September 2002

Consignia's head of home shopping lays it on the line at retail event

Why not offer a premium home delivery option to your customers, and charge them for the privilege? It won't cost you anything - only the consumer. It doesn't make any difference to you. It's a no-lose situation."

That challenge was thrown down by David Taylor, managing director of Consignia (soon to be Royal Mail) Home Shopping, to an audience composed mostly of retailers and e-tailers at Access Conferences' Home Shopping 2002 event in September.

Strolling amongst his audience and speaking without notes, Taylor gave a bravura performance that combined a show of calculated ingenuousness with tongue-in-cheek humour, but at times veered into the realms of scarcely-hidden frustration.

"Home shopping is increasing at a rate of 10 per cent per year," he told his audience. "Yet when we asked consumers why they don't do more home shopping, we found that only one of the top five reasons had to do with product quality. All the others were about delivery issues - returns, predictability, speed of delivery and convenience in terms of delivery time.

"You might conclude that if retailers improved their home delivery performance, people could be expected to buy more, and they would increase their sales.

"We also asked retailers what they thought would prompt growth in home shopping. Two thirds cited improved delivery, and said they were planning to offer a better range of choices during the coming year.

"We already offered a variety of options such as 24-hour, 48-hour and weekend deliveries, but there were still delivery issues, so we've tried new options like evening deliveries, Local Collect and drop boxes.

"Yet we find that when we introduce these things, we don't get a positive response from retailers. In fact there's a reluctance to offer choice. Why?"

One frequently-cited reason, Taylor said, was the extra cost involved. "But it's up to you how you deal with that. You can absorb it in the selling price, you can pass it on, or you can even mark it up."

Retailers also seemed reluctant to make the ordering process more complex, he said, arguing that too much choice put customers off. He dismissed that view. "I don't know about you, but when I buy something online I want to see the range of delivery options at the outset. Yet half the Web sites I've seen only tell you the delivery options at the end of the ordering process."

Citing the Local Collect service, under which consumers can pick up consignments from their nearest post office, Taylor said one major customer now using it, Figleaves.com, had found that the consumers taking advantage of it were disproportionately new customers; and the average value of orders channelled through it by existing customers had gone up. In other words, it had increased overall sales.

One of the problems with home delivery, Taylor said, was that "home shopping guys are fighting the existing retail culture, which is all about real estate. Retailing as the dominant culture is not changing as rapidly as it could." But he added: "The dynamics of the market demand that you provide what consumers want. And the market is growing, so you're going to have to address the issue."

Softening his approach, Taylor admitted: "It is hard work for retailers to offer delivery choices. It adds cost at call centres and elsewhere. We don't deny it."

What, then, was the solution? He suggested that one answer was for Royal Mail to work at finding out consumer delivery preferences through schemes such as its Decide and Deliver database (see main article). On a more general level, he felt retailers could work more closely with his organisation to achieve mutually beneficial results. "We would love it if you would help us make you more profitable," he said.

"Between us we can mess up this market, or we can make it work."