Increasing Pressure on Retailers, Consumers' Top Concerns and the Cost of Failed Deliveries This Holiday Season

With in-person holiday gatherings cancelled due to COVID-19, on-time delivery of gifts is critical.

Getty Images 961335672 Ecommerce
Getty Images

Loqate announced the results of a study revealing shifts in consumer behavior, increased concerns and the elevated role of on-time delivery this holiday season. It's no secret that the pandemic has led to a shift from in-person to online commerce. Seventy-three percent of American consumers, many of whom are digital newcomers, plan to do their holiday shopping online, and 26 percent plan to ship gifts directly from retailers to friends and family. Combined with 88 percent of consumers expressing concern over packages arriving late, these shifts put retailers under mounting pressure to make this holiday season a success.

Among the many impacts COVID-19 is having on this holiday season, Loqate's 2020 holiday survey of 1,200 American consumers revealed:

  • With in-person holiday gatherings cancelled due to COVID-19, on-time delivery of gifts is critical. More than half of consumers have canceled their holiday travel plans. In place of in-person hugs and gift exchanges, love and friendship will be expressed remotely through gift-giving, making accurate, on-time delivery more important than ever.
  • Holiday spending remains strong, despite the pandemic. The good news? Forty-two percent anticipate spending the same amount on holiday gifts as last year, while 19 percent expect to spend more.
  • Free shipping and promotions drive consumer purchases. Free shipping and promotions remain the biggest factors driving purchase decisions, followed by customer reviews and recipient wish lists.
  • With less travel, shipping gifts internationally is on the rise. Forty-three percent plan to send gifts internationally. With the nuances of international shipping, retailers need to be extra vigilant to ensure accurate, on-time deliveries.
  • Consumer expectations are high for retailers to get holiday delivery right. Consumers are willing to wait for their packages, but not too long. Fifty-seven percent of consumers say they would avoid using a retailer again if they had a negative delivery experience. During the holidays, many shoppers are inputting unfamiliar addresses for gift recipients, making it key that retailers verify address data without adding friction.
  • Consumer concerns over delivery are heightened amid the high volume of online shopping this season. In addition to 88 percent of consumers expressing concern that packages may arrive late, 86 percent are worried about stolen packages. Deliveries that don't land in the right hands can lead to brand damage, decreased customer loyalty and cost the retailer an average of $17.78 per failed order. With this season's increase in volume and one in 20 online orders never arriving at their intended destinations, the stakes are high. When retailers fail to capture accurate address data during checkout, the likelihood of an item reaching the correct recipient is greatly reduced which, in the end, leads to a frustrating customer experience.   
  • Fraud fears are higher than normal this holiday season. Fifty percent of consumers are concerned fraud attempts will increase as a result of COVID-19, with baby boomers being the most concerned. Nearly half of urban shoppers, but only 30 percent of rural shoppers, are expecting fraud.
  • Technology helps retailers build trust and loyalty with online shoppers. Forty percent of consumers have more trust in retailers with address verification and autocomplete than those without. Twenty-three percent would make additional purchases in the future from that retailer and 20 percent would register for an account.

"With high consumer expectations, a surge in online shopping and more shoppers planning to ship gifts directly to recipients, retailers that minimize checkout friction and deliver a seamless experience from cart to delivery have an opportunity to increase revenue and build customer loyalty," said Matthew Furneaux, director of Location Intelligence at Loqate. "Address verification plays a critical role in the digital shopping experience. The right solution can decrease shopper input by as much as 78 percent, ensuring accurate customer data, increasing online conversion rates, reducing failed deliveries and improving the customer experience. It's a win-win."

For most consumers, filling out shipping and billing address fields, particularly on mobile devices, is the most cumbersome part of digital shopping. With address verification technology, retailers can perfect their online checkouts, minimizing friction by reducing form fields, creating a positive customer experience and improving delivery success rates this holiday season. With consumers sending more gifts direct to their recipients, having the right technology in place will help retailers build trust and ensure accurate, on-time deliveries to customers and their loved ones worldwide.