The High Cost of Online Delivery Services

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Ordering food, drink, presents and many other products online has made all our lives easier, with the opportunity to place an order for whatever we need without leaving the home. The costs are also relatively small in most cases, compared to the amount that would otherwise be spent on petrol and transport services.

For a lot of retailers though, they are now realising the expense that online deliveries can create. In turn, the additional costs being introduced are having an impact on businesses that use their delivery services and leading to more using cheaper alternatives such as InXpress and others for their professional delivery services.  

Online Retail Sales

Online retail sales have seen a massive rise in the past decade or so, with many experts constantly proclaiming the high street to be dying. Competition has increased so much that most are battling with each other to offer the cheapest prices and quickest delivery times.

In some cases this has led to some retailers offering unprofitable delivery options, which has resulted in them exploring ways to get back the costs. Certain retailers that were offering free delivery have introduced charges to try and cover the costs.

Minimum Orders

In 2012 Sainsbury’s were the first retailer to introduce minimum orders for online orders as they tried to avoid unprofitable deliveries. In certain cases they would be losing money from such small orders being placed due to the petrol, driver and other costs involved.

With delivery charges in place already, a minimum order also ensured that no customer would spend more on delivery than the cost of their actual goods. There may have been worries that they would lose out on some custom, but the majority of retailers now implement minimum orders as well.

Click and Collect

According to research, margins for some supermarket online sales are just 1%, compared to 2.5% and more for in store sales. Such low margins are part of what is making online deliveries unprofitable for a lot of retailers and leading to them exploring new strategies.

Click and collect is one such option that is used by many retailers to try and bring their online sales margins back up. With a much smaller charge for the service and no need to pay for fuel and drivers, it makes more economic sense for a lot of supermarkets and other retailers. Online deliveries will not go away but they may continue to evolve.   

 


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