In a multi-channel world, it’s all
about delivery
Sara Wroth
Insight Manager
March 2008

Today’s agenda
To understand
trends in the home
shopping market
and multi channel
dynamics
What this means Why delivery is
for multi channel important to
retailers consumers
What makes a
good delivery
experience
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Key Findings

Key findings – trends & multi channel dynamics
• Six out of ten people in the UK now shop from home
• More home shoppers are purchasing five or more products via a
home shopping method than ever before – no one product type
driving increase
• The growth in home shopping is driven by an increase in
shopping online
• Most consumers use a combination of channels to home shop
• In the last year, two thirds have used a catalogue when making
a purchase
• Catalogues play a key role in driving online sales and spend
Online shoppers who browse in catalogues spend on average 25%
more than those who don’t use catalogues
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Key findings – delivery
• Delivery is an integral part of the purchase experience
• Customers want upfront, transparent delivery information
• 94% of shoppers say they would shop from an online retailer
again if they are happy with the delivery of their goods
• Customer frustration with delivery plays a key role in shopping
cart abandonment
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Home shopping trends and
multi channel dynamics

Highest ever proportion home shopping
Home Shoppers Online Shoppers Catalogue Shoppers
Agency Shoppers Direct/Direct Account Shoppers Door to Door Shoppers
70%
60% 61%
50%
40% 39%
30%
20% 19%
15%
10% 8%
6%
0%
2001 2002 2003 2004 2005 2006 2007
Similar trends identified by IMRG
Source: Home Shopping Tracker 2007
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Not only are more consumers shopping from home,
they are also purchasing more items
29%
39% 36%
5 or more 9%
4 products 9% 10%
13%
3 products 12%
12%
2 products 17%
One product only 15% 16%
32%
25% 26%
2007 2006 2005
In the last year have you purchased any of the following items, without visiting a shop and had them delivered to your
home address or another address such as a work address, a neighbour’s, a friend’s or a relative’s?
Source: Home Shopping Tracker 2007
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Large increases in the number of items home
shopped compared with 2006
Computer
50% Computer Games 50% Garden Products 50% Theatre tickets 45%
software
Computer 40%
Food/drink 43% Books 41% hardware Furniture 40% Holidays 38%
Downloadable Household Financial 28% CDs 31% DVDs 18% Women’s
music 33% Appliances 33% Clothes 11%
Source: Home Shopping Tracker 2007
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How the channels work together

Consumers shop across a variety of channels
Two thirds use a catalogue to make a purchase
Multi channel shop 80% 77% 72%
36% 34% 30%
Store, internet and
catalogue 64%
Store and catalogue
27% 32%
28%
Store and internet
16% 10%
In store only 16%
23% 28%
20%
2007 2006 2005
Source: Home Shopping Tracker 2007
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Youngest shoppers are more likely to shop across a
variety of channels
2007
Multi channel shop 80% 90% 76% 75%
21%
Store, internet and catalogue 36% 39%
50%
46%
Store and catalogue 28% 19%
15%
18%
Store and internet 16% 8%
25%
In store only 20% 24% 25%
10%
2007 16-34 35-54 55+
Source: Home Shopping Tracker 2007
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… as are ABC1s
2007
Multi channel shop 80% 90% 88% 75% 70%
23%
Store, internet and catalogue 36% 33%
44% 46%
Store and catalogue 16% 37%
27%
19%
23%
Store and internet 28% 15% 10%
27% 19%
25% 30%
In store only 20%
11% 12%
2007 AB C1 C2 DE
Source: Home Shopping Tracker 2007
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Half looked at a catalogue for at least one purchase
online, catalogues sent through the post used more
for online purchases
Proportion using catalogues prior
to online purchase:
All
47%
catalogues
Effective for:
Catalogue
clothes; footwear;
sent
39% household appliances;
through the
homeware; toys; electrical
post
goods; CDs
Catalogue Effective for:
picked up in 24% household appliances; toys;
store holiday/travel; mobile
phones
In the last year, which of these have used to find out information about a product before purchasing it online?
Source: Home Shopping Tracker 2007
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Other research supports this consumer led
shopping phenomenon
Home shoppers use catalogues to buy online
Financial Times, 09 Aug 2007
According to data group Experian, catalogues are thriving,
as home shoppers engage in more ‘flick to click'
shopping. The sector has grown, with high-street chains
and previously exclusive online retailers turning to print to
drive sales. It is thought that growth in the sector has been
driven by higher broadband penetration. However, 80% of
shoppers said that they had looked in catalogues
before ordering online.
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Catalogues also drive online spend, those who
browse a catalogue prior to an online purchase
spend more online
£1,526
£1,221 +25%
Heavy browsers
(browse more than
5 different
categories) spend
more than average:
£2,465
Average Online Spend Browsed catalogue
prior to online
purchase
Source: Home Shopping Tracker 2007
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The impact of social networking
on multi channel retail

