Peak Delivery: The Cost-of-Living Crisis Impact on 2022 Holiday Spending

Peak season is right around the corner, and the ‘cost of living crisis’ continues to bear down on households. This uncertain future has made planning for this year’s shopping season challenging, with customer behaviour difficult to predict and the extent of this economic event’s impact cloudy at best.

To help businesses deshroud this ambiguity, ShipStation and Retail Economics interviewed 8,000 global customers and 800 retailers on how they expect the ‘cost of living crisis’ to affect peak season spending and what this means for holiday shopping.

Our Holiday Spending Trends Report digs deep into many consumer expectations from across Spain, Italy, France, Germany and the UK, as well as the US, Canada and Australia. 

From extensive data on regional shopper behaviour to the importance of smooth delivery, we uncover what shoppers want before committing to the ‘Buy’ button and what their important concerns are.

Peak season sales numbers are going to be different 

The majority of households are going to spend less this peak season. Fact. Very few in society are immune to the effects of rising prices and inflation. We can see this in the government data and in our research results.

Essentially, as the money people have at the end of each month shrinks, so too do retail sales figures. That applies across the board and includes both brick and mortar retail and ecommerce. In fact, according to research more than 70% of UK shoppers plan to cut back on non-essential purchases this peak season. 

You, yourself, are likely doing the same in your life.

These financial pressures drive changes in behaviour and this graph shows how consumers are responding.

With less disposable income and flagging retail sales, what action can ecommerce businesses and merchants take this holiday season to cement customer loyalty and drive new sales? Let’s take a look at the trends that stood out in our Holiday Spending Trends Report.

Delivery’s importance deepens

Double down on great delivery, that’s what the data shows.

Cost of delivery matters

Firstly, 40% of customers surveyed indicated that the cost of delivery was their most important factor when they were deciding whether or not to purchase a product online. 

Conversely, with more than 35% of retailers increasing delivery prices as a result of rising supply chain pressures, courier price increases and other business costs, customers may be in for a shock at the checkout.

There is clearly a gap emerging between what consumers want and are used to when shopping online, and what delivery costs are absorbable on a seller’s side. 

Careful communication will be key to reducing the shock factor of price hikes and to prepare customers for any future delivery price changes. 

Speed of delivery wins

Also important is how fast a package arrives. Customers still want same- or next-day delivery this peak season, especially those last-minute Christmas shoppers who have left their gift buying a little too late. 

Over a quarter of customers consider these as the most important delivery options when choosing to buy online. 

Again, we observe a disconnect between shopper and seller. On the other side of the fence, many retailers are extending delivery time frames to compensate for rising costs, import delays and other unexpected holdups. 

This coping mechanism results in another gap between buyer expectations and reality forming, endangering conversion and sales volumes. Once again, tread carefully when communicating with customers.

Optimising the delivery process to increase sales

Once you have started to address this disconnect with your customers, turn to optimising your delivery practices because as our report shows, consumers clearly care about their delivery experience. 

Here are four ways your business can optimise delivery:

1. Offer flexibility

Life is busy, and customers rarely have time to sit around all day waiting for a package. 

Offer options that cater to a range of lifestyles. We suggest implementing ‘click and collect’ or if you have a brick-and-mortar store, ‘ship from store’. Not only do these options offer convenience and flexibility, but this can also reduce your delivery costs if you have a physical retail estate.

2. Provide delivery tracking

“Where’s my parcel?”, is a common question that takes up valuable time, but are you doing everything you can to keep buyers updated?

Transparency throughout the order and delivery process is paramount for customers. Once an order is placed, ensure your tracking informs shoppers where their order is at all times. 

This visibility builds trust and gives customers the confidence to return to your business time and again. 

3. Deliver on time and in full

Nothing is worse than Christmas parcels arriving after the big day. Relying on one carrier throughout peak season could lead to severe delivery disruption, especially with industrial action causing delays outside your control. 

Implement a multi-carrier strategy that spreads the load across multiple carriers. In the event a carrier has disruption issues, your business won’t be affected and you can easily switch to another option to get your orders out the door and into the hands of customers. 

4. Assess delivery costs

The pandemic ushered in the free delivery trend, but with rising costs this popular feature is looking increasingly difficult to maintain. Understandably, customers are confused about the removal of free delivery by big retailers such as Next and Zara. 

If you’re planning on removing free delivery, it’s important to set the scene by providing insight into why delivery and return costs are rising.  

Once free returns have been removed, make sure this is communicated before customers reach checkout. This will prevent confusion amongst those who are familiar with your brand.  

Great data drives great delivery

We know peak feels very close but there’s still time to enhance your delivery processes to align with customer expectations. 

Our delivery optimisation tips are meant as quick wins and are ideal for those selling anywhere in the world. 

There’s plenty of additional insight in our Holiday Shopping Trends Report that can unlock additional business growth this holiday season and our global research is a powerful ally when considering how to sell to international customers. 

Whether your business is already popular in Southern Europe, is expanding down under to entice Australian buyers or has grand ambitions of taking America by storm, take advantage of the deep data available in our report.

Don’t act first without reading our report. Download today.