Sunday 23rd Oct 2016 - Logistics Manager

Any time, anywhere

The explosion of multi-channel retailing means that logisticians are facing a new operational reality with increasing demands on the supply chain.

There’s no doubt that internet shoppers’ expectations are now huge. The long-tail effect means just about anything is available at the click of a mouse, even on the move, and competition has driven down prices for ever faster, more accurate, and more tailored delivery options.

Online retail continues to grow. Between 2010 and 2012 the penetration of shopping via mobile devices soared 2,900 per cent, according to research by Capgemini and IMRG. And increasing options have increased expectations.

“The fact that e-commerce facilitates purchases anywhere and at any time has also meant that consumers are demanding the same level of flexibility and immediacy throughout the entire purchasing process,” points out Yodel’s Peter Fisher.

“While a trip to the sorting office once in a blue moon might have been acceptable 10 years ago, consumers are buying online more often and they are buying higher value goods, so they really want them to be delivered right first time,“ says DPD’s chief Dwain McDonald.

At a round table presenting the findings of BT’s Retailtopia panel discussion, Neil Ashworth, the new chief of CollectPlus, and former supply chain director of went further, saying that the sophistication of the various sales channels has transformed retailing into a customer centric process.

“Retailers now recognise that the customer is in control, and in control forever. It’s a huge problem and it’s not easily overcome… The paradigm has shifted.”

Ashworth put forward an account of the phases leading to this paradigm, starting with the early days when the online channel was viewed as a sideline experiment. Then consumers got wise, using early search engines to make informed buying decisions linking online and offline channels. Since then consumer empowerment has grown and grown with the quantity and quality of information and services available online.

And beyond space for shopping, the internet also allows social interactions and browsing that can be monitored to immense value. “The next big thing in retail technology is not another smartphone but the enormous amount of customer dialogue online. Companies who are able to aggregate that and use it in supply chain planning will have enormous power,” says Gary Sharp of BT global services.

Along with such opportunities, social media is also causing problems for retailers, with Twitter and blogs being used to rant about bad service.

And considering the millions spent on marketing and maintaining brand image, you can bet that retailers are taking this new type of word-of-mouth seriously. DHL reports that it monitors Facebook and Twitter, and that with one retailer for example, if a consumer posts that they are unhappy with a product, DHL work with the retailer to resolve the issue in 24hrs either to get a replacement product out or arrange reverse logistics.

In short an awful lot has to be got right. Not just to take advantage of the opportunities of retailing through multiple channels, but also to avoid serious problems. A proactive approach is vital requirement.

“As companies like HMV and Blockbuster have learned to their detriment, simply having an online portal capability does not breed success or even guarantee survival if it’s not integrated and supported by the rest of the businesses system,” says Vocollect’s Darrell Williams.

“Front-end user interfaces have to be seamlessly linked with back office processes and crucially the warehouse, to meet the extremely high customer service demands of today’s consumers, who in a ‘click and buy’ world, expect instant delivery of products and quibble-free returns.”

If online retail has raised the bar in terms of customer service demands, expectations for traditional channels have by no means slipped. Stock-outs in store are still a cardinal sin. And shoppers are more sensitive than ever to any kind of inconvenience – for example, dissatisfaction at less than glamorous loading bay collection points for click and collect services.

There is a danger in a retail process that doesn’t address and link all operations, end-to-end, and across the channels. While extra sales channels represent new ways of reaching customers, they also represent extra potential to alienate them if availability or service fails to meet newly heightened expectations.

“The challenges for logistics include: reducing lead-times; finding the right technology for a seamless cross-channel experience and keeping the flow of the product moving,” says Dean Wyatt, vice president of business development retail UK at DHL.

“End-to-end tracking of ingredients and chain of custody through new technologies such as RFID is another emerging trend for the industry.”

Lee Gill, vice president of retail strategy, EMEA at JDA, says that the future winners will be those retailers that have put their money where their mouths are, and invested in an ultra-responsive supply chain.

