Is flexibility the key to securing a greater share of online delivery?

May 30, 2014
3 min read

The Royal Mail is to extend a Sunday parcel delivery service and open up to 100 delivery offices seven days a week, in a move that had been widely anticipated.

The move follows a period of innovation in the parcels industry, with a focus on live parcel tracking, text alerts and one-hour delivery windows.

Mintel’s Courier and Express Delivery – UK 2014 report projects the market will expand by 38% over the next five years. Capturing a larger share of these revenues is the main factor behind the Royal Mail’s announcement that:

  • The Sunday parcel delivery pilot will take place over summer 2014, available to customers living within the M25
  • Approximately 100 of its busiest delivery offices across the UK will now also open on a Sunday
  • Parcelforce, its express delivery arm, is to offer a Sunday delivery service from June for customers of retailers already engaged in delivery contracts with the company.

Is flexibility the key to securing a greater share of online delivery?

Sunday delivery has been a clear aim for the largest delivery companies, with Hermes and DPD launching services through 2014. Amazon also began providing its own Sunday delivery service in select areas of the UK in January.

Consumers main concern when buying online is the cost of delivery, Mintel consumer research has shown. Mintel’s Online Grocery Retailing – UK 2014 report shows that:

  • 58% of people would be encouraged to shop online more if delivery costs were lower
  • This compared with just 24% who would be encouraged to do more shopping online by more precise delivery slots.

The theme of delivery costs was also paramount for consumers buying clothing online, shown by research in Mintel’s Fashion Online – UK 2013 report, which indicated:

  • 56% of people said a barrier to buying online clothing was delivery costs
  • This compared with 28% who said a barrier to purchasing clothing online was having to wait at home for deliveries.

If the largest factor in encouraging people to shop online is the cost of delivery, rather than the speed or flexibility, this could prompt the Royal Mail and its competitors to look at different innovations to capture a greater share of the market.

What are the implications for the Royal Mail and other delivery firms?

  • If people’s main concern is the cost of delivery rather than flexibility, retailers are likely to favour express delivery operators whose focus is upon making delivery as cheap as possible.
  • Working with retailers to offer cheaper delivery options over longer-time delivery periods may attract more customers than offering faster premium services.

Ben Harris joined Mintel in 2013, having previously worked in research for a global professional services business. He writes a range of reports covering the UK’s industrial and professional services markets, specialising in how economic, political and regulatory change impact the B2B sector.

Ben Harris
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