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Free shipping is still critical for online shoppers in Asia: Report

As more shoppers in Asia buy online, their rising expectations amidst a fiercely competitive retailer landscape is driving increased demand for free shipping, expedited deliveries, and customer-centric return policies to be offered as the standard, according to the UPS Pulse of the Online Shopper Study. Now in its sixth year, the research commissioned by UPS revealed enduring constants as well as emerging trends that are changing consumer behavior and preferences across China, Hong Kong and Japan, as well as the United States, Canada, Mexico, Europe and Brazil. The results have been categorized into three areas – Constants, Movers and Emergers.

“Analysing the mindsets and motivations of thousands of shoppers around the world reveals that, far from being a sunk cost, clever shipping and returns solutions are actually an area where retailers can win and retain customers, drive repeat patronage, and encourage shoppers to add more items to their carts – both online and in-store,” said Sylvie Van den Kerkhof, Vice President of Marketing, UPS Asia Pacific.

Notably, only 57 per cent of shoppers in Asia are satisfied with the online shopping experience, the lowest percentage compared to other regions surveyed, and an improvement of only 11-percentage points since 2015 (when it was 46 per cent), demonstrating the slow pace of change in addressing customer satisfaction.

Other areas of the retail experience that remain important year over year and influence purchase behavior include the importance of free, fast shipping, as well as free and easy return policies. Tellingly, Asia online shoppers enjoyed free shipping, on average, for 85 per cent of their orders, illustrating the competitive advantage that free shipping gives to retailers that offer it.

Unsurprisingly, nearly two-thirds of respondents in Asia indicated that free shipping is an important factor in the checkout process, with 46 per cent of shoppers adding items to their cart to qualify for it. What’s more, about half of Asia online shoppers have abandoned a cart due to no delivery date being given or delivery time being too long, with the average delivery wait leading to cart abandonment being 11 days.

Meanwhile, a convenient and transparent return policy increases sales and customer satisfaction, with 67 per cent of shoppers in Asia indicating that free shipping on returns is important when selecting online retailers. Regrettably, this is an area where retailers in Asia must do more to improve their service as only 47 per cent of shoppers are satisfied with the ease of making returns, even though only four in 10 have actually returned an online purchase in the past year. Furthermore, 79 per cent of shoppers returned only 10 per cent or less of their orders. Among these, 69 per cent made new purchases when returning an online order in-store, and 67 per cent bought new items when returning online, demonstrating a strong business case for offering a fuss-free return service.

The usage of smartphones has become even more prevalent amongst shoppers in Asia, with smartphone purchases becoming the norm as 77 per cent of shoppers have placed orders on their phones (the highest percentage globally), up from 55 per cent in 2015. By way of comparison, only 48 per cent of American smartphone users made online purchases on their device.

Ship-to-store is growing in popularity (with 37 per cent of shoppers using it in the past year and 59 per cent of those planning to use it even more this year). Notably, it can be a lucrative offering for retailers, as 60 per cent of Asia shoppers who used ship-to-store in the past year made additional purchases while in store. The percentage is even higher in China at 74 per cent.

“One revealing finding is that Asia’s online shoppers are now buying from a more diverse set of retailers – ranging from major marketplaces to boutique shops, from domestic and foreign stores. Importantly, what this tells us is that there is a viable opportunity and customer base for small businesses in Asia to expand internationally, and it is only set to grow larger,” said Ms Van den Kerkhof.

Promisingly, the research found that 55 per cent of online shoppers in Asia are embracing international retailers. Among those, 49 per cent of buyers ventured to overseas retailers because the brand or product was not available domestically, or the quality (39 per cent) or price (38 per cent) was better internationally.

Noteworthy for Asia businesses is that there is a strong preference for buying from retailers within Asia as 77 per cent of those who made an international purchase made one from a retailer within the region, while 31 per cent have ordered from retailers in the United States. Hong Kong had the highest percentage of online shoppers making international purchases at 82 per cent, followed by China at 64 per cent. Meanwhile, only 21 per cent of Japanese shoppers did so, indicating their strong preference for domestic goods.

Alternate delivery locations are most popular in Asia compared to other regions, with 71 per cent of consumers, particularly millennials and urban shoppers, interested in shipping packages to these locations with extended hours for reduced fees. Shoppers’ preference for alternate delivery locations has grown considerably from 46 per cent in 2015 to 59 per cent of orders in 2018.

Asia shoppers also love their marketplaces with 98 per cent having purchased from one, and more than a third saying they will use them even more in the next year. Better prices (64 per cent) and free or discounted shipping (42 per cent) are the top reasons for buying from a marketplace instead of direct from a retailer.

“The UPS Pulse of the Online Shopper research shows time and again that as online shoppers gain the benefit of greater choice, they are increasingly dictating the terms of their buying experience—and it is vital that retailers know how to cater to and adapt to their changing needs,” Ms Van den Kerkhof added.