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Retailers could have to charge next-day delivery premiums during peaks

The UK’s capacity to offer next-day delivery is finite and retailers may have to start charging a premium for this service during peak times such as Black Friday, the executive chairman of package carrier Yodel has warned.

Speaking to Drapers, Dick Stead called for more transparency about the true costs of delivery. It comes after Yodel was forced to suspend collections from retailers on December 11 for two days, as it struggled to keep up with unprecedented demand following Black Friday orders on November 28.

“At present many retailers are absorbing all or part of the delivery costs and in turn are squeezing the carriers,” explained Stead. “Consumers expect an ever-shortening delivery window at lower and lower prices. The equation does not balance.

“During peak periods, 48- and 72-hour services may have to become the standard and, where required, next-day delivery available only at a premium price.”

Last month, Liberal Democrat MP Greg Mulholland tabled a motion in the House of Commons calling on UK retailers to refrain from marking Black Friday in 2015 or beyond.

The motion criticised larger retailers that chose to take part in the US-imported discounting day, noting the scenes of disorder in some stores as police had to attend and break up fights.

Supporters include Conservative MP Sir Peter Bottomley and independent MP Mike Hancock.

Others, such as John Lewis managing director Andy Street, have bemoaned the discounting day for bringing sales forward from Christmas.

But Black Friday heavy discounting is set to continue as retailers match rivals’ discounts. “You have to be competitive in the market, and if your competitors are offering similar products with bigger discounts you’re not going to prosper,” said research firm Verdict’s retail analyst Kate Ormrod.

Shop Direct is planning to extend its discounting period to a full week this year, after its sales spiked by 23.1% on November 28.

Ormrod emphasised retailers must include the cost of delivery when deciding how to present discounts to consumers. “Shoppers are savvy and they take the cost of delivery into consideration. The biggest bargains won’t matter if delivery costs are high.”

In 2014 UK retailers experienced their worst December since 2008, with fashion and footwear sales down 2.2% year on year, according to the Office for National Statistics. Overall, online sales in December were up 5% on 2013.

Readers' comments (1)

  • Retailers have been quick to promote next day delivery, but by offering for 'free', have missed the opportunity to understand if it's what the customer actually wants. Risking their margin as well.

    It's further folly as it suggests a consumer should expect a further discount if the customer selects 2-5 day for delivery.

    For me, it's always been about accuracy of delivery time and services over weekends and in evenings.

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