ACRS White Paper: The delivery experience segmenting consumers

MONASH BUSINESS SCHOOL

THE DELIVERY EXPERIENCE: SEGMENTING CONSUMERS

INTRODUCTION The Delivery Experience

Why Segment Consumers?

Consumers today have an abundance of choice for product and service providers

The 2016 Online Delivery Report provides foundational insight into the delivery

as well as unprecedented access to information. At the same time, e-commerce

experience among Australian consumers. This insight can be used to develop

is growing at a rapid rate, with online sales more than doubling over the past five

strategies that reflect current consumer preferences and expectations at an overall

years. In response, consumers have become increasingly demanding and expect a

level. But what do consumer preferences look like at a more granular level? How can

seamless shopping experience across online and offline channels.

the delivery experience be tailored on this basis? Grouping Australian consumers

A crucial element of the online shopping experience is product delivery, particularly the ‘last-mile’ of delivering product to the customer’s door.

into distinct segments based on their product delivery preferences provides a more nuanced view of the experience and enables specific strategies to be developed to

service each group in a relevant and appealing way.

To shed light on current Australian consumer preferences for last-mile product delivery, Blackbay, MeeMeep.com, and Red Planet have collaborated to produce the 2016 Online Delivery Report. One of the key findings from the report is that although

89% of Australian online shoppers are satisfied with their delivery experiences, only 17% say that parcel deliveries meet their expectations.

ACRS Segmentation Approach Segmenting consumers can be performed in a variety of ways. Many segmentations are based on consumers’ demographic characteristics (e.g. males aged 18-24

In this white paper, ACRS and MeeMeep.com extend the insights in the 2016 Online

years). The assumption behind this approach is that consumers who have similar

Delivery Report by identifying segments of Australian consumers that exist based on

demographic profiles will have similar needs and preferences. However, while

their preferences for parcel delivery.

similarities in demographic characteristics can exist, so too can other important differences within and across consumers. The ACRS’ approach to identifying consumer segments is based on distinguishing needs and preferences, with demographic profiles developedto further understand segments.

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THE DELIVERY EXPERIENCE: CONSUMER SEGMENTS CONFIDENCE THROUGH CONTROL Consumers in this group are relatively frequent online shoppers and are highly involved in the delivery experience. As a result, they have high expectations regarding products purchased online and available delivery services. These consumers also like to be kept informed at different stages of the delivery process.

TRUST THE PROCESS Consumers in this group are relatively infrequent online shoppers and trust in a positive delivery experience by sourcing available information regarding their deliveries upfront. These consumers also like to prepare for delivery by arranging for someone to be at home to receive and sign for the parcel.

SET A N D FORGET Consumers in this group are relatively young and have moderate to high online shopping activity. However, they are somewhat indifferent regarding specific aspects of the delivery experience as they are either very experienced online shoppers or are not engaged by online shopping. These consumers are very comfortable with the delivery process once making the upfront arrangements.

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COMPLETE CONTROLLERS “I know what I want and how to get it”

Driven by previous delivery pains, Complete Controllers desire full involvement in

the delivery process and seek information updates throughout. They use available delivery information when making a purchase online and expect the very best return policies (e.g. free, easy, trackable). These consumers are the least comfortable leaving deliveries in a ‘safe place’, and want to be able to sign for delivery as well as specify the exact time a delivery will be made. Comprising mainly females aged 45+, these frequent online shoppers are highly considered purchasers, with delivery decisions conditional on meeting their high expectations.

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FRONT-END PLANNERS “I take confidence in my upfront planning efforts�

Frequent online shoppers, Front-End Planners are experienced in the delivery process. They are a highly organised group of consumers who are accustomed to plan for high quality delivery services and seek delivery status via tracking at all points of the process. These consumers seek available delivery information upfront, and want to lock in arrangements before making a purchase. Knowledge of the expected delivery time is highly important to these consumers, driven by previous deliveries arriving outside of the expected time frame. While the ease of initiating returns is important to these consumers, it is not a key decision maker.

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BACK-END CONSERVATIVES “I need to be able to return products that I buy easily”

Risk-averse and product focused, Back–End Conservatives are rarely home to receive deliveries, often collecting parcels from a local store. Whilst they purchase online monthly, these consumers are not concerned with tracking the delivery progress; instead they view the returns policy — especially the cost and the ease of initiating a return — as key to delivery decision–making. Back–End Conservatives also highly value delivery times outside of regular business hours when they are able to be at home to receive parcels.

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CAREFREE INITIATORS “I’m fairly easy going about the delivery process”

Easy going and self–assured in their online purchases, Carefree Initiators desire competitive prices and accurate expected delivery times. Skewing towards middle– aged males, these consumers infrequently shop online so are generally flexible and relaxed about the delivery process. Carefree Initiators are also proactive in their parcels deliveries, usually collecting outside of business hours and even using click–and–collect shopping services.

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SCHEDULED ORGANISERS “I need parcel deliveries to work within my schedule”

Scheduled Organisers are process–driven consumers who often arrange to have someone at home to receive their online purchases. To be as organised as possible, these consumers also expect to be able to specify the exact delivery time to fit best within their busy schedule and track the status of their parcel. Also product focused, Scheduled Organisers have high expectations for the quality of the returns process, particularly the ease of initiating a product return.

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EXPERIENCED FAITHFULS “I have products delivered often so trust the process”

Among the most frequent online shoppers, Experienced Faithfuls take comfort in the process of shopping for products online and their delivery. These consumers have few specific delivery requirements and are comfortable having their parcel left in a ‘safe spot’ if they are not able to receive. Concerned only with delivery costs, Experienced Faithfuls do not actively seek out information regarding the delivery process, driven by previous successful experiences.

