This article provides an overview of the logistics and communications network as part of the UK eCommerce market and outlines some of the key elements that prospective cross-border retailers need to be aware of before entering it.
UK online consumers are arguably the most sophisticated in the world when it comes to delivery expectations. Almost 27 million households packed onto an island, where the maximum distance between major population centres is only 650 miles1, means that a significant number of carriers and couriers can claim to offer national delivery services, creating a highly competitive environment where retailers and their customers have a wide choice of services.
There is a concentration of online orders in London and the South East of England but in order to succeed in the UK a non-UK retailer will need to offer a fully national delivery solution.
Figure 1: UK destination analysis percentage of total volume March 2017 Source: IMRG MetaPack Delivery Index
UK consumers are also highly att ractive to non-UK retailers with a high per capita online spend and a confidence in online retailing which means they are fully prepared to look outside of the UK to buy the products they want if the price, quality etc. are right.
The latest IMRG Blackbay UK Consumer Home Delivery Survey consistently shows that more than 50% of respondents have shopped cross-border but that when making that decision it is still delivery and returns issues that create the biggest concerns.
So when dealing with UK online shoppers it is important to get the logistics offer right and just as important to communicate this offer clearly and frequently through the buying process - two-thirds of UK consumers feel that access to clear delivery and returns information, before they start to shop, is important in making their shopping experience more convenient.
Figure 2: When do you expect to see delivery/returns information? Source: IMRG Blackbay UK Consumer Home Delivery Survey
A non-UK retailer wishing to deliver to UK consumers at home has a number of service providers to consider. The first of these is Royal Mail which provides the ability to reach 29 million addresses nationwide, every day with a range of cost-effective, tracked and guaranteed next day parcel delivery services. Royal Mail also off ers UK shoppers a range of flexible options such as delivery to a neighbour or a safe place plus the option of delivery to their Royal Mail Customer Service Point or local Post Office branch with Local Collect(R).
The delivery lead time will of course depend on the destination and how long it takes to enter Royal Mail’s UK network. From arrival, Royal Mail offers guaranteed next day delivery as well as other 24 and 48 hour delivery options.
In addition to Royal Mail, retailers in most countries will have access to the major global carriers, namely:
When sending goods from outside the UK, Royal Mail services are accessed through either the postal authority in the originating country or a commercial service partner. Most notable of these are the companies that are part of the GLS (General Logistics Systems) network, covering 37 countries across Europe.
Transit times and service options to the UK will depend on the country of dispatch and the service range off ered by the selected carrier. GLS estimates that for parcel shipments, deliveries to the UK will be made between 24 hours and 96 hours from dispatch dependent on where they are sent from.
The other carriers mentioned above will provide their own branded access options in each of the countries they serve which are fully integrated with their UK operations.
Senders looking for a more managed carrier solution can look to integration specialists who will provide the interface with a range of carriers and services. This will generally include the production of the right labels (and where necessary, customs documentation) for each carrier and service the sender wishes to use and data exchange including any pre-advice and tracking information.
Providing carrier integration within the UK market are companies like Electio, Consignor, Hypaship, and MetaPack.
Local logistics solutions
The UK has one of the most competitive carrier and online retailer markets in the world. Therefore, as well as understanding the logistics and delivery options available to reach the UK from their country of dispatch, non-UK retailers also need to understand that UK retailers present their strongest competition and have access to the widest range of delivery solutions. It is therefore important to appreciate what these ‘local’ companies are able to offer UK consumers and what UK shoppers have come to expect from online delivery.
What do local consumers expect?
Price, demand and a lack of availability with UK retailers are cited as the key drivers behind shoppers venturing to international retailers with many being unconcerned about where a retailer is based, as long as they’re selling the right product at the right price. A significant number of cross-border purchases are made via marketplace sites such as eBay and Amazon suggesting consumers mainly head to international retailers when the product they’re after is niche.
However, price and choice aside, delivery and returns are very important to UK consumers and has now become an important factor, differentiating retailers they will and will not shop with. In order to win customers non-UK retailers should appreciate that 70% of UK consumers positively confirm that a good delivery experience will encourage them to return and shop again with the retailer providing it.
Figure 3: Has a good delivery experience directly encouraged you to order again from a particular retailer? Source: IMRG Blackbay UK Consumer Home Delivery Survey
When it comes to delivery location UK consumers still overwhelmingly want delivery to home with in excess of 80% consistently giving this as their top preference3. However, home delivery needs to work efficiently.
Currently the proportion of deliveries meeting the stated service promise is over 93% with only a small proportion of deliveries (<3%) failing to be made at the first attempt
This has become possible in the UK due to the growing popularity and use of:
Between two thirds and three quarters of UK consumers rank this specific option as important in making their delivery experience more convenient.
