- Retailers face profitability challenges as shoppers continue to shift online
- Kurt Salmon warns retailers need to establish the “true cost of servicing their online customer”
- Retailers urged to learn Black Friday lessons and meet customer expectations on Christmas deliveries
Retailers face “higher-than-ever profitability challenges” in 2016 as discounting and decreased revenue from deliveries bite, experts have warned.
Businesses have been urged to reconsider their fulfilment options and their costs as shopping habits continue to shift online.
Consumers now expect “more and more delivery options”, but retailers need to understand “the true cost of servicing their online customer to figure out how to maximise profits”, retail consultancy Kurt Salmon said.
It came as the firm revealed its “Nice List” ahead of Christmas Day, naming the top 10 retailers for Black Friday deliveries.
Etailer Amazon and fashion behemoth Next were the only retailers to offer next-day delivery on Black Friday and only 30% of retailers delivered goods by the following Monday, Kurt Salmon’s study found.
Net-a-Porter, Coach and Gap completed the top five, with department store giant John Lewis sneaking into the top 10. White Stuff, Monsoon, Topshop and Clarks were also named on Kurt Salmon’s Nice List following their Black Friday delivery performance.
Further analysis of the data – which assessed 50 retailers on shipping speed, customer notifications, accuracy, cost and ease of returns – revealed that it took an average of five days for orders placed on Black Friday to be delivered.
Retailers who fulfilled their orders quickest averaged a 2.8-day turnaround – nearly twice as fast as the average delivery time – as 80% of businesses offered customers free standard delivery.
“If retailers want a very merry, prosperous and profitable 2016, they are going to have to take a much closer look at their delivery and returns options and their costs”
Judy Blackburn, Kurt Salmon
At the other end of the scale, Kurt Salmon said some retailers took 10 days or more to deliver orders – more than double the average delivery time.
But Kurt Salmon director Judy Blackburn suggested those retailers with sluggish delivery turnaround times should not have been caught out by the level of Black Friday demand.
Blackburn said: “Analysts had been predicting sales of more than £1bn for months and they were in line with this prediction, just slightly higher.
“It is too late for retailers to improve their performance this year, but if they want a very merry, prosperous and profitable 2016, they are going to have to take a much closer look at their delivery and returns options and their costs, otherwise they will not be celebrating in 12 months’ time.”
Kurt Salmon said shoppers will now have to pay more for delivery to ensure that their orders arrive before Christmas, with less than three online shopping days remaining.
Blackburn added that retailers can learn lessons from Black Friday and said “meeting customer expectations” would be vital.
“The best present that retailers can give is meeting customer expectations – speed is not everything”
Judy Blackburn, Kurt Salmon
She said: “Shoppers cannot rely on the standard delivery option – they are going to have to pay for a premium or next-day service to have the best chance of getting their presents delivered in time for Christmas Day.
“The best present that retailers can give is meeting customer expectations – speed is not everything. Shoppers would much prefer to have their orders delivered on time, even if it is going to take longer, rather than be let down by retailers who make promises that can’t be kept.
“With 14% of retailers not even confirming a delivery date at the point of ordering, thousands of customers are being left in the dark wondering as to when their delivery might arrive.
“The difference between the ‘nice’ and ‘naughty’ retailers is their ability not only to deliver on time to the address requested with all items required, but also their ability to communicate order status, ship in fewer packages, deliver at low cost, or for free, and the ease of returns.”