A newly published Temando report, The Truth About Youth, about the shopping habits of Gen Z shoppers reveals new behavior that will impact how retailers respond to customer expectations. We define Gen Z as people born between 1995 and 2012, which would include all consumers currently in their teens. Data for the report came from an independent global survey commissioned by Temando that polled 4,128 consumers and 852 retailers in United States, United Kingdom, France, and Australia in November 2015. In summary, here are three findings from the report that shows increasing expectations around online shopping deliveries, and what retailers can do to address them:
Value Tied to Shorter Timeframes
Gen Z has the shortest attention span of eight seconds, which is four seconds less than Millennials—and they want their online purchases quicker than ever before. However, while the expected timeframe for deliveries has become shorter, Gen Z shoppers don’t generally expect retailers to provide this service for free.
61% of Gen Z shoppers polled would pay a premium for same day delivery, while 46% would do so for hyperlocal delivery (one to three hours). Comparatively, most Millennials would pay a premium for shipping that would take up to three days.
Tip: Offer a good range of shipping options at checkout in addition to standard and express delivery, to ensure that you’re not alienating segments of your customer base. To offer hyperlocal delivery, you need to ensure that your technology and carrier network is capable of executing this service option well, as a misalignment here is costly in the long run and could spell disaster.
Price Sensitivity to Shipping Costs
It’s easy to take technology lightly when you’re born into it, like the Gen Z-ers, who use the Internet as a shopping channel to scour for the best prices; shopping online is viewed as a given, not a luxury. Due to this attitude, Gen Z shoppers prioritize affordability over convenience as a reason why they chose to shop online.
Hence, when they perceive that they’re charged unfairly, many won’t hesitate to walk away: 54% of Gen Z shoppers abandoned their shopping carts due to high shipping costs. Comparatively, a smaller segment abandoned their carts when free shipping is not offered at 38%.
Tip: Delivery is commonly viewed as a loss leader in e-commerce, but it’s tough for retailers to bear the full cost of delivering online orders. Consider sharing the cost with your customers, by charging a small fee for standard orders, and only add a premium when the order is particularly bulky, or is required to be delivered in a shorter timeframe. Communication is key: remember to communicate these additional costs upfront, so shoppers are aware.
‘Free’ Delivery For Increased AOV
From the above findings, we know that Gen Z shoppers want their online orders quicker, but aren’t willing to pay much for the service. Accustomed to paying less or nothing for services that came with a premium in the past, such as attaining an Ivy League education for free through MOOCs, Gen Z consumers have expedited the shift in attitudes around the dollar value of premium services.
This sentiment challenges the traditional retail model, but can be tapped into as a tactic to help increase a retailer’s average order value (AOV): 64% of Gen Z shoppers will increase their cart size for free hyperlocal shipping—18 percentage points higher than those who would pay a premium for the same service.
Tip: Use ‘free shipping’ as a marketing tactic to drive sales especially around peak periods. Let shoppers know that they’re eligible for free shipping if they meet a spend threshold, and include a limited time frame for the offer to increase a sense of urgency to encourage shoppers to act.
Although Gen Z have not fully come into their own today, they will represent 40% of consumers by 2020. To survive and flourish in the increasingly competitive ecommerce space, retailers must dedicate themselves to finding the right balance between satisfying their customers with optimizing revenue. After all, as the generation with the highest influence on household spend, how retailers adapt their strategies to address the changing attitudes of Gen Z shoppers now will impact how other consumer demographics respond to retailers.
Temando is a provider of shipping and fulfillment software.Favorite