Safe-place delivery — providing the customer the option to give safe-place delivery instructions can avoid a missed delivery and the need for a repeated delivery.
Neighbour delivery — providing the customer the option to select a neighbour to accept goods on their behalf can avoid a missed delivery and the need for a repeated delivery. This option has increased in use especially since Royal Mail has been given the regulatory freedom to offer to delivery to a specified neighbour.
In the order of 50% of UK consumers consider safe-place and deliver to neighbour options as important in making their delivery experience more convenient and consistently almost 50% confirm that they do have a safe-place or neighbour they would be happy to nominate.
Despite the preference for home delivery, over the past five years click & collect has been gaining in popularity. This is where the customer can choose to collect their online order from the retailer’s own store, a parcel-shop or a locker bank at a time and place to suit them. Awareness of this option is now very high with 98% of UK consumers and with three quarters having used it or intending to use it in the future. More than half of online shoppers have used a Click & Collect service – and 59% of those said they did so because it was free*.
However, 72% of Click & Collect customers still prefer home delivery and would choose it if delivery was free of charge.( Royal Mail - Delivery Matt ers, April 2016, Trinity McQueen).
Amongst the click & collect variants for those that have used this service, collecting from the retailer’s store is most popular amongst UK shoppers with 70% having used this service but this is unlikely to be an option for non-UK retailers who will not have store networks in the UK. To overcome this barrier, there are now extensive click and collect options with delivery to a Post Offi ce, or parcel-shop and locker networks in the UK, many aligned to particular carriers.
Non-UK retailers should actively look at their ability to access delivery to Post Office branches, local parcel-shops or locker networks because up to 35% of UK shoppers have used this option which is also popular for returning unwanted orders. This also provides an element of brand association. If the shopper knows and trusts the click & collect provider, that trust extends to an overseas retailer.
A short summary of the UK’s parcel-shop and locker networks is provided in the next section.
Over and above the services generally available to non-UK retailers, domestic retailers have access to a wider range of service providers with some additional service options.
Source: IMRG MetaPack UK Delivery Index
Figure 4: Service Analysis - Percentage of Total Volume - rolling 6 months to March 2017 Source: IMRG MetaPack UK Delivery Index
As mentioned previously click & collect from the retailer’s store is the most popular of this type of service but click & collect overall increases in use during the peak Christmas shopping period (November / December) when UK consumers make 25% of their annual purchases.
For retailers without access to stores in the UK main 3rd party networks are shown below. A full explanation of the UK click & collect market is available in the IMRG – Collect+ UK Click & Collect
Royal Mail / Parcelforce / Post Office
UPS Access Points
DPD Pick Up
Pass My Parcel
A very important element for any retailer’s offer to UK consumers must be the ability to accept returns and make the returns and refund / replacement process convenient. When surveyed, 60% of UK consumers stated that the ability to return unwanted orders and get a credit was a concern and potential barrier for them shopping with a non-UK retailer.
As can be seen in the following graph, the same survey reveals what the most important elements for UK consumers wanting to make a return are.
Figure 5: How important would the following aspects be in making a returns service more convenient for you? Source: IMRG Blackbay UK Consumer Home Delivery Survey
For non-UK retailers unable to offer their own stores for the customer to return to, the most used option is Post Offices, using Royal Mail or Parcelforce to provide the logistics link to the local postal administration. Royal Mail is a leading participant in the recently developed IPC (International Post Corporation) Common Return Platform which allows the seller to provide the consumer with an internationally accepted, tracked, pre-paid label. With the UK and Royal Mail as one of the original participating countries, the service is now available from nine other markets.
In addition to Post Offices for accepting returns, non-UK retailers may also have access to the click & collect networks and collection from home services offered by global carriers, which then integrate with their corresponding returns distribution services.
With returns there is also the option to provide shopper with a ‘returns portal’. This is a website (which may have the option to be integrated into the retailer’s website) which the consumer is asked to visit and download a label to make a return.
This can identify the product, the reason for the return etc. and give the consumer returns options best suited to that situation. Labels and instructions are then provided and once again some click & collect networks may be available. Providers of such returns portals, serving the UK market include Royal Mail, MetaPack, wnDirect and ReBound. During 2017 Royal Mail is planning to expand its UK returns portal to international countries.
When sufficient volumes of returns are generated, another option is to arrange for them to be consolidated and managed ‘in country’. This could extend to the resale or disposal of the items.
Therefore, when selecting the delivery provider and service, a non-UK retailer should equally consider the returns option.
This article provides a logistics overview of the UK eCommerce market – we have produced a full country guide covering in-depth information on multiple aspects of trading into this territory including logistics, payments, legal framework and marketing.
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