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UNINVOLVED SHOPPERS “I’m not really interested in the delivery process”

The youngest segment, Uninvolved Shoppers have little regard for how and when their product purchases are delivered, despite being moderately frequent online shoppers. Indifferent towards the delivery experience itself, these consumers are most comfortable for parcels to be left at the door and do not seek any delivery information prior to making a purchase.

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COMPARE THE SEGMENTS Having a deep knowledge of Australian consumer preferences for the delivery

ATTITUDES ON ASPECTS OF RETURNS

experience and developing tailored strategies for key segments is an important step in meeting (even exceeding) online shopping expectations. Below are some

FREERETURNS

important delivery experience comparisons across the consumer segments to further understand them individually and relative to each other.

EASE OF INITIATING RETURNS

PERCEPTUAL M A P OF ALL SEGMENTS RETURNS TRACKING

INSTANT REFUND ATRETURN

CONFIDENCE THROUGH CONTROL

TYPE OF DELIVERY INFORMATION SOUGHT DELIVERY COST

TRUSTTHE PROCESS

RETURNS POLICY DELIVERY INVOLVEMENT SETAND FORGET

COST OF RETURNS

EXPECTED DELIVERY TIMEFRAME

TRACKING PURCHASE INFORMATION SOUGHT ACRS | MeeMeep.com | The Delivery Experience: Segmenting Consumers White Paper

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APPLICATION Outlined below are a number of ways that Delivery Experience Consumer Segments can be applied to businesses, as well as potential next steps to integrating the insight.

options

There are seven Australian consumer segments that differ on their preferences throughout the online purchase delivery process. Businesses operating online should ensure that their delivery options cater to each segment.

IDENTIFY preferences of customer BASE to

While the consumer segments revealed different preferences at a national level, they may differ by industry sector,

develop delivery segments

product category, and other important factors. By collecting delivery experience preferences of own customers,

REVIEW the suitability of current delivery

businesses can potentially uncover their own segments and work towards creating a tailored delivery experience.

TRACK evolving customer preferences over

It is important to consider how consumers’ delivery experience preferences evolve over the longer term. Longitudinal

time

data can be used to model how customer preferences change over time, and identify the triggers that drive these shifts in preferences and behaviour (e.g. previous delivery experiences, change of life-stage, etc.)

Investigate the online path to purchase and

The online channel provides a valuable opportunity to examine how consumers progress through the path to

identify POTENTIAL delivery barriers

purchase. Clickstream data can be used to investigate how consumers navigate through a website and identify triggers or barriers to conversion, particularly related to delivery options. This can also be overlayed with consumer segments to determine the impact of offering tailored delivery options.

Real-time website optimisation based on

Once a business has a detailed view of customers’ delivery preferences and the online path to purchase, predictive

CUSTOMER path to purchase

algorithms can be developed to optimise the website experience. Factors such as the product type purchased and a customer’s previous behaviour can be used to determine the optimal delivery option to help drive online conversions.

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AB O U T ACRS

Monash Business School

Nested within the Department of Marketing at Monash Business School, the

Monash Business School is one of the world's leading academies of scholarship in

Australian Consumer, Retail, and Services (ACRS) Research Unit has a 30+ year

business, economics and related disciplines, and among the 1% of business schools

history as a globally respected source of retail, services, consumer, and marketing

in the world to have achieved the elite 'triple crown' of accreditation by the three

knowledge. ACRS achieves this through conducting cutting–edge applied research

major global accreditation bodies (AACSB, EQUIS and AMBA) and the only Group of

and engaging multiple stakeholders with Monash Marketing staff and students.

Eight Australian university to have done so.

ACRS connects with its stakeholders across a range of external, internal and partner engagement initiatives to deliver the latest academic thinking combined with business relevance, practicality and strategy.

MeeMeep.com MeeMeep is the simpler, smarter, seamless delivery service putting the logic back

External engagement: Industry and academic research collaborations and

into logistics. By bringing together innovative technology and a vast and varied

applications.

network of independent and commercial couriers in one easy-to-use e-platform,

Internal engagement: Facilitating student and alumni activities, curriculum

development, and career assistance.

MeeMeep's delivering fully customisable e- commerce solutions for some of Australia's biggest retailers and small-medium businesses. And with a super- smart tracker app and person-to-person approach, MeeMeep means better value,

Partner engagement: Academic-industry engagement programs and initiatives.

Visit ACRSpartnership.com to find out more about the ACRS.

complete confidence and total control for our customers. Visit www.MeeMeep.com to find out more.

Jason Pallant, Swinburne University

Department of Marketing

Jason is an applied researcher within Swinburne Business School’s Department of

The Monash Business School’s Department of Marketing is Australia’s largest and

Management and Marketing. His research focuses on how companies and

leading marketing research and tertiary-level teaching providers. The department has

consumers interact, and how this is facilitated through emerging technologies and

a very strong reputation (rated ‘above world standard’ in the most recent Excellence

services. He has presented domestically and internationally on topics including

in Research for Australia assessment), with many publications in the leading

omni-channel retailing, the future of physical stores, and the challenge of last-mile

scholarly journals and a strong representation on editorial boards.

deliveries. Jason is also an expert in uncovering consumer motivations from behavioural data, and identifying how marketers can predict and influence how consumer behaviour evolves over time.

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MONASH BUSINESS SCHOOL

Department of Marketing Monash Business School Level 6, Building S 26 Sir John Monash Drive Caulfield East, VIC 3145 T. +61 3 9903 2455 E. acrs@monash.edu W. monash.edu/acrs