Will Sunday delivery services reshape online retail?by
Recent unique data analysis by the online retail industry body IMRG and ourselves revealed that online retail was growing faster than expected in the first four months of 2014. Indeed, like the Government’s own economic analysts, this has led the IMRG MetaPack Delivery Index to revise its forecast upwards, with 900 million orders and 940 million parcels expected to be dispatched by UK e-retailers this year. This compares to an earlier estimate made at the start of the year that 855 million orders would be made in 2014.
Within this increased pace of growth, we’re seeing another interesting trend that’s going to drive a new phase of innovation in online deliveries.
For the first time in a year, the percentage of 'on time' delivery (92.62%) has fallen below the level achieved for the same month in the previous year.
Yes, a great deal of this is down to how the Easter and Spring bank holidays fell much closer together than usual. But, also it suggests how the growth in volumes is putting the delivery supply chain processes under some strain, several months before we even enter the peak season for ecommerce.
So, it’s not entirely coincidental that major players in the carrier industry are bringing forward a raft of new delivery innovations. Of these, the advent of Sunday delivery services is the most striking development in how it resolves a longstanding anomaly.
For a decade or more, retail has been a seven-day a week business while online retail has offered 24 hour buying but deliveries limited to Monday to Friday or Saturdays at a premium.
So, Sunday services provided by the likes of Hermes, DPD and Royal Mail have the potential to transform online retailing at a time when retailers are reviewing the best strategies to handle the Christmas peak.
It’s important to understand the drivers for a Sunday service.
Firstly, it is a move linked to how the carriers want to offer a new service that helps minimise the peaks and troughs of delivery volumes across the week. Monday already experiences a sharp spike in volumes so an increased weekend service is extremely helpful in reducing strain on the carrier network. The industry is keen to disperse volume more evenly whenever possible and especially around volatile periods like Christmas peak. For example, in 2013 we saw a rise in parcels being dispatched on Tuesday and Wednesday, as opposed to previous spikes predominately on a Monday. Sunday service, therefore, provides greater flexibility to address peak season pressures as well as manage shipments during normal periods.
Secondly, it is about addressing the slippage of deliveries on-time and the negative impact on customer experience for retail brands. According to the IMRG UK Consumer Home Delivery Review 2013, almost 50% of customers don’t expect to be home when a delivery is expected. Alongside Saturdays, a Sunday service fully opens the window for when the customer could be there to receive the delivery. A Sunday service gives the carrier and shopper a better chance of receiving their parcel first-time, minimising costs for the retailer and carriers, as well as providing a more satisfying experience for the consumer and increasing the likelihood of them choosing that retail brand next time.
From the carriers’ perspective, most interestingly, Sunday service introduces new differentiation into the marketplace. The key here is how quickly they are able to bring these new delivery choices to market for retailers and their customers. This is where MetaPack is playing a pivotal role in helping launch and coordinate these new offerings in good time for the peak season.
Christmas 2014 will be a major test for the new Sunday services and we still need to see how these offerings perform as the first services move beyond their pilot phases but we have no doubt that we will be seeing a noticeable update in consumers opting for this delivery method.
What’s particularly interesting for us is how Sunday services may reshape the balance of home delivery in the near future. A full weekend delivery service should be overwhelmingly attractive for consumers, retailers and carriers, with the right operational infrastructure in place. We can see the likelihood that Saturday and Sunday will become the preferred days for receiving online deliveries to home, resulting in more evenly spread volume across the rest of the week and established high volumes on week days declining.
Simon Croft is carrier account director at MetaPack.