Customers want retailers to foot the bill for green deliveries

26 September 2019

Customers and businesses are at odds when deciding who should foot the bill for more sustainable deliveries for online orders, a report has revealed.

The report, by Barclays Corporate Banking, found while consumers are looking for retailers to provide more sustainable delivery methods for online orders, they are often unwilling to pay extra. 

Over half (48%) of retailers are investing in making deliveries more sustainable over the next five years. However, there is a disparity between how much retailers believe customers would be willing to contribute financially to sustainable deliveries and how much consumers would be willing to spend. 

Retailers believe customers would be willing to pay up to 5.6% more for sustainable delivery options, however customers said they would only be willing to pay an average premium of 1.8% more.

And six in 10 customers (62%) expect retailers to absorb all additional costs associated with making deliveries more sustainable.

In 2019, the value of UK online retail sales is expected to reach £80bn, up 17% on the previous year. As online orders grow, businesses recognise the importance of making large-scale operations more sustainable to attract and retain customers.  

More than half (57%) of retailers believe making deliveries more sustainable will improve brand reputation. Businesses also expect greener deliveries will strengthen customer loyalty (51%) and attract new customers (51%).

One of the key frustrations for customers is excess packaging, with 45% believing retailers are not doing enough to tackle the issue. 

However, this is a large focus of business investment over the next five years. Almost half (48%) have planned to reduce packaging for online orders, while 46% planned to increase the use of biodegradable packaging. 

The research revealed several areas not currently prioritised by retailers that could potentially win business from customers. These include the collection of packaging for recycling via delivery drivers (85% of consumers said they would use this) and deposit schemes for returning plastic (33% would like retailers to offer this). 

Retailers are beginning to trial packaging initiatives to tackle what is commonly regarded as a “global waste crisis”. 

Tesco is partnering with retailers and manufacturers on Loop, an initiative which uses refillable containers rather than plastic packaging for household goods. Meanwhile, Waitrose has also been trialling packaging-free refill stations in stores. 

Karen Johnson, head of retail and wholesale at Barclays, said: “Retailers have to recognise that it’s not a choice – they must be able to demonstrate that sustainability is top of their agenda if they are to retain and attract new customers, whether that’s through greener delivery options, packaging or wider supply chain improvements.

“The elephant in the room is who is expected to fund these sustainability efforts, with our research showing that consumers are largely unwilling to foot the bill. Hard-pressed retailers don’t have a lot of wiggle room at the moment, so it’s not easy for them to take the hit either. 

“Despite this challenge, it’s good to see that the vast majority of retailers are committed to devoting more resources to green activity and it’s crucial that they safeguard this spending even when funds for investment are limited.”

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