British courier and express delivery market hit £12.6bn in 2018 says Mintel

Brits’ love of online shopping is sending the courier and express delivery market into double digit growth, according to latest research from Mintel, the world's leading market intelligence agency.Last year, courier and express delivery sales increased 12% to reach £12.6bn, thereby completing growth of 62% since 2014. Meanwhile, volume sales increased by 14% alone in 2018 and 66% between 2014 and 2018. Further to this, last year Brits sent 3.65bn packages, up from 3.2bn in 2017.

Over the next five years, the market for courier and express delivery is expected to continue to post first-class sales. Volumes are forecast to maintain double-digit yearly growth, rising by 54% between 2019 and 2023, further surpassing value sales, which are forecast to grow by 42% over the same five year period.

Cost (53%), ease of finding products online (51%) and greater variety (39%) are the top three reasons why Brits are choosing to have products delivered as opposed to shopping in-store. Almost one in ten (8%) consumers are encouraged to order online because they are part of an unlimited delivery subscription.

Marco Amasanti, Retail Analyst at Mintel, said: “The courier and express delivery market is booming, much of which is underpinned by surging online retail sales. However, the marketplace remains hugely competitive, marked by slim margins and a growing expectation to provide more for less.

“Looking forward, rising demand for delivery subscriptions brings added pressures; particularly the growing amount of returns, which require extra processing, storage and logistics. However, for those who remain in the market, the future looks bright. Major players should further consolidate, given continued value and volume growth; both of which show little sign of abating as online retail appears far from reaching its ceiling.”

According to Mintel research, carried out among 2,000 internet users, some 81% of British consumers used courier services in the six months to February 2019. What is more, nearly a fifth (18%) of users say they have used these services more in the year to February 2019 than the previous 12 months, highlighting the growing popularity of these services.

Speed is of the essence for the four in ten (39%) consumers who received their most recent parcel either the same day or the day after the product was ordered. But, despite increased availability of express delivery, over half (56%) of consumers say that the last parcel they received arrived more than a day after the product was ordered.

“Premium delivery services, namely same-day and next-day delivery, have surged in popularity in recent years as operators scramble for a competitive edge over their rivals, with convenience central to demand. However, growing expectations around these services, which play a pivotal role in consumer choice, have intensified margin pressure. Consumers increasingly demand couriers to deliver more for less, with a cut-throat expectation of increasingly fast, flexible and precise deliveries at constantly lower prices,” added Marco Amasanti.

Over four in ten (37%) consumers who received a parcel from a courier also returned a delivered item in the six months to February 2019; a seven percentage point rise year-on-year since 2018 (30%). The rate of return is higher among younger consumers, with 45% of 16 to 24 year-olds returning a product in the last six months, compared to 27% of over 55s.

The importance of returns is confirmed by the fact that a free returns policy is the second most important factor (43%) when choosing a delivery option, following the cost of delivery (68%).

“The returns process is a key influencer for consumers. The surge of online retail has spawned a new generation of serial shoppers, many of whom over-order to allow the comparison of products at home, assured by the guarantee of free returns. Online retailers, and therefore couriers, have to find a balance between reducing the impact of returns, while acknowledging the importance return policies play in consumer decision making,” Amasanti commented.

Finally, while new innovations in the courier and delivery market aim to increase efficiency, Mintel research finds that Brits are cool to these delivery advancements.

Almost eight in ten (79%) consumers say they would be unwilling to allow a delivery driver access to their home to deliver a parcel when no one is home, while a slightly lower 76% would be unwilling to allow access to their car boot. Beyond these technologies, demand for delivery outside of the home and workplace is more promising. Half (47%) of consumers say they would be interested in receiving a delivery at an agreed time and place away from home or work.

“The rise of access control schemes has coincided with the surge in smart homes across the UK. However, they remain in their infancy and much of the consumer base remains unsure of allowing drivers this access. Given this reluctance, there could be an opportunity for smart doors and smart boxes, which through the use of expanding compartments allow couriers to deliver parcels to a secure location without actually accessing a property. However, these remain still largely at a prototype stage,” Amasanti concluded.