“This starts with creating an optimised network, where fulfilment locations – and that could be anywhere that inventory resides, is configured with capacity, lead times and resource capability that maps to serving the needs of all channel commerce.

“End-to-end visibility, from source to fulfilment centre is a pre-requisite, as is having this in real time, how else can an order promise be made?”

This drive for seamless service is not only putting logistics processes under pressure, but also in the spotlight. Patrick Gallagher, chief executive of CitySprint believes that since consumers can now shop on their terms, they are starting to demand this same level of convenience from fulfilment.

“As a result, logistics is emerging as the new battleground for market share… While retail logistics was a ‘behind the scenes’ function for many years, it is now a highly innovate part of the business.”

Some innovative approaches involve viewing the distribution, and store network from completely fresh angles. For example, equipping stores with a packing station to fulfil the occasional order that is out of stock in the online network, essentially using stores as mini regional distribution centres.

Another way of making inventory as accessible as possible, regardless of channel is to offer connection to the online store from within the bricks and mortar shop via computer terminals or enabling customers’ mobile devices.

In the USA Macy’s department store is testing a tablet computer kiosk “Beauty Spot” which allows shoppers to search and select products across multiple brands. The store says that it “embraces localisation, a seamless omni-channel blending of stores, online and mobile, and more meaningful customer engagement on the selling floor.”

Andrew Dalziel of Kewill advocates this approach to making channels work in synch, as it makes each channel stronger “This way a customer has access to the full range of stock whether it’s catalogued to that store or not… If bricks-and-mortar retailers are to survive they need to adapt and connect the in-store and online journey.”

While few would predict the demise of the bricks-and-mortar store entirely, the cost of real estate alone is a huge pressure on traditional shops, and now that retailers can list their entire stock portfolio online, it is inevitable the function of stores will change.

Speaking at BT’s Retailtopia panel, Milton Guffogg of GA Europe said: “Stores will be showrooms. People will buy online.”

The panel were united in a vision of retail stores fulfilling a new function to win brand loyalty with a fun experience, as at Apple stores today. Shop floors will not be piling stock high to sell cheap, and stores will not be for browsing and buying. Instead stores will be for collecting and returning orders, consulting sales staff about in depth information and testing products; feeling a fabrics, getting a true colour match, or listening to a radio’s clarity.

“Stores will become more showroom-like, so the experience has to be more theatrical, and staff have to be more knowledgeable and understanding of customers’ needs and perceptions,” says Les Beaumont of Total Logistics.

Another concept discussed by the Retailtopia panel was customer supremacy, and the customer as king. But with how easily consumers can locate the lowest price, demand the best service, and castigate any retailer that puts a foot wrong, perhaps the customer is more of a tyrant.

There’s no doubt that omni-channel retailing has empowered the customer to an intimidating level, but there is good news – the root of customers’ power is their cash. And there is a lot of it to be made from keeping the tyrannical masses happy.

Case study- Wilkinson goes omni-channel with Clipper

High street retailer Wilkinson took on Clipper to provide multi-channel services, which handled almost a quarter of a million items in the first month of operation.

The family-run retailer has over 370 stores nationwide and the service Clipper provides offers a range of customer delivery options, including home delivery and “click and collect” from store.
The contract is being serviced out of Clipper’s Ollerton e-fulfilment centre, taking up 110,000sq ft of a new 150,000sq ft extension, which was completed earlier in the year.

The facility will stock some 14,000 product lines, and a total of around 400,000 individual units at any one time to offer high level stock availability.

Wilkinson decided to hire Clipper in response demand from high street retailers to secure a slice of the growing online market, while offering shoppers the best value, choice and shopping experience.

Clipper managing director Tony Mannix said: “Retailers are increasingly seeing the value of an online presence and by combining our ability and Wilkinson’s reputation for quality and value, we’re confident we can deliver a great customer experience.”

