It says ‘Free Delivery’. I wonder who pays for that?

Free delivery and free returns allow people to shop now, and decide later

that they really don’t like any of the 6 pairs of shoes, 3 jumpers, a toaster and a Peppa Pig Party Time Race Game that they bought at their leisure and now plan to return at the expense of the retailer. What is that going to cost us?

The first secure retail transaction over the Internet took place in 1994 and by the following year and eBay were there to take your money; if you had enough patience to cope with your 56k, dial-up connection.

That first online purchase is believed to be “Ten Summoner’s Tales” by Sting and it went for $12.48 plus shipping.

Of course, that was over twenty years ago and it makes sense that e-commerce, on-line retail, call it what you will, has changed enormously but were all of those changes well thought out decisions or have we just been following trends and jumping on bandwagons?

There certainly appears to be enough incentive to get involved. In the late 90’s the vast majority of people who ordered or shopped online were men in their early 30’s who were interested in technology. You know, geeks. Now it is just about everybody. From your grandchildren to your grandparents, the entire country is clicking away and adding to their basket.

In the UK, online sales are growing at about 15% year on year. In fact, online retail expenditure in the UK is forecast to reach £62.7bn in 2020.

That’s an awful lot of money and businesses will try whatever they can to win a bigger slice of it. The best price. The best choice. The best website. Free delivery.

Whatever happened to ‘plus shipping’?

There are some advantages to the idea of buying stuff on line.

From the customer’s point of view, they can order whenever they want; the shop is always open. They are possibly offered a bigger choice; the shop isn’t going to run out of shelfspace. They can compare any number of businesses selling the same product and they can get the ‘best price’.

From the seller’s point of view, they can avoid the overheads of having ‘bricks and mortar’ shops and showrooms and so they can win business by offering a lower price and attracting customers from a wide area.

Of course, the problem comes once the deal is done and the purchase made. The person who bought it is in Penge and the thing they just bought is in a warehouse in Macclesfield.

‘That’s fine’, says the seller. ‘We offer free delivery’. And their margin, which was slim in the first place, gets shaved a bit more.

Offering free delivery was a good trick for the first few to do it. They stand out from the crowd and attract more customers and, after all, they are in a ‘high volume – low margin’ game. But what happens when everyone is doing it?

It stops being an advantage and becomes a burden on the business. Because that delivery isn’t ‘free’. Somehow it’s got to get paid for.

‘Just sling it on the van.’ Or not.

The first option is to make the cost of delivery as low as possible. Chuck it in a box and throw it in a courier’s van.

The problem there is that the quality of the delivery is part of the quality of customer service that the company offers.

The likes of Tesco and Argos are moving customers towards ‘click and collect’ – in fact Tesco has just announced cutting 1,000 jobs from it’s distribution centres – but that isn’t an option for everyone. Amazon seems to be planning on building a fleet of drones. At Golden Coast we are a bit more traditional and have our own fleet of delivery vehicles and qualified drivers.

Because yes, this affects my business. Whether an order is made by phone or fax or from our webshop, everything that we sell has to be delivered. The way we see it is that the quality of the delivery is a part of the service that we offer and we take pride in the fact that our drivers are often singled out for praise from our customers.

Another option is to win back that delivery cost from somewhere else. Customer service is often the first area to get the chop. We’ve all dealt with e-commerce sites that offer no way to contact the business – either to complain or enquire – other than by email or labyrinthine automated phone systems that often leave you no option other than to simply hang up. There is money to be saved there.

So what will the future deliver?

Free delivery has turned out to be a poisoned chalice.

Unsurprisingly, customers and consumers want it but the cost is crippling many businesses. Worse than that, it’s changing customer behaviour. People are ordering online on the off chance that they might want the product and then sending it straight back.

Retailers faced a 40% surge in returns on Black Friday sale items and when it gets to gifts, it’s even worse. Over £250million worth of unwanted gifts will have been returned this Christmas.

That’s an awful lot of packages travelling from one end of the country to the other for no real reason. That has a financial impact and an environmental one.

It may well be true to say that the customer is king, but even kings have to realise that everything has a cost.