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Online Retailing: Delivery, Collection and Returns - UK - October 2019

“Customers are increasingly making purchasing choices based on how, when and where they will receive orders made online. Therefore how retailers fulfil orders, and process returns, must be viewed as not simply something that happens ‘after the sale’ but as important to the decision-making process as more traditional purchase triggers.”

– Nick Carroll, Associate Director of Retail Research

This report examines the following issues:

  • The need to make online more sustainable
  • Tackling the returns problem
  • In-home delivery, the next step?

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Table of contents

  1. Overview

    • What you need to know
      • Products covered in this Report
      • Executive Summary

          • The market
            • Online sales continue to grow strongly
              • Figure 1: All online sales and forecast, 2014-24
            • Online to hit nearly a fifth of all sales in 2019
              • Figure 2: Online sales as a % of all retail sales (including VAT), 2014-24
            • The first generation of mobile-first shoppers
              • Collection accounts for under a fifth of the sector by value
                • Figure 3: Estimated share of online sales, by fulfilment method, 2018
              • Companies and brands
                • Key third-party players
                  • Figure 4: Leading delivery operator turnover, 2017/18
                • Parcel boxes enter the market, as businesses react to growing online demand
                  • Figure 5: Royal Mail Parcel Postbox, August 2019
                • Greener deliveries
                  • Figure 6: Amazon Scout, August 2019
                • The consumer
                  • More than nine in 10 shop online
                    • Nearly half collect online orders
                      • Figure 7: How online orders have been received in the past 12 months, July 2019
                    • Two thirds have faced an issue with a delivery
                      • Figure 8: Issues with delivery, July 2019
                    • Long queues the main issue with collection
                      • Figure 9: Issues experienced when collecting products in the past 12 months, July 2019
                    • Half have made a return and a third purposely order more than they need
                      • A third often intentionally order more than they need
                        • Figure 10: Returns behaviours, July 2019
                      • Over half are members of a delivery scheme
                        • Figure 11: Delivery pass ownership, July 2019
                      • Delivery passes encourage more frequent and impulse shopping
                        • Figure 12: Behaviours of delivery pass holders, July 2019
                      • Concerns around level of packaging could put shoppers off
                        • Figure 13: Attitudes towards delivery, collection and returns, July 2019
                      • What we think
                      • Issues and Insights

                        • The need to make online more sustainable
                          • The facts
                            • The implications
                              • Tackling the returns problem
                                • The facts
                                  • The implications
                                    • In-home delivery, the next step?
                                      • The facts
                                        • The implications
                                        • The Market – What You Need to Know

                                          • Confidence is holding up well despite uncertainty
                                            • The first generation of mobile-first shoppers
                                              • Online sales continue to grow strongly
                                                • Collection accounts for just under a fifth of all online sales by value
                                                • Market Drivers

                                                  • Despite uncertainty confidence has held up…
                                                    • Figure 14: Mintel Financial Confidence Tracker, January 2017-August 2019
                                                  • …helped by growing real incomes
                                                    • Figure 15: Real incomes: CPIH versus average weekly earnings, excluding bonus pay, January 2016-August 2019
                                                  • Online continues to gain share of the retail sector
                                                    • Figure 16: Online sales as a % of all retail sales (including VAT), 2014-24
                                                  • Store-based retailers also benefit from online’s growth
                                                    • Figure 17: Share of all online sales, by type of retail operation, 2014-24
                                                  • The final quarter is a strain for logistics
                                                    • Figure 18: Online as a % of all retail sales, by month, January 2017-August 2019
                                                  • The first group of mobile-first shoppers
                                                    • Figure 19: Devices used to shop online, by age, May 2019
                                                • Online and Collection Market Size

                                                    • Online market grows by 14.4% in 2018
                                                      • Figure 20: All online sales and forecast, 2014-24
                                                      • Figure 21: All online sales and forecast, at current and constant prices, 2014-24
                                                    • Fashion the largest online market
                                                        • Figure 22: Online estimated sales by product, 2018
                                                      • Courier and express delivery market continues to soar
                                                        • Figure 23: UK courier and express delivery market value, £ billion, and volume, packages, 2014-2018
                                                      • Click-and-collect market size
                                                        • Figure 24: Estimated share of online sales, by fulfilment method, 2018
                                                        • Figure 25: Estimated collection market size, 2015-18
                                                    • The Consumer – What You Need to Know

                                                      • More than nine in 10 shop online
                                                        • Nearly half collect online orders
                                                          • Two thirds have faced an issue with a delivery
                                                            • Long queues the main issue with collection
                                                              • Half have made a return and a third purposely order more than they need
                                                                • Over half are members of a delivery pass scheme
                                                                  • Concerns around level of packaging could put shoppers off
                                                                    • Nearly half are interested in in-home delivery
                                                                    • Online Retail Use and Products Purchased

                                                                      • Over nine in 10 shop online
                                                                        • Fashion still the most popular purchase online
                                                                          • Figure 26: Online purchases made in the last 12 months, July 2019
                                                                        • Repertoire of products purchased online
                                                                          • Figure 27: Repertoire of products purchased in the last 12 months, by age, July 2019
                                                                      • How Purchases Are Received

                                                                        • Nearly half of online shoppers collect orders
                                                                          • Figure 28: How online orders have been received in the past 12 months, July 2019
                                                                        • 35-44s most likely to use collection
                                                                            • Figure 29: How online orders have been received in the past 12 months, by age, July 2019
                                                                        • Issues Encountered with Delivery

