E-tailers let down by poor delivery

Online retailers are failing to deliver customer satisfaction because they have underinvested in back-end delivery systems.

The shopping habits of some 2,000 adults were taken as a representative sample of the UK population for the survey, Home Delivery and Fulfilment 2000. It revealed dissatisfaction with the length of delivery times, inflexible delivery hours, and poor systems for returning unsuitable goods.

Excluding traditional home delivery items such as milk, newspapers and takeaways, some 55 per cent have home deliveries.

Online shopping represents a small percentage of the total sales for home shopping. In 1999 it accounted for about £581m out of a £17bn market, but figures are being driven by new technologies, either online, via digital interactive TV or mobile phone, says the report. It predicts that online spending for retail goods will grow more than 1000 per cent in the next five years.

Consumers spend an average of 300 hours a year online, of which they spend 10 per cent buying. In the past year buyers spent an average of £316m online. Some 51 per cent of internet users think that buying online will replace physical shops, but if poor delivery services continue, e-tailers will go out of business.

Mike Godliman, director of Verdict, said that such failures put electronic retailers' relationship with customers at risk, and will determine the winners and losers of the future.

He said that the biggest problem for online retailers is that they outsource delivery, leading to loss of control over the service. "Most dot com companies are not making money. They have spent a lot on marketing and there's none left for transport and fulfilment, so they put their brand in the hands of outsourcers, which can be dangerous."

However, Godliman believes that "the potential will evaporate quickly if the industry cannot meet this challenge."

Verdict decided "not to name and shame the worst offenders because the differences between the best and the worst is not huge," said Godliman. "Nobody is brilliant," he added.

In a separate report published today, the Centre for Economics and Business Research said that the internet would boost the UK's rate of growth by 0.6 per cent over the next 20 years.

Today, however, ebusiness has boosted growth by "negligible amounts - 0.1 per cent at most", according to The e-conomics of e-business report, "because substantial amounts of e-business create negative value-added under traditional accounting".

Ecommerce is "boosting investment in intangibles, such as marketing and advertising" which cannot be measured "but still adds to economic activity", said the report.