Just what you’ve been looking for…

We know just what shoppers will pay for unlimited annual delivery

Our research shows that for retailers to attract customers to annual

delivery subscriptions, a price point of £9.99 will drive the most interest
and the highest subscription revenue. But why?
 First we looked at the market…

Delivery Launched Annual Minimum Order cut What’s Included? Standard

Subscription price order off for next next day
Scheme value day home delivery cost
delivery
Next day Click Evening Free
& collect delivery Returns

Amazon 2007 £79 None Midnight Y Varies

Prime* depending
on product

ASOS 2009 £9.95 None Midnight Y Y Y £5.95

Premier
Delivery

Boohoo 2016 £9.99 None 10pm Y Y Y £4.99

Premier

New Look 2016 £9.99 None 7pm Y Y Y Y £5.99

Delivery
Pass

Next 2017 £20 £10 Midnight Y Y £3.99

Unlimited

FeelUnique 2017 £8.95 None 6pm Y £8.95 under

Unlimited £15, £4.95
Delivery over £15

Oasis 2017 £9.99 None 8pm Y £4.99

Unlimited

Jacamo 2017 £9.95 None 10pm Y Y £3.99

Unlimited

* Selected items
 Then we looked at consumer behaviour…
What subscribers said:
‘A subscription lets me place any
order no matter how small, all for
just one annual cost’
‘Quick easy delivery for a flat fee’
‘I shop regularly and it means I get
‘free’ next day delivery’
The highest revenue is
generated from charging £9.99
for an annual next day delivery
subscription
Revenue
per 1000
1. Three quarters of online shoppers are aware of delivery
subscription models, but only one-third have ever signed up to one.
2. Of those shoppers who have a subscription, 78% use Amazon, 27%
a grocery store and 11% a young fashion brand.
3. 40% of online shoppers are interested in an annual subscription
model for next day delivery. This increases to a staggering 68% for
under-35s.
4. There are four key messages to tempt online shoppers to sign up to
a delivery subscription:
N
 EXT DAY DELIVERY – “Only next day delivery for me
- if paying up front I want it fast and tracked”
CONVENIENCE – “It would take the stress out of making last

minute purchases”
VALUE – “The price seems competitive when you take into
account how much you normally spend”
F
 REE RETURNS – “It could tempt me if returns were covered
in the price”
5. £9.99 is a real threshold for online shoppers with 34% agreeing
they would be very likely to subscribe to a next day delivery
subscription model at this price point. At a price of £12.99, this
drops significantly to just 17%.
£9.99 is also the price that will drive the highest subscription revenue.
At this price point, for every 1,000 customers a third
would be likely to sign up. At the highest price less
than 10% of customers would be enticed.
£3,301
£2,566
£1,977 £1,854 £1,822
330 198 124 103 91
£9.99 £12.99 £15.99 £17.99 £19.99
Annual subscription for a fashion retailer who will deliver your items NEXT DAY.
 Then we started thinking…
Interest shoots up when people hear that
an annual delivery subscription could only
cost £9.99. This is probably because most
over-35s assume a delivery subscription
will be much more expensive because of
services like Amazon - which costs a hefty
£79 annually. However, Amazon can justify
this due to the wide range of additional
benefits that their Prime service offers,
such as Amazon video, music streaming,
exclusive sales events and same-day
delivery in selected areas.
The Sample: 487 online shoppers sourced from Yodel’s Have Your Say customer survey, run by Maru/eDR, which gathers feedback from around 4,000 customers each day. March 2017
Happily for retailers, our research shows that £9.99 is also the price
that will drive the highest revenue - so it’s no surprise that most
fashion brands (ASOS, Boohoo, New Look and most recently Oasis)
have opted for this price point.
Next dramatically bucks this price trend with an annual delivery cost
of £20. Customers would need to place five orders at the standard
next day delivery charge of £3.99 to cover the cost of this annual
subscription. One reason for this approach could be that Next sells
across multiple categories - menswear, womenswear, childrenswear
and homeware – so there is the opportunity for customers to order
more frequently than if they are limited to a single category.
Although it may seem risky, we think Next’s strategy could work well.
If successful, Next Unlimited could increase order frequency and/
or basket size, build customer loyalty, increase lifetime value, and
ultimately lower customer acquisition costs.
We expect other multi-category retailers are considering similar
schemes. If so, what can they do to differentiate from Next? One
option would be to include additional perks like free returns, premium
delivery options and exclusive offers and promotions.
We’re also watching beauty brand Feel Unique’s foray into the delivery
subscription market with interest. The business is the first beauty
company to offer this service, and we can understand why. As a
brand operating in a highly competitive, fast-growing online product
category, building brand loyalty is critical. We expect its young,
primarily female market to respond very positively to this option.
Men’s clothing retailer Jacamo has also launched a delivery
subscription this year– does this herald the beginning of a wider
menswear move into delivery subscriptions? After all, menswear is
set to be one of the key growth drivers in the Clothing & Footwear
category over the next few years.
Could we start to see more category-specific suppliers like wine
merchants and pet food specialists branching out and offering delivery
subscriptions in the near future?
Get in touch to learn more about our retail and shopper insights.
Tel: 020 35100 831 email: marketingsupport@yodel.co.uk