Which retail customers are willing to pay for same-day shipping?
Part of leveraging retail customer intelligence is finding out what people are willing to pay for. Producing a high-quality product and marketing it to a target audience consisting of individuals who may not be able to pay for said commodity is an example of poor analysis. Same-day shipping is becoming quite popular with many e-commerce businesses, prompting some of them to deduce whether their logistics operations will be able to support such an operation while still exercising cost-efficiency on the buyer's end of the deal.
Not on the radar
According to RetailWire, a survey of 1,500 U.S. consumers conducted by The Boston Consulting Group discovered that the majority of participants, about three in four, listed free delivery as a key decision-maker regarding purchases. Coming in at second were lower prices (50 percent). A mere 9 percent of respondents maintained that same-day delivery was a top priority. BCG noted that the latter contingency likely consisted of people between the ages of 18 and 34 with household incomes greater than $150,000 living in affluent urban areas.
"Same-day delivery will be a niche service in the near future," said BCG partner Rob Souza, as quoted by RetailWire. "Retailers may choose to offer it to build customer loyalty, enhance brand awareness, or keep up with the competition. But it is unlikely to generate significant revenues for either retailers or carriers."
Targeting the wrong audience?
For merchants offering discount prices, retail customer trends often point in the direction of affordability. The Boston Herald noted that nationwide merchandiser Target will try its hand at same-day delivery in Boston during June, allowing consumers within select parts of the New England city to order items online by 1:30 p.m and receive them between 6 and 9 p.m. for an additional $10. Jason Goldberger, Target's senior vice president, maintained that the the service will allow the retailer to deliver products more flexibly.
However, some critics such as Norwell analyst Michael Tesler believe that same-day shipping doesn't make sense for discount merchants, asserting that luxury brands such as Neiman Marcus could benefit from the practice because their customers will be willing to pay for it.
"Ten dollars additional on a Neiman Marcus item isn't very significant," said Tesler, as quoted by The Boston Herald.
Consulting point of sale software and figuring out how shoppers are spending their money can give merchants a better idea of whether same-day delivery will benefit their operations or simply be a waste of resources.
