What’s changing consumers’ expectations?

The retail world is seeing significant shifts in consumer expectations and behaviors. Today’s online shoppers have higher expectations than ever before.

Consumers want the ability to shop anywhere at any time and are looking for retailers that offer multiple options. In particular, the flexibility to choose a delivery date can impact consumer loyalty and future spending with a brand. There are a number of recent trends that affect these delivery expectations, including omnichannel fulfillment, customized deliveries and free shipping — the latter of which has evolved to include free returns. E-tailers have to be quick to rethink their business strategies to accommodate these dramatic shifts in consumer behavior, or lose ground to others who will.

UPS worked with data analysis firm comScore on a unique customer experience study to gain insight into online shopping behaviors and what factors influence consumer’s purchases. The 2013 UPS Pulse of the Online Shopper study examines mobile trends, social media impact and omnichannel retailing. We’re taking the insight from our experience working with thousands of retailers, and will marry the findings from this annual survey to help our customers accelerate their growth.

From the survey we discovered consumers want an easy shopping experience from initial product search to shipping options, to package arrival — and, if needed, returns. Online shoppers also want more choices and convenience from their favorite retailers. Only 49% of the 3,000 shoppers surveyed were satisfied with the flexibility to choose a delivery date. The desire for a seamless customer experience — especially how and when consumers receive their online purchases is what we’re calling the “delivery factor.” When asked what options are most important during checkout, more than half said providing an estimated delivery date and shipping costs early in the process.

More of the results from the survey highlight factors that play a role in shaping the retail delivery experience.

Omnichannel expectations

When retailers create a simple and integrated buying experience across multiple channels it shows they understand what their customers want. According to the study, 44% of online shoppers want the option to buy online and pick up the item in-store. Another 62% said they are more likely to shop with a retailer that allows them to purchase online and make returns in-store.

Mobile apps and social media are also changing the way consumers shop: 47% said they want retailers to push coupons and/or promotions to their smartphones when they are in the store or nearby.

Consumers also expect a variety of shipping options; however, 78% continue to choose the most inexpensive option. The study discovered 51% have chosen “ship to store” services and 38% of those purchased other items while in the store. This is great news for retailers that are trying to drive foot traffic to their stores.

The challenge for many retailers is adjusting their supply chains to deliver on omnichannel expectations. We’ve assisted some of our larger retail customers with their operations to deploy technology solutions to streamline inventory, reduce markdowns and maximize profitability. UPS is also helping train their in-store employees to fulfill online orders.

Evolving delivery models

Same-day delivery is one of the hottest e-commerce trends but we’re investigating how much consumers are willing to pay for those services. Recent surveys suggest it only appeals to a small niche of consumers.

Last year, through the Strategic Enterprise Fund, UPS invested in Shutl, a British startup that connects retailers to local same-day courier companies allowing online customers to receive their purchases within minutes. Shutl will begin delivery service in the select U.S. cities this year and we’ll gain insight into this emerging business model.

Delivery is one of the main reasons consumers give for not shopping online. From the study, we learned more consumers have abandoned their carts before checkout due to long shipping times — 44% in 2013 compared to 42% in 2012.

If consumers know what to expect, they are surprisingly patient when it comes to waiting for purchases to arrive. Online shoppers are willing to wait 7 days to receive their packages, especially if the shipping is free. This includes fulfillment and transit time combined.

Customized delivery

Another important factor in meeting online shoppers’ expectations around product delivery is offering tracking services as 97% of shoppers said tracking services are essential or nice to have. Among those who want tracking services, 71% want to track their packages through email alerts and 63% want to track packages via retailers’ websites.

Online consumers also want the flexibility to reroute packages. UPS My Choice is a service that gives consumers the option to choose when and where their packages are delivered. UPS will send a delivery alert (text message or email) the day before the package is scheduled to arrive. If that time doesn’t work — you can reschedule or reroute to another location. There’s also the ability to go online and release packages requiring a signature. Since the launch two years ago, more than 3 million people have registered for the residential delivery service.

This year’s study analyzes social media and the impact of mobile apps. Not surprisingly, 84% of respondents said they use at least one social media site with Facebook being the most popular (used by 77%). With the UPS My Choice Facebook app, consumers can track packages directly from their Facebook page.

The ability to go beyond tracking and connect online shoppers with customizable delivery services can also drive customer loyalty and give retailers a competitive advantage.

Hassle-free returns

Delivery is not only important when consumers have purchased a product online, but also during the returns process. From the study we learned returns volumes are growing, with 62% of consumers having returned or exchanged an item in 2013 versus 51% in 2012. A positive returns experience can boost sales, with 67% of consumers saying they will shop more often with a retailer if they offer a hassle-free returns policy.

Consumers want convenience in the returns process, including a return label in the box of the original purchase (53%), an easy-to-print returns label (43%) and the ability to return to a store (39%). Free returns shipping options are the most valued, cited by 65% of consumers as an element of a best returns experience.

The best advice for retailers is to incorporate the returns process as an essential part of their overall supply chain planning.

What about free shipping?

It’s nearly impossible to talk about the delivery experience and not mention free shipping. According to a January comScore study, more than half of consumers said they would cancel their purchase if free shipping was not offered.

Creating a free shipping strategy can be beneficial, but how can retailers determine what approach is right? There are some unpredictable costs associated with shipping promotions but there’s strong evidence that free shipping attracts new customers and improves brand loyalty. Through an earlier study with Forrester Research, we found consumers will buy