UPS and comScore study takes deep dive into intricacies of online shipping and impact on logistics

The advent of e-commerce continues to grow and gain increased traction over time. The many ways for consumers to order and purchase goods online continues to expand and leads to various subsequent byproducts… By Jeff Berman, Group News Editor

March 04, 2015

The advent of e-commerce continues to grow and gain increased traction over time. The many ways for consumers to order and purchase goods online continues to expand and leads to various subsequent byproducts of online purchases, including shopping through multiple channels, and delivery and payment options, among other things.

These types of topics serve as the thesis in the second annual UPS Pulse of the Online Shopper Global Study issued this week by UPS and comScore Inc.

Data used in the study was based on feedback from more than 19,000 online shoppers in the United States, Brazil, Europe, Asia, and Mexico.

In some senses, free shipping for online purchases is viewed as “a must” for consumers, and the survey noted that nowhere is that more evident than in the United States.

The survey highlighted that free shipping is having a significant influence on online purchases, with 58 percent of U.S.-based study respondents saying they add items to their online shopping carts to qualify for free shipping, with 83 percent indicating they are willing to wait an additional two days for delivery for free shipping. Another finding cited how 68 percent of respondents require free returns shipping to complete a sale, and 44 percent said they were satisfied with the flexibility in changing delivery days or rerouting packages.

In an interview with LM, UPS Retail Director Bala Ganesh said that while free shipping is clearly in demand, it really is one piece of the puzzle when it comes to satisfying customers on the e-commerce front.

“Retailers need to think about it from a holistic perspective in terms of how to reconcile the actual costs involved with free shipping,” he said. “The question from a retailer perspective is what you do you get in return for that. That study’s data shows what consumers are willing to do to qualify for free shipping like using free shipping to store locations for pick up or joining an omniretailers’ loyalty program. In effect, the days of blanket free shipping-with no questions asked-are going away with more things like this occurring.”

A major question for retailers in addressing free shipping is how to offer consumer options that cater to the variety of demand and demographics of specific populations, according to Ganesh.

As an example, he said how certain consumers within countries in Asia typically want their orders delivered faster than consumers in the U.S.

The optimal way to approach this, he explained is to offer a choice of what is possible for consumers so they can choose from different shipping options. And on the retailer side, options they can consider in return include offering air shipping options, leveraging omnichannel locations, and click and collect models in which consumers pick up orders at store locations, which is popular in Europe and Asia.

In the case of UPS, the company’s My Choice offering, which allows online shoppers to reschedule deliveries for a future date or reroute packages to another address, provides a viable alternative for shoppers to get their orders. And when a UPS driver is unable to deliver to a consumer’s residence, packages are left at a UPS Access Point location where consumers pick up packages at their convenience.

The study found that 27 percent of consumers in Asia, whom are the most avid technology users, expect same-day delivery, with 48 percent expecting next-day shipping to be offered by retailers, with both metrics the highest among the surveyed markets.

“There is a combination of factors there in that Asia tends to be a little bit of a trendsetter as far as how they move into and adapt to new technologies, and you are seeing a little bit of that in terms of how demand patterns and e-commerce are concerned, with consumers there basically bypassing the whole mall experience and going straight to e-commerce options. There is a bit of growth and accelerated expectations there, as well as a function of geography, with physical distribution there more feasible with more countries in close proximity to each other, as opposed to the U.S., where it can take three days for a product to be delivered.”

While Asian consumers expect faster shipping options, the study also found that they want faster shipping options made available but those options are often not the ones selected, said UPS Retail Marketing Manager Ashley Boggs.

“The challenge for logistics service providers and retailers is to provide that flexibility of different types of shipping options but knowing in many cases consumer will select the less expensive ones or ones with slower transit times,” she said. “But they want to know faster options are there for when they are needed, too.”