The Ecommerce Delivery Benchmark Report 2023, conducted by Auctane in collaboration with Retail Economics, offers a comprehensive analysis of the ecommerce landscape. The report is based on a survey of over 8,000 consumers from various countries, including the UK, USA, Canada, Australia, Germany, France, Italy, and Spain. It aims to provide actionable insights for retailers navigating a challenging economic environment marked by inflation, geopolitical tensions, and changing consumer behaviors.
Economic Context
The report sets the stage by highlighting the economic challenges that the retail industry faces in 2023. Global economic uncertainty, high inflation rates, and rising living costs have led to a shift in consumer behavior. A staggering 84% of consumers are concerned about their economic future, with inflation being their top worry. These macroeconomic factors are not just affecting demand but are also creating supply-side pressures like rising borrowing costs, labor shortages, and supply chain disruptions.
Key Findings
Inflation and Consumer Behavior
The report reveals that 57% of consumers are deeply concerned about inflation. This concern is translating into a change in buying behavior, affecting even affluent consumers, 61% of whom are planning to alter their spending habits.
Delivery Preferences
A notable shift has been observed in consumer preferences regarding delivery. About 72% of consumers now prioritize cost over speed and convenience, marking a 5% increase compared to the previous year.
Sustainability
While 32% of consumers are open to sustainable delivery options, only 7% are willing to pay extra for such services. This indicates a gap between consumer ideals and practical choices.
Online Returns
The report shows a declining willingness among consumers to pay for returns. Only 24% are willing to pay for this service in 2023, a 4% decrease from 2022.
Generational Differences in Shopping Behavior
The report also touches on generational differences, particularly when it comes to the topic of returns. For instance, 39% of Gen Z shoppers say they would consider paying for online returns, compared to just 22% of Boomers.
This suggests that younger generations, often seen as ‘compulsive returners,’ are more receptive to the idea of paying for returns. This could be attributed to their digital-native status and a heightened sense of environmental responsibility, making them more willing to bear some of the costs associated with returns.
The Psychological Impact of Economic Conditions
One of the more nuanced findings of the report is the psychological impact of economic conditions on consumer behavior. Even among the affluent ‘Carry On Spenders,’ there is a 61% subset that plans to tighten or cut discretionary spending.
This indicates that the mere prospect of an economic downturn can exert a psychological toll on consumers, affecting their spending habits. Retailers need to be aware of this psychological dimension as they strategize, understanding that consumer behavior is influenced not just by actual financial standing but also by perceptions of economic stability.
Strategies for Success
‘Recession-Proof’ Business Models
Retailers are advised to focus on building resilient business models that prioritize profitability over revenue growth. This involves making difficult trade-offs and strengthening balance sheets.
Intelligent Pricing Architecture
The report suggests adopting sophisticated pricing strategies that offer an optimal product assortment mix. This is crucial as consumers become increasingly value-oriented.
Cost Management
Retailers should rigorously assess input costs and operational efficiencies to conserve cash and maximize productivity. This includes eliminating unnecessary overheads and focusing on core operations.
Diversification and Partnerships
To mitigate risks, retailers are encouraged to diversify their supply chains and consider strategic partnerships and acquisitions.
Types of Shoppers Described in the Report
The Ecommerce Delivery Benchmark Report 2023 identifies four main archetypes of shopper behavior that are expected to shape the retail landscape this year.
These archetypes are based on how consumers perceive the economic outlook and their personal finances:
Necessity Shoppers (40%)
This group is highly concerned about the economic situation and is most likely to display ‘recessionary’ shopping behavior. They make discretionary purchases only when absolutely necessary and avoid impulse buying. Their shopping decisions are driven by a careful and considered approach to spending, often due to budget constraints.
Carry On Spenders (27%)
Unfazed by economic uncertainties, this cohort does not intend to change their shopping behavior. They are generally on higher incomes and have a comfortable financial safety net, allowing them to continue spending as usual.
Value Hunters (10%)
Always on the lookout for the best deals, Value Hunters show little brand loyalty. They are savvy shoppers who actively seek out cheaper brands and retailers, often switching between online and physical channels to find value for money.
Postponers (22%)
This group is willing to delay their discretionary spending, holding off on major purchases until economic conditions improve. They are likely to wait for seasonal offers or special promotions to secure the best prices.
Income-Based Shopping Behavior
The report also delves into how shopping behavior will diverge across income groups. High-income consumers are almost twice as likely to continue spending as usual compared to the least affluent shoppers. However, even among the most affluent, 61% still plan to tighten or cut discretionary spending due to the psychological toll exerted by the prospect of an economic downturn. This creates a two-track spending pattern, where luxury brands and discounters are likely to outperform, leaving mid-tier retailers vulnerable.
Conclusion
To succeed in 2023, retailers must adapt to a rapidly changing economic landscape and consumer behavior. They need to closely monitor market developments and respond intelligently to shifts in consumer preferences. Maintaining a focus on customer experience, adopting sophisticated pricing strategies, and understanding regional market differences are key to navigating the challenges ahead.
The report serves as a critical resource for retail brands and related organizations, offering deep insights into consumer behavior and economic pressures. It provides a roadmap for navigating the complexities of the retail landscape in 2023, making it an invaluable tool for decision-makers in the industry.