Wilkinson’s multi-channel operations controller, Chris Screeton, said: “We were impressed by Clipper’s track record in multi-channel logistics, with experience in both large and small retail brands. The new facility at Ollerton provides exactly what we need and we look forward to developing this relationship as our online business continues to grow.”

Case study- Back in house for House of Fraser

House of Fraser has been trading for some 160 years, and went online in 2007. Originally it outsourced its stock and despatch management to an e-fulfilment company. However, the department stores had no way of monitoring despatches through the current system, leaving it unable to assist its customers if a delay occurred.

At the same time, its reporting function was complex and did not consistently provide House of Fraser with the information it required. Arranging couriered returns was also a very manual and laborious process.

So House of Fraser decided to move to an in-house system, enabled by Metapack.

The system provides full delivery visibility for each sales channel, with tracking emails sent at specified stages of the delivery.

“Online retail is seen as a key engine for growth, and MetaPack has given us a complete level of visibility that allows us to consistently offer our customers a proactive response,” says Mark Russell, head of operations for the retailer.

MetaPack selects the appropriate carrier and service, communicates the collections requirement to the carrier, prints labels, and communicates status updates to all parties as required.
House of Fraser can use almost any carrier without the hassle of integration, giving flexibility to offer the best service at the best price.

Russell says: “The flexibility MetaPack offers us to execute change is important… We’re now in a position to offer more delivery options, as we believe it is an opportunity to distinguish ourselves from our competitors.”

Delivery Options- What’s on offer for the retailer?

– In February DPD launched DPD Direct, a dedicated international home delivery service for e-retailers. It works with local delivery firms to offer tracking and returns in 12 countries across Europe and in the USA, Australia and New Zealand.

– Also in February, FedEx set up Integration Manager – a web based tool to connect retailers to e-commerce platforms such as eBay, Amazon, Etsy, Google Checkout  and Yahoo.

– Last summer Hermes introduced its ParcelShop service via myHermes, which allows shoppers to return goods by taking them to a local convenience store in the Parcel Shop network. In a deal with Midcounties Co-Op, over 80 Co-Op stores in its region join the Parcel Shop network.

– Hermes is also boosting its international presence. “We are targeting smaller and larger international players alike that are looking to leverage their success model to gain a foothold in Europe,”  says head of international business development, Max-Niclas Bense.

– CollectPlus has been establishing a network of pick up and drop off locations in corner shops since 2009. The joint venture between Yodel, formerly Home Delivery Network, and PayPoint now has about 5,000 locations in its network. It picks up and delivers returns for firms such as,  Asos, Asda, Boden, Burton, Clarks, Coast, Dorothy Perkins, Ebay,  Evans, House of Fraser, isme, Jaeger,  John Lewis, Jones the Bootmaker,  Karen Millen, Littlewoods, Miss Selfridge, Monsoon Accessorise, Music Magpie, New Look, Oasis, Regatta, Scuh, Superdry, Topshop, Topman,, Wallis, and Warehouse.

– Last year CitySprint launched its MyTime service for retailers, which offers consumers time specific delivery options, within a one-hour time window, using the retailers’ existing IT services and pick and pack processes and CitySprint’s 35 UK service centres. Shoppers can select their delivery preferences without having to leave a retailers’ web site.

– UPS has just launched a network of convenience stores, petrol stations and newsagents which consumers purchasing goods on the web can choose for delivery and returns, called UPS Access Point.

– Joe Mozzali, vice president of strategy, UPS Europe, says “Access Point technology provides tracking, delivery notification, and smart inventory controls for capacity management.”

– UPS has also invested $2 million in Shutl, the internet service that offers delivery within 90 minutes of a customer making an order online, by  connecting retailers to local couriers. Retailers already using Shutl include Argos, Huggle, Jewson, Karen Millen, Maplin, Oasis and Warehouse.

– Royal Mail is now able to leave packages with recipients’ neighbours  if no-one is at home. Its Delivery to Neighbour scheme got the green light last October when Ofcom approved changes to its regulations. Until then it was not allowed to deliver to a neighbours.