Friday, 6 January 2006

Online shopping's killer (and killer app): delivery






Internet shopping is on the rise, even in the UK, which generally lags behind the US in things Webby. A boom was predicted in the Financial Times of 22 November 2005, with the story that UK supermarkets had to stop taking orders over the Net because the "astounding" demand was such that they couldn't guarantee delivery before Christmas headlining on the front page of its 15 December 2005 issue, analysts Mintel (according to Out-law) saying that 38% of UK shoppers were expected to buy Christmas presents online, and then UK trade body for e-tailers (or e-retailers) Interactive Media in Retail Group (IMRG) reporting £2 billion worth of internet shopping in November, 50% higher than a year ago, with a peak of 5,000 online shoppers per hour at Tesco.com and a record-breaking Christmas for Amazon.co.uk.

However, buying over the Net is still nowhere near as big as it could be, especially in the UK. Addressing one simple but critical issue would really make Internet ordering take off. That issue is delivery, otherwise known as "fulfilment" (and boy do I feel ever so fulfilled when I finally manage to get delivery of whatever it is I've tried to order).

Delivery, the killer (and killer app)

Now I've been home shopping since before there was a Web. Not "mail order" (I'm too lazy to fill in a form, find stamp and envelope AND get to a postbox): but phone shopping. The biggest pain was trying to get delivery of your order. It still is. Downloadables like software, music, video are no problem. CDs and little things that fit into your letterbox, they're fine too (unless the blasted supplier insists on requiring a signature). But stuff too big for your letterbox, or which has to be signed for (whether us mere consumers think it warrants that or not) - that's where the aaargh territory begins.

How many of us have had hours of fun of playing endless telephone tag with the delivery man? Assuming you can decipher the scrawled phone and (if you're lucky) reference number on the screwed up bit of card stuffed through your letterbox, that is. And as for being home to receive re-delivery, assuming you can afford to take the time off just for that, forget it. You'll be privileged if they can offer a morning or afternoon time slot ("No it could be any time on the day. No I don't know if that means between 9 to 5, it could be any time on the day").

Fact: most of us have to work for a living. Little housewives sitting at home all day waiting with bated breath for the next exciting delivery just aren't the norm anymore (if they ever were), but delivery systems haven't caught up. Unless you're rich, maid or nannied, or have employers willing to put up with personal orders being delivered at your workplace, then too bad (plus, for large items like furniture, delivery at work is just not feasible - fancy lugging that sofa all the way home from the office, do you?).

Yes, some suppliers deliver at weekends or evenings - but for a much higher fee. And "evenings" often means anytime after 6 (not 8 or 9) pm, if they're willing to give you an idea at all of what hours count as "evenings" to them (which is probably different from many employers'!). How many of us live close enough to work to get home by 6? As for being able to collect from their depot, not all couriers allow that, and if they do it's usually miles away in the middle of nowhere and open only during, you guessed it, daytime on week days - when you're at work. So the collection option's really mostly a non-option.

Credit card companies

Even if orders could be delivered to work, credit card companies' practices are another barrier. To minimise fraud, many retailers won't deliver anywhere but to the cardholder's registered address. That's understandable, but why oh why won't the credit companies let you register more than one address, even three (including your mum's so you can send her pressies, of course)? If the requested delivery address matches ONE of those registered on their database, then fer goodness' sake just authorise the charge. Don't they have the technology to allow more than one registered address? Just how hard can that be?

But no, that would be too much like making life easier for their customers. The most you can do with a handful of credit card companies is to register your work address, with your home address as the mailing address for statements. Which means that if you ever need stuff delivered at home, you have to change the registered address again, going through stricter security hoops. (There's a clear gap in the market there for any credit card company willing to let customers have more than one registered address. I'd switch like a shot.)

The cost in productivity terms can't be insignificant. Sellers and couriers wasting time and money in failed deliveries attempted during business hours on weekdays when the buyer, not surprisingly, is normally out at work. Consumers having to take time off to wait in, usually all day, for re-deliveries, which sometimes don't arrive when scheduled, resulting in more time-wasting.

