Free delivery matters to online shoppers
RETAILERS in Asia have an opportunity to grow their online sales as they enhance customer experience to meet a growing demand for improved services.
According to the UPS Pulse of the Online ShopperTM Study, rising expectations by online shoppers is driving increased demand for free shipping, expedited deliveries and customer-centric return policies amidst a fiercely competitive retail landscape.
The research, currently in its sixth year, notes that only 57% of shoppers in Asia are satisfied with the online shopping experience. This is the lowest percentage compared to other regions surveyed, and an improvement of only 11-percentage points since 2015 (46%), demonstrating the slow pace of change in addressing customer satisfaction.
On average, Asian online shoppers enjoyed free shipping for 85% of their orders, illustrating the competitive advantage that free shipping gives to retailers that offer it. Nearly two-thirds of respondents in Asia indicated that free shipping is an important factor in the checkout process, with 46% of shoppers adding items to their cart to qualify for it.
Additionally, about half of Asia’s online shoppers have abandoned a cart due to no delivery date being given or delivery time being too long, with the average delivery wait being 11 days.
Meanwhile, a convenient and transparent return policy increases sales and customer satisfaction, with 67% of shoppers in Asia indicating that free shipping on returns is important when selecting online retailers. This is an area for retailers in Asia to improve as only 47% of shoppers are satisfied with the ease of making returns, even though only four in 10 have actually returned an online purchase in the past year.
The study reveals that 79% of shoppers returned only 10% or less of their orders. Among these, 69% made new purchases when returning an online order in-store, and 67% bought new items when returning online, demonstrating a strong business case for offering a fuss-free return service.
“Analysing the mindsets and motivations of thousands of shoppers around the world reveals that, far from being a sunk cost, clever shipping and returns solutions are actually an area where retailers can win and retain customers, drive repeat patronage, and encourage shoppers to add more items to their carts – both online and in-store,” says Sylvie Van den Kerkhof, vice president of marketing for UPS Asia Pacific.
In recent years, consumers in Asia have become increasingly comfortable with shopping on smartphones, selecting ship-tostore, and buying from international retailers and small businesses.
Smartphone purchases have become the norm with 77% of shoppers placing their orders through their phones. This percentage, up from 55% in 2015, is the highest globally. In comparison, only 48% of American smartphone users made online purchases on their device.
Ship-to-store is also growing popular with 37% of shoppers using it in the past year and 59% of those planning to use it even more this year. Notably, it can be a lucrative offering for retailers, as 60% of Asian shoppers who used ship-tostore in the past year made additional purchases while in store. The percentage is even higher in China at 74%.
“One revealing finding is that Asia’s online shoppers are now buying from a more diverse set of retailers, ranging from major marketplaces to boutique shops, from domestic and foreign stores.
“What this tells us is that there is a viable opportunity and customer base for small businesses in Asia to expand internationally, and it is only set to grow larger,” says Van den Kerkhof.
The research found that 55% of online shoppers in Asia are embracing international retailers. Among those, 49% of buyers ventured to overseas retailers because the brand or product was not available domestically, or the quality (39%) or price (38%) was better internationally.
Noteworthy for Asian businesses is that there is a strong preference for buying from retailers within Asia as 77% of those who made an international purchase made one from a retailer within the region. About 31% have ordered from retailers in the US. Meanwhile, Hong Kong had the highest percentage of online shoppers making international purchases at 82%, followed by China at 64%.
On the contrary, only 21% of Japanese shoppers did so, indicating their strong preference for domestic goods.
“An increased appetite for making purchases from international retailers demonstrate a strong potential for businesses in Malaysia to expand their presence globally. Local small and medium enterprises must create a more dynamic online shopping experience to meet the future demands of Asian shoppers,” notes UPS Malaysia managing director Mohamed Firoz.
The study also indicates newer areas of retail that may play a bigger role in the future such as alternate delivery locations.
Alternate delivery locations are most popular in Asia compared to other regions, with 71% of consumers, particularly millennials and urban shoppers, interested in shipping packages to these locations with extended hours for reduced fees. Shoppers’ preference for alternate delivery locations has grown considerably from 46% in 2015 to 59% of orders in 2018.
Asian shoppers also love their marketplaces with 98% having purchased from one, and more than a third saying they will use them even more in the next year. Better prices (64%) and free or discounted shipping (42%) are the top reasons for buying from a marketplace instead of direct from a retailer.
“The UPS Pulse of the Online Shopper research shows time and again that as online shoppers gain the benefit of greater choice, they are increasingly dictating the terms of their buying experience and it is vital that retailers know how to cater to and adapt to their changing needs,” Van den Kerkhof adds.