It comes as little surprise that discussion of Debenhams’ and Mothercare’s lacklustre Christmas results have mentioned their online delivery propositions.
Mothercare admits its £50 delivery threshold this year hit online sales. Debenhams raised its threshold for free delivery to £50 in September, returning it to £30 in November to reduce its abandoned basket rate. Given the discounting Debenhams went on to do it would have perhaps benefited its margins if it had even offered free next-day delivery during the whole of peak, rather than raising the bar for free standard delivery, which takes up to four working days.
Clearly free delivery has been as important as ever to consumers in the run-up to the Christmas period.
After all, Amazon has reported that globally it signed up one million members to its Amazon Prime service in the third week of December. Prime provides free next-day delivery and discounts on other delivery services. It costs £49 a year in the UK but, crucially, there is a free trial period. So UK customers signing up in December could get gift purchases delivered free, and then cancel their Prime membership post-Christmas before the charge kicked in.
It would be interesting to see how many do cancel, but that’s a figure Amazon is likely much less keen to divulge.
However, there’s more to making delivery competitive than just cost. Consumers’ time is money too. Other things being equal, this is perhaps why Debenhams’ online sales growth was relatively weak compared to John Lewis and House of Fraser. Debenhams only offered standard, next-day or click and collect from its own stores.
In comparison, John Lewis online orders can be picked up from Collect+ locations or Waitrose stores. Waitrose itself has reported that 619,000 grocery orders were collected from its stores in the five weeks to Christmas, providing a steady stream of customers for whom it would also be convenient to pick up a John Lewis order.
Meanwhile House of Fraser left nothing to chance, offering Collect+, order until midnight for next-day delivery, nominated day and same-day delivery services – as well as click and collect from its own stores.
Multichannel retail is supposed to be about giving customers the choice to shop how they want. Having a wide range of channels – web, mobile, stores and maybe catalogue – is only going to be so attractive to customers if you don’t also offer the same broad choice when it comes to fulfilment.