Sustainable Transportation More Important than Speed, Some Consumers Say
Despite many retailersâ€™ recent push to offer same-day shipping as a competitive differentiator, research shows there are other factors that US consumers hold highâ€”sustainable transportation being one of them. But most consumers donâ€™t even know that such options often exist.
Google, Amazon, eBay and Target have been pushing to expand their same-day delivery services in order to seize a competitive advantage. For example, The Wall Street Journal (Amazon, in Threat to UPS, Tries Its Own Deliveries, April 24, 2014) recently described Amazonâ€™s most recent same-day delivery offering as an effort to get closer to the â€śholy grail of e-commerce.â€ť
Same-day delivery sounds like a great goal, particularly for a market increasingly used to immediate gratification. But is it so attractive that most consumers are willing to pay for it? Recent West Monroe Partners research suggests they may be swayed by other factors such as sustainable transportation. The study, â€śThe Need for Green or the Need for Speed,â€ť revealed that a sustainable transportation model ranks relatively high on online consumersâ€™ agendas, and many consumers are willing to concede speed and would be willing to pay a premium to make home delivery â€śgreener.â€ť The survey covered more than 600 consumers across the United States and Canada to understand the compromises they are willing to make for more sustainable delivery of products purchased online.
More than half of US consumers surveyedâ€”54 percentâ€”said they would pay at least five percent more for products ordered online if they include sustainable transportation. Twelve percent said they were willing to spend up to 10 percent more for sustainable delivery.
Even moreâ€”76 percentâ€”said they are willing to wait at least one extra day for climate friendly transport such as alternative delivery windows. In fact, responses suggest consumers are much more likely to wait longer for sustainable delivery than they are to pay for it.
Pay particular attention to the younger generation
Even more intriguing is who is most likely to consider sacrificing for sustainable delivery. The study found that younger consumers in the 18-25 age group are most willing to sacrifice some delivery speed. More than 82 percent of respondents aged 18-25 said they would be willing to accept some length of delay for a more climate-friendly transportâ€”much higher than for all other age groups.
This is a good reminder that companies must consider the opinions and preferences of younger generations as they shape their future supply chain and deliver services. For one thing, younger generations will be consumers over a longer time horizon. In addition, they are more active in voicing their views on social media and other channels, and they are, of course, tomorrowâ€™s business leaders and decision makers.
Patience in the inverse of income
Income did not seem to make a significant difference in willingness to spend more for sustainable delivery. But while respondents earning under $50,000 annually were not always willing to pay higher prices, they were the group most willing to wait at least one day longerâ€”with 83 percent indicating they would accept at least one day of delay. This was also the group most willing to accept a wait of more than three days, with over 19 percent agreeing to wait that long for sustainably delivered goods.
In contrast, high-income consumersâ€”those making more than $200,000 annuallyâ€”were the least willing to wait longer for climate-friendly transport by a considerable margin.
US consumers simply arenâ€™t aware that such options existâ€¦
Although US consumers seem positive about greener delivery, it is clear that they are mostly unaware that such delivery options existâ€”provided online retailers present them with such an option in the first place (many do not). An overwhelming majority of survey respondentsâ€”79 percentâ€”said they were not aware of sustainable delivery options such as alternative delivery windows or transportation modes. Only 15 percent were aware that these options exist, and a mere five percent have actually used sustainable delivery alternatives.
Younger respondents were more aware, but even they topped out at just shy of 22 percent awareness.
â€¦while their European peers are much more aware, and more likely to have used them
The survey effectively mirrored a similar study of 1,100 European consumers conducted by West Monroeâ€™s alliance partner, BearingPoint. That study found European consumers are willing to pay higher prices and/or wait longer for sustainable delivery. The survey teamâ€™s hypothesis was that the results would be much different in the United States than Europe for a variety of reasonsâ€”including a higher concentration of people in cities, higher fuel prices, and more mature European Union regulation. In fact, the study found very similar patterns on both continents. The big difference between the two regions is that nearly half of European consumers were aware of climate-friendly shipping alternatives and that nearly one in five has already used them.
What does all this tell us?
As retailersâ€™ hype for same-day delivery mounts, itâ€™s important that these efforts are accompanied by climate-friendly delivery options to capture a greater share of environmentally conscious customersâ€™ purchases.
More distributors will need to strive for a comfortable balance between speed and â€śgreenâ€ť that is appealing to e-commerce/online consumers. And they will need to do a much better job of educating consumers about the alternatives available to them.
Yves Leclerc is the managing director of the supply chain practice at management and technology consulting firm West Monroe Partners.
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