Up stores work together? Both store models can be used as a click & collect location, inviting the customer back to collect / inspect / try on their purchase; managing the returns process efficiently should any of the order not be required. Does click & collect better enable returns management? This is clearly an important area for many retailers as the recent State of Shipping survey shows, with 63% of enterprise retailers admitting that their returns process is slow and 53% finding it hard to manage. In-store click & collect can certainly reduce the cost of returns provided the in-store process is quick and efficient. Parcel-store and locker click & collect solutions are fully tracked and having early visibility of returns can assist the retailer. The local nature of parcel-point and parcel-locker locations also provides a more convenient drop off for the customer and so aids customer retention. How are retailers able to square the circle of online click & collect competing with in-store purchasing collections and returns? Most retailers solve this problem and encourage multichannel behaviour for stores by allowing click & collect orders and online returns to be allocated to both the online operation and / or the store whose catchment area covers the customer s home address. IMRG UK Click & Collect Review 2018 EXECUTIVE EXTRACT 11

12 About the authors For over 20 years, IMRG (Interactive Media in Retail Group) has been the voice of e-retail in the UK. We are a membership community comprising businesses of all sizes multichannel and pureplay, SME and multinational, and solution providers to industry. We support our members through a range of activities including market tracking and insight, benchmarking and best practice sharing. Our indexes provide in-depth intelligence on online sales, mobile sales, delivery trends and over 40 additional KPIs. Our goal is to ensure our members have the information and resources they need to succeed in rapidly-evolving markets both domestically and internationally. Doddle s mission is to make collecting and returning online shopping simple, hassle free and rewarding for customers and retailers alike. Doddle partners with over 50 of the UK s most popular online retailers including Amazon, ASOS, New Look, Missguided and Wiggle. When customers select Doddle they can pick up or return their online shopping in a network of premium click and collect locations, including Morrisons and Debenhams stores nationwide. Retailers can partner with Doddle in three ways to enable them to offer sector leading Click & Collect services: They can offer Doddle as a seamless click and collect and returns service for their customers They can deploy Doddle collection points in their stores as a way of driving footfall and incremental sales They can use Powered by Doddle, Doddle s retail technology platform, which enables retailers to rapidly roll out the very latest fulfilment technology solutions customisable to their own brand Doddle is headquartered in London with regional teams and partners in Australia, US, Europe and the Middle East. Neopost Shipping, a division of Neopost Group, is a market leader in ecommerce supply chain solutions from cart-to-customer. Through its integrated product portfolio and extensive partnerships, Neopost Shipping enables merchants, technology providers and carriers to place the customer at the heart of the delivery experience. The result is increased connectivity, efficiency, customer experience and intelligence across the supply chain. The company has more than 400 employees with offices in Europe, North America and Asia-Pacific and their solutions process hundreds of millions of shipments and billions of data transactions annually. Read more: shipping.neopost.com 12 IMRG UK Click & Collect Review 2018 EXECUTIVE EXTRACT