Some supermarkets have got the right idea, allowing customers to choose 2-hour (or even 1-hour) slots for their grocery deliveries and charging little more (if not even less) for delivery than most online shopping companies charge for delivery by post or courier. If they can do this for an average £5 delivery fee for orders of smallish amounts (or no delivery charges at all for orders over £75, in Ocado's case), why can't other suppliers? Or why not make a deal with Tesco or Ocado to piggyback on their delivery systems?

IDIS - a start

It is good that the IMRG at least have finally recognised that delivery is the Achilles heel of online shopping. On 8 December 2005 the IMRG (who were responsible for the ISIS (Internet Shopping Is Safe) Code of Practice for E-Commerce), launched an "online shopper delivery charter" (with accompanying IDIS ("Internet Delivery is Safe") logo). The charter is very short but I won't repeat it here, I'll leave you to check out the IDIS site (which also by the way has useful stuff like top 10 tips for online shoppers, more detailed online shopping guidelines, consumer FAQ and glossary of e-retail terms).

Now the charter's great as far as it goes, and all other things being equal I for one would rather buy from a retailer that's ISIS/IDIS-accredited (though a search facility would be helpful) than one which isn't, but in my view it's not enough. (I'd also take issue with their saying "Agree in advance with the retailer if you are going to return goods that are faulty or incorrect, then return the goods in accordance with the retailer's instructions: expect that you may be required to pay for return postage, which will usually be refunded by the retailer once the problem is confirmed." I feel that if they sent you wrong or defective goods then they have to refund you return postage, no "usually", though I agree it's sensible to talk to them about it before you return it and any retailer worth their salt shouldn't have a problem with the return of duff or wrong goods and refunding the postage).

The charter says consumers have a right to "Clear delivery information before you place your order" and "Convenient delivery options", but it doesn't spell out what should's required for "clear delivery information" or what are "convenient delivery options"- and it should.

For instance, I feel all online suppliers should state clearly (somewhere on their site that's very easy to find), not just delivery charges/scales but also the rough timeframe for delivery and delivery days/hours available, whether you have a choice of delivery dates/timeslots, what happens if you're out when they first try to deliver (or that they will contact you first in order to arrange delivery, if so), what re-delivery days/hours are offered e.g. they can re-deliver no sooner than X hours or days after you call to arrange re-delivery, and no later than Y days after the first attempt, and they can provide morning or afternoon slots of 8.30 am to 12.30 pm or 12.30 pm to 6 pm respectively (or only all day slots of 8 am to 5 pm), etc. That information matters to the time-pressured working consumer who has to juggle not only work but other commitments. I am not going to order from an e-retailer who can only re-deliver within the next 2 days after the first attempt and who can offer only an all-day slot, as that's too short notice for me to arrange time off. And why can't they let people schedule re-deliveries online, and provide all that info there too?

The root problem is still the inability to deliver at reasonable rates during times that would suit the average working consumer (or could be easily arranged to suit, which is the nub of it). There's surely money to be made by someone who can deliver proper delivery, so to speak, deploying shift workers and using technology to manage and maximise the efficiency of deliveries and collections; and I am convinced the widespread introduction and use of delivery systems more in keeping with the realities of the twenty-first century would increase online sales considerably, as well as perhaps generally improving productivity. The IDIS charter is better than nothing, but to my mind no one has yet addressed the delivery issue properly in the UK (apart from the supermarkets, and then only for groceries - booo to them, why not for their electronics equipment and other goods too?).

And now, excuse me for a few minutes, I have to make a call to reschedule the last failed delivery...

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3 comments:

Kirk said...

Excellent post Imp! Belongs in the "Best of Imp" category.

Improbulus said...

Thanks Kirk! :)

Paul Elosegui said...

UK online shopping is really taken off now, figures just in from IMRG and hitwise, one in ten retail sales in the UK are online