New JDA/Centiro Report

The new report reveals more than three-quarters of European online customers are willing to exceed minimum order thresholds for free delivery

More than 80 percent of European online shoppers are willing to exceed minimum order thresholds if it qualifies them for free delivery or collection, according to data from the JDA/Centiro Customer Pulse Report Europe 2016, conducted by YouGov. The survey of 8,190 adults online across the UK, Germany, France and Sweden revealed that despite this willingness to spend more with retailers, European online shoppers continue to be intolerant of poor service. Overall, nearly 63 percent of respondents stated they would likely switch to an alternative retailer as a result of a poor experience with an online home delivery, or when using a Click & Collect service. UK online shoppers were the least tolerant, with 74 percent stating they would likely switch to an alternative retailer.

Ongoing online home delivery problems fuels Click & Collect growth

Research reveals that one in two European shoppers experienced a problem with an online order in the last 12 months. As problems with home deliveries continue, Click & Collect is gaining increasing popularity among European online shoppers. Almost half of those surveyed stated they had used this service over the past 12 months, growing by 17 per cent since 2014. 59 percent of the French and the 54 percent of the UK markets saw the highest rate of adoption of Click & Collect services over the last year.

Despite the growing popularity of Click & Collect, more than 54 percent of European adults that used the service had encountered an issue. This figure is lower in the UK at 45 percent, due in part to it being a more mature market for Click & Collect. In other regions where issues were more frequent (Germany 65 percent, France 56 percent, Sweden 56 percent) retailers are still learning and refining how to run an effective in-store Click & Collect service. 

“The growth of online retail shows no sign of slowing down, with retailers competing ever more aggressively for sales and offering an increasing array of fulfilment options. Delivering a high level of service in an efficient and profitable manner remains a challenge for many retailers,” said Jason Shorrock, vice president, retail strategy EMEA at JDA. “As our research shows, last-mile issues continue to negatively impact the customer experience and customers are more willing to go elsewhere if their expectations aren’t being met. The good news for retailers is that customers appear to be willing to exceed order thresholds if it qualifies them for free delivery or collection. Now, more than ever, it is important for retailers to ensure they are offering outstanding customer service, or they risk damaging customer relationships and revenue. 

Differing responses to minimum order values

When ordering goods online for home delivery, cost continues to be the most important factor for European online shoppers, followed by convenience for 26 percent of people and speed for 18 percent. Interestingly, speed was much more important for Germans at 21 percent and French the same, than online shoppers in the UK at only 16 percent and Sweden with only 12 percent.

Over the last 12 months, many retailers have introduced measures such as minimum order values and charges for Click & Collect orders, as they look to boost the profitability of their online operations. Despite the majority of European online shoppers indicating they would be happy to exceed minimum order thresholds, the research shows that behaviour differs by delivery option. 25 percent would do so for same-day delivery and 22 percent for next-day delivery, but this drops to 15 percent for standard delivery. Responses also varied by geography, with a third of UK respondents exceeding minimum order values to qualify for next-day delivery, compared to just 16 percent of French respondents.

Regarding free delivery, UK respondents had the highest expectations with almost 72 percent expecting standard delivery to be free. In comparison, this expectation was far less in Sweden at 61 percent and Germany and France at 55 percent.

Returns remain a conundrum for European retailers

Returns continue to put stress on European retailers from both an operational and margin perspective. The research shows that 30 percent of European online adults return items bought online twice up in an average year, with a further 25 percent returning items three or more times.  Overall, 46 percent of European online shoppers returned items as a result of them not meeting their expectations. A further 16 percent stated they bought multiple items with the intention of returning the goods they did not want. Significantly, that figure was higher in Germany at 23 percent and the UK 19 percent specifically, which indicates a possible trend towards ‘serial returners’ in those regions.

Stores to retain a key role in online retail

According to the research, online home will be the most popular way to shop in five years’ time. However, a significant number of European shoppers stated they will use Click & Collect or use the store to shop and pick up in store or shop and opt for home delivery.  This indicates that the store will continue to play a significant role in the retail industry in the future.

Another trend is the increased use of third-party fulfilment services to enable shoppers to pick up their goods from locations such as train stations and convenience stores. More than a quarter of European adults online said they would use such services in the future, with it being especially popular in Sweden and France.

“It is clear that there are differing levels of maturity within the European online retail market and customer behaviour varies from country to country.  For international retailers, it is important to understand these regional differences so they can tailor their approach to meet local needs.  Key to this will be mining the volume and variety of customer data to generate and use insights to serve shoppers in a much more personal and segmented manner. Aligning this insight with their supply chains will help retailers deliver a better and more cost-effective service to their customers,” added Jason Shorrock.