The value of orders collected by consumers hit an estimated £22.6 billion in 2023, accounting for approximately 18.4% of all online sales. With the usage of collection services continuing to grow, aided by strong appeal to those with busy schedules, investment into collection continues to grow, with lockers a current focus area for many retailers.
A significant challenge for retailers, particularly in the fashion sector, is managing returns, with more retailers looking to implement returns fees. While these fees help cover retailers’ costs, the introduction has not been well received by all shoppers. The primary reasons for returning online purchases revolve around the sizing and quality of items, and retailers should look to ease the underlying friction in these areas as a solution to returns issues.
Innovations such as AI-powered virtual fitting rooms can help customers find the right size, thereby reducing return rates. Additionally, new delivery methods, such as Amazon’s testing of drones and B&Q’s trial of autonomous delivery, promise a faster and more convenient service. These advancements will enhance the shopping experience, making it more convenient and eco-friendly, and appealing to consumers looking to maximise their time.
This report looks at the following areas:
- The size of the online retail market, and estimated share of online sales by distribution method.
- Products purchased online in the last year, and how consumers choose to receive their online purchases.
- The level of online returns made in the past year, and attitudes towards returns fees, including price-sensitivity analysis.
- How retailers can address the issue of ‘repeat returners’, and manage returns using technology.
- How financial pressures impact returns, and how consumers choose to receive their purchases.
- Consumer attitudes towards delivery and collection, and how investment in collection services can provide greater flexibility to fit their schedules.
- Consumer attitudes towards rapid delivery providers, the environmental impact of such services, and improvements to the convenience of services.
As ultra-convenience drives demand for flexible options, retailers and delivery operators can leverage technology to address consumer concerns and provide a more seamless experience.
Bridget McCusker, Research Analyst
Market Definitions
For the purposes of this Report, Mintel has used the following definitions:
Delivery is defined as an order that is delivered to a customer’s home, work, place of education or any other location that they have used as a traditional postal address.
Collection is used as a broad term to describe the numerous collection services offered in the UK retail sector. Broadly speaking, collection orders can fall into one of three fulfilment methods:
- Click-and-collect in-store: this is where payment is taken online and the order is made available for collection at a retailer’s own store or via another retailer’s store through a partnership, eg through Amazon’s Hub scheme.
- Reserve-and-collect in-store: this is where no payment is taken at the point of purchase, rather the items are reserved to be collected and paid for in a retailer’s own store.
- Click-and-collect at third-party locations: this is where, usually, payment is taken online and then products are made available to collect at a location that is not the retailer’s store. Examples of third-party collection services include collection services such as Collect+, where products are made available at other participating stores, or first- or third-party locker services where products are delivered to and held in lockers for collection.
Return(s) is used to describe any returned goods from an online order. This can be done through postal means, in-store or via a third party.