Low prices key to ecommerce

Warc, 6 March 2013

NEW YORK: The promise of same-day delivery would entice fewer than 10% of US consumers into buying more products on the web, an area where free shipping and price dominate, a survey has found.

The Boston Consulting Group asked 1,500 US consumers what would encourage them to shop more online and, despite more retailers competing on this particular front, just 9% mentioned same-day delivery.

What consumers actually want is free delivery: almost three quarters of respondents referred to this.

And, unsurprisingly, lower prices would also be an attractive proposition for half of those surveyed.

If they have to pay for same-day delivery for an item bought online, the analysis found that consumers were willing to meet an average charge of $7.50 on a $50 purchase, a figure that is lower than the current fees being charged.

"The demand for this service and the willingness to pay do not match the cost of providing it," said Rob Souza, a partner at The Boston Consulting Group.

The circumstances in which consumers would use the service tend to be exceptional, such as the need to buy a last-minute gift or an inability to get to a physical store.

The one group that is most interested in same-day delivery, affluent millennials earning more than $150,000 a year, constitutes less than 2% of the market, according to the report.

Retailers could consider offering same-day delivery on a limited number of products, the study suggests, typically ones that are small, light and carry high margins. Examples include electronics, office supplies or clothing, although even here consumers are reluctant to pay extra to have these items delivered promptly.

"We're pretty sceptical about the ability of a stand-alone business to make money from this," said Vladimir Lukic, who worked on the survey for the Boston Consulting Group.

The conclusion is that same-day delivery will remain a niche service, offered as a loyalty-building option by some retailers.

Data sourced from Reuters; additional content by Warc staff