Shoppers like the idea of premium delivery services such as next day and evening drop off, but currently there is a gap between that consumer desire and the price.

Shoppers like the idea of premium delivery services such as next day and evening drop off, but currently there is a gap between that consumer desire and the price.

A survey published last week by delivery service Hermes found consumers want premium delivery services either for extremely low cost or free.

The survey provided some encouraging news for online retailers, as 97% of consumers are shopping online more or about the same than a year ago, according to the research which comprised 1,000 consumers. The top three reasons consumers cite for shopping more online are that it is more convenient (91%), they can shop when they want (75%), and that it’s cheaper (65%).

Expectations for premium delivery though are out of line with what retailers can offer. Early evening delivery was highlighted as the most convenient time for deliveries to be made, with 90% of consumers saying this was either very appealing or quite appealing for retailers to offer. Yet, 63% of consumers would only be willing to pay an extra 50p to £1 for the service.

Hermes sales and marketing director Gary Winter says providing the service for such a low price is not economically viable, with the service actually needing to cost at least £2.50 to £3 for retailers not to lose money. He believes the reason people would only be willing to pay so little for the service is that the market is made up of two segments of people, the ‘I want it nows’ and the ‘I want it for nothings’, and that these two types are currently merging, with many people often wanting both.

Winter says: “The drive for a bargain and value is the reason you’ve got this mind set, but it’s countered against a massive drive for convenience. Walking that line between value for money and the cost involved in putting these innovative solutions in is the challenge for us and our competitors.”

In addition, asked how much consumers would have to spend online to expect free delivery, 17% thought that even orders under £10 should qualify. A further 40% said somewhere between £10 and £30. Clearly consumers expect retailers to absorb the costs involved in delivery, as 55% acknowledged that by shopping online they save on fuel and parking costs of going to bricks-and-mortar stores.

So there is a gap between consumer expectations of what a delivery option should cost, especially services like evening delivery and next day, and what retailers can actually charge to make delivery services economically viable.

Winter believes once there is sufficient demand for premium services they could build an infrastructure and an economic model to provide the services at scale, which would drive pricing down, but until then these delivery services are the domain of premium delivery companies.

Winter says: “Our clients are dragging us into the areas they see as the future interest. At the moment the interest [for premium delivery services] massively outweighs the willingness to pay the premium. How much are we [the consumer] willing to pay? Nothing.”

It appears for now that there is stalemate: retailers will only be able to offer premium delivery options at lower prices once consumer demand is more clearly demonstrated, while consumers will only use and pay for them in volume once the pricing is lower.

Though not strictly a premium delivery option, pick-up points, such as the Amazon Lockers, seem to be where consumers and etailers can meet in the middle. It offers shoppers and online retailers an affordable and convenient option of getting product to buyer, with both agreeing on the cost of the service.