Why you are losing Gen Z customers

Gen Z is an increasingly lucrative market for retailers, but a number are missing out. Here are the secrets to engaging Gen Z.

Gen Z is the face of the future consumer: digitally savvy and convenience driven shoppers who dictate their purchasing journey based on online reviews and ‘want-it now’ experiences.

Representing close to a fifth of the Australian population, these young shoppers account for $1 billion spending power, which makes it a real issue for retailers that 97 per cent of Gen Zs are abandoning their cart at the last hurdle due to poor shipping practices, as recent research has revealed.

Not only revenue suffers, but brand perception too. Exploring the online consumer habits of Gen Zs with a focus on how shipping affects behaviour, our latest report, ‘Great Expectations: Shipping, CX & Gen Z’, highlighted a real sensitivity among this demographic to the shipping component of the customer journey.

In order to corner the Gen Z market, here are three things you can do to ensure you keep this next generation of consumers on your side.

1 Shipping friction is a sure-fire way to demotivate Gen Z

The 24/7 accessibility of online shopping is a strong motivator for Gen Z, with one in every three highlighting convenience as the main reason they shop online. When retailers make it difficult for Gen Z to complete their purchase by offering only limited shipping options, almost every Gen Z consumer in Australia responds by abandoning their cart. Compared to their counterparts in the US, UK or France, Aussie Gen Z consumers clock the highest rate of cart abandonment (31 per cent).

A great example of a local ecommerce retailer who is winning the shipping stakes with a Gen Z customer base is The Iconic. Not only is the checkout stage full of a range of shipping options catered to metro-based customers, the entire post-purchase journey from tracking the status of a delivery to an easy-to-use online returns portal lends itself to a great end-to-end customer experience.

2 Retailers are driving Gen Z to competitors by limiting delivery options

Is there anything worse than serving your potential customers to your competitor? Well, retailers are inevitably doing that when they limit the delivery options at checkout.

Following a failed attempt to select a shipping option of their choice, nearly half of Gen Z (44 per cent) will opt to buy from an alternative brand online. To mitigate risk, retailers should adapt their shipping strategies to the requirements of Gen Z consumers in a way that is sustainable and scalable for their business.

Speed-based shipping does not have to cannibalise profit margins, especially in Australia where Gen Z shoppers are more than willing to pay for immediate gratification. Over half would fork out more for hyperlocal delivery and these young Aussies would pay more than their peers in other markets for this service or same-day delivery.

For retailers with a physical footprint, consider offering Click-and-Collect by installing smart parcel lockers on site like sporting goods retailer Decathlon. This also indirectly encourages online customers to pick up a few additional items in-store.

3 Gen Z has zero interest in working around your limitations

We all have limitations, but shipping is a risky area of customer experience (CX) for retailers to fall short. Ask yourself this: why should Gen Z, or any consumer, be expected to put up with a frustrating experience when the borderless nature of ecommerce frees them up to shop elsewhere?

Some of the popular shipping-related requests that Gen Z have are: estimated delivery dates (95 per cent), online or mobile tracking (95 per cent) and free returns shipping (71 per cent). With the likes of Amazon and other leading local online retailers normalising the expectations for bigger and better shipping practices, other retailers who fail to put into motion an improved shipping strategy will find the ecommerce environment increasingly challenging.

Neopost Shipping’s research also shows that more than half of Gen Z consumers make purchases on their phone from within a retail store on a competitor’s site. Not only do retailers have to contend with stiff competition online, they need to be aware that it’s not a clincher when a consumer walks instore. But, if retailers get the shipping experience right, they can expect 71 per cent of Gen Z to be return customers, 57 per cent to trust the brand more, and 42 per cent to endorse the brand by sharing the experience with their networks.

For Australian businesses looking to win over the Gen Z consumer, they need to get serious about their shipping and supply chain. With only a fifth of retailers offering alternative shipping options, there is a clear opportunity for businesses to leverage effective shipping as one of the key drivers for conversion.

 By Matthew Mullen, Neopost Shipping senior vice president Americas