                                                                          • Packaging surpasses convenience as foremost concern
                                                                            • The call for technological advancements
                                                                              • Deliveries left in an unsafe space
                                                                                • Figure 30: Issues with delivery, July 2019
                                                                            • Issues Encountered with Collection

                                                                              • Long queues the main issue when collecting products
                                                                                • Wasting time
                                                                                  • Upping the service stakes
                                                                                      • Figure 31: Issues experienced when collecting products in the past 12 months, July 2019
                                                                                  • Returns Behaviour

                                                                                    • Just under half have returned online purchases
                                                                                      • Figure 32: Level of and methods of returning products in the past year, July 2019
                                                                                    • Instances of returns far higher with collection users
                                                                                      • Figure 33: Methods of returning products in the past year, by how online orders were received in the past year, July 2019
                                                                                    • Returns should be thought of as a key part of the offer
                                                                                      • Figure 34: The importance of returns, by age, July 2019
                                                                                    • The majority would take vouchers in exchange for extended returns
                                                                                        • Figure 35: Behaviours relating to the return of online purchases, July 2019
                                                                                    • Delivery Passes

                                                                                      • Over half have a delivery pass, and one in three have Amazon Prime
                                                                                          • Figure 36: Delivery pass ownership, July 2019
                                                                                        • Delivery pass ownership skews younger
                                                                                          • Figure 37: Delivery pass ownership, by age and socio-economic group, July 2019
                                                                                        • The majority think having a pass encourages more frequent shopping
                                                                                          • Figure 38: Behaviours of delivery pass holders, July 2019
                                                                                        • A third don’t have a pass because of fears of being tied in
                                                                                          • Figure 39: Why consumers are not members of a delivery pass scheme, July 2019
                                                                                      • Attitudes towards Sustainability and New Delivery Methods

                                                                                        • A third say it is easier to cancel orders than risk not being in
                                                                                          • Figure 40: Attitudes towards new delivery methods, July 2019
                                                                                        • Nearly half are interested in in-home delivery
                                                                                          • Figure 41: Agreement with attitudes regarding new delivery methods, by age, July 2019
                                                                                        • Concerns around amount of packaging can impact purchase intentions
                                                                                          • Figure 42: Attitudes towards packaging of online orders, July 2019
                                                                                        • Key online shoppers are more likely to be put off by excessive packaging
                                                                                          • Figure 43: Agreement with statements regarding packaging in online orders, by age, July 2019
                                                                                      • Leading Players – What You Need to Know

                                                                                        • Royal Mail remains the largest delivery operator in the UK
                                                                                          • Collect+ hits 7,000 locations
                                                                                            • Parcel boxes enter the market, as businesses react to growing online demand
                                                                                              • Greener deliveries
                                                                                              • Competitive Strategies – Leading Retailers

                                                                                                • Amazon the dominant player
                                                                                                  • Figure 44: Leading retailers share of all online sales, 2018
                                                                                                • Amazon
                                                                                                  • Grocery: the most complex category to fulfil demand online
                                                                                                    • Figure 45: Online grocery sales as a percentage of grocery retail sales, 2013-23
                                                                                                  • Fashion: creating a sustainable future
                                                                                                    • Figure 46: All online clothing, footwear and accessories sales as a percentage of all consumer spending on clothing, footwear and accessories, 2014-24
                                                                                                  • Electricals: A category where most demand is fulfilled online
                                                                                                    • Figure 47: online electrical goods sales as a percentage of all spending on electrical goods, 2014-18
                                                                                                • Competitive Strategies – Leading Delivery/Collection Operators

                                                                                                    • Courier and express delivery
                                                                                                      • Royal Mail
                                                                                                        • DHL
                                                                                                          • DPD
                                                                                                            • Hermes
                                                                                                              • UPS
                                                                                                                • Yodel
                                                                                                                  • DX Group
                                                                                                                    • FedEx UK
                                                                                                                      • Figure 48: Leading delivery operator turnover, 2017/18
                                                                                                                    • Third-party collection
                                                                                                                      • Doddle
                                                                                                                        • Collect+
                                                                                                                          • InPost
                                                                                                                            • Figure 49: Third-party collection turnover, 2017/18
                                                                                                                          • New challengers
                                                                                                                            • Figure 50: Food delivery operator turnover, 2017/18
                                                                                                                        • Launch Activity and Innovation

                                                                                                                          • The introduction of parcel postboxes
                                                                                                                            • Figure 51: Royal Mail Parcel Postbox, August 2019
                                                                                                                          • Delivered straight to your car boot
                                                                                                                            • Asda trials 30-minute express grocery delivery service
                                                                                                                              • Waitrose drivers to accept John Lewis returns
                                                                                                                                • Amazon pilots ‘Scout’ autonomous delivery service
                                                                                                                                  • Figure 52: Amazon Scout, August 2019
                                                                                                                                • Consumer-facing app advancements
                                                                                                                                  • Figure 53: Hermes Mobile App, August 2019
                                                                                                                                • Greener deliveries
                                                                                                                                  • Figure 54: Royal Mail e-Trikes, August 2019
                                                                                                                              • Appendix – Data Sources, Abbreviations and Supporting Information

                                                                                                                                • Data sources
                                                                                                                                  • VAT
                                                                                                                                    • Abbreviations
                                                                                                                                      • Consumer research methodology

                                                                                                                                      Online Retailing: Delivery, Collection and Returns - UK - October 2019

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