Three-hour and same-day delivery services are becoming more popular in Australia, but an e-commerce and delivery expert warns they won’t become widespread unless businesses and customers are willing to subsidise some of the cost.
Jessica Ip, head of commercial and transformation at franchise business CouriersPlease (CP), says she is having more conversations with businesses interested in offering same-day delivery.
“The recent discussions I’ve been having with customers have all been about same-day, after-hours and weekend delivery,” she said.
“A few businesses are starting to offer these services in some capital cities and Amazon is working on bringing its Prime services here, but the key point is that it is for a price. Whether these services are scalable, so that retailers and consumers are okay with the price points, is the question.”
In shipping software business Temando’s most recent report, an equal 68 per cent of Australian online shoppers revealed they want express (one to three days) delivery and standard (five to seven days) delivery, compared with 41 per cent of shoppers that want same-day delivery and 37 per cent that want hyper-local delivery.
Customers are also only willing to spend $2 more on same-day delivery and $3 more on hyper-local delivery than they are on express delivery.
“To make these services widespread, online shoppers need to be comfortable with paying additional fees, and retailers need to be willing to subsidise some of the costs to make it commercially viable. But, Australian shoppers are not as willing as shoppers in markets where these services are available to pay additional fees for faster delivery,” Ip said, adding that Australians only want to spend AU$13 on same-day shipping, US shoppers are willing to spend US$18.
She also noted that Australia’s geography is very different to the rest of the world, which makes it hard to offer these services at a reasonable price.
“While these services are being offered in the US and UK, Australia’s market is very different. We have a relatively small population, spread over vast distances, with very little infrastructure compared with other well-established markets,” she said.
Given these challenges, Ip believes delivery providers need to focus on offering a consistent and reliable service over one that is just focused on speed.
“CP is listening to its customers and we’re responding. We want to offer a consistent service and a reliable service, first and foremost. We’re also working with our retail partners to offer premium services, flexible delivery options at competitive rates. For customers willing to pay, and retailers willing to subsidise the costs, we will also be offering an express premium service.”
Heather McIlvaine is editor of Internet Retailing, a sibling publication to Inside Retail and Inside Franchise Business.