‘Word of mouse’ drives sales among the
recommendation generation
• Social networkers (the recommendation
generation) are more likely to purchase
as a result of a recommendation than
non social networkers (66% vs 52%)
• There is also an appetite among social
networkers to join retailer own
branded networks for product reviews
• 45% of all social networkers have made
use of a catalogue in the last six
months, the same percentage as those
not using social networking sites
Source: The Recommendation Generation
Royal Mail/ The Future Foundation 2007
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The delivery experience

Getting your delivery promise right on your website
will lead to more sales
Delivery and returns are very Good delivery
important in the overall home is a hygiene
shopping experience factor
94% are more likely to shop from a
Key to
retailer if they are happy with the
retention
delivery of their goods
Customer frustration with delivery Key to
information leads to shopping cart improving
abandonment for 60% of online conversion
shoppers rates
Source: Delivery Experience Study 2007
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Delivery is an integral part of the purchase
experience
84% of shoppers want clear delivery
information before they place their order
69% get excited when a parcel arrives in
the post
Two thirds say ‘no hidden’ or extra
delivery charges would encourage them to
shop more online
Source: Delivery Experience Study 2007
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Shopping cart abandonment

Delivery plays a key role in shopping cart
abandonment Why?
Got interrupted when
placing order 52%
Didn’t have what
wanted in stock 47%
Not happy with
42%
delivery charge
Would take too long for
items to be delivered 35%
Found a better deal
95% of shoppers have elsewhere
34%
abandoned their shopping cart
Didn’t have delivery
at some point options that suited me
23%
Didn’t have payment
options that suited me 17%
Source: Delivery Experience Study 2007
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In customers’ own words..
Shopping cart abandonment
“That’s where transparency “I wanted it delivered to
comes up, with some sites you work and it said – I’m
have to put something in your sorry this seems like a
basket and go right through until commercial residence,
you are almost finished and then we do not deliver to
it says £12 for delivery, forget it” commercial locations
and I was like, well I’m
not going to be at home
to get it, so ‘stuff’ it”
“If I don’t find out before I have to put my
details in I won’t shop there because I’m
not going to put my name, address and
credit card details to find out they are
charging me £10 for postage and packing”
Source: Delivery Experience Study 2007
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What are the most important
aspects of delivery?

Importance of delivery factors
Same day / express
upgrades
Above average importance
Average importance
Specify Track
Below average
delivery progress of
importance
timeslot item
Specify Specify delivery
Specify exact delivery date address Specify
location where evening or
goods should Notified of Ability to Know Saturday
be left any contact exact delivery
problems someone in date
with order event of goods will
Being query arrive Have fastest
informed of possible
delivery delivery
Good customer provider Easy
service is vital redelivery
Source: Delivery Experience Study 2007
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Different groups of people have different delivery
priorities
New online shoppers Younger shoppers
• Ability to contact someone if • Option to upgrade
necessary delivery
• Have fastest possible
delivery
High spenders
• Simple ordering process
• Option to specify delivery date
• Know the exact delivery date
• Option to specify delivery timeslot
Source: Delivery Experience Study 2007
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What this means for multi channel
retailers

Your checklist
Specify your delivery promise on your homepage
Be transparent about all postage, packing and other delivery
charges
Give guidance as to when customers can expect to receive
their order
Offer a range of delivery options including:
Ability to specify alternative delivery locations
Ability to upgrade speed of delivery
Confirm order and delivery details by email
Communicate any changes to your customers’ orders by email
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In summary
Getting your delivery
promise right will help
you to:
attract new customers
retain existing customers
reduce shopping cart
abandonment
improve conversion rates
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For more information:
• For more information on home
shopping trends and the delivery
experience, visit us at
www.royalmail.com/homeshopping
• Get your delivery promise right by
following our handy hints and tips,
visit www.royalmail.com/toptips
• For more information on the
‘Recommendation Generation’ and the
impact of social networking on multi
channel dynamics, visit
www.royalmail.com/homeshopping
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