Small firms say they are heading online to cut cost of delivering goods and introduce more people to the internet
One, two, three, click! That’s it: the time it takes to send an online parcel to a customer is now shorter than your average UK post office postcode – between five and 10 minutes.
But while it’s often cheaper for small businesses to use online deliveries than distributing them by post, retailers and analysts warn of complications.
Discount chain Poundland has been tested in one of its online stores by its owner, John Drake of Dart Equity, who has convinced management he will make more money by cutting price in-store, sending products to customers as soon as they want them and then slashing the cost of delivery.
In August, Drake bought a stake in Poundland as part of his largest ever investment. He said: “We don’t expect Poundland’s online offering to be a huge value revolution because we think the range of products in the stores is good enough.”
Drake – whose own idea for a discount chain, Ozwald Boateng, was axed when problems with its site emerged in the 1990s – reckoned shoppers were only willing to pay for “value for money” by discounting the goods to buy online.
But analysts say the move makes price comparisons much harder, both before and after an online purchase. “In this way, there’s no comparability and the question becomes how much are you paying, with delivery usually costed on top, not as a part of the transaction,” said Anthony Cross at retail consultancy CCS Insight.
For shoppers shopping for discount chains like Poundland and Asda’s stores, receiving items in the post is often difficult or expensive, which can alienate customers.
In the UK, Post Office Mailings is Britain’s largest retail postal service. Its sales surged in June when the Mail was cut to five days a week from six.
John Gibson, general manager of Post Office Retail, said only 1% of customers who used the Post Office for its box prices, which pay for the delivery, said they would do so without the weekly service. “But roughly half of customers who used the Post Office for the one-off price, said they would be more likely to use it without the discount box. You can see how it works.”