Friday 28th Oct 2016 - Logistics Manager

Christmas Run Up for E-tailers

Retailers and manufacturers selling direct to consumers put a huge amount of effort into ensuring that their order and fulfilment processes can cope with the anticipated uplift in the run-up to Christmas. Yet these same businesses are recognising that a similar level of planning and commitment must be made to their e-tail operation, if they are to maximise the growing opportunity which online trading now offers.

Latest analysis shows that online trading is doubling in value each year. In the UK alone, now Europe’s largest e-tail economy, it is worth more than £1Bn per month – some 6% of total retail sales – and traditional high street operators such as Tesco and Argos are as successful in exploiting this new route to market as online specialists such as Amazon.

Despite this, many B2C companies have yet to see online trading as anything other than, at best peripheral and, even worse, irrelevant to their mainstream business. Peter Hughes, head of Tunbridge Wells-based Amethyst Group’s e-fulfilment business unit, says: “Our research found that within our sample 60% of major retailers had yet to introduce a transactional website.”

Yet even for firms keen to take advantage of the new opportunity, Christmas trading online is the real test of their e-fulfilment capability.

Order profile

For any company selling to the consumer and creating an online business, there is an immediate conflict between its core operation and what it wants to achieve trading on the Web. Whether a manufacturer selling through wholesalers or retailers, or a retailer distributing to its own stores, logistics will be geared to B2B – sending a few large deliveries to a controlled number of destinations, often and within tight timeframes.

The logistics manager charged with forming viable online trading is faced with a requirement that is significantly different throughout the whole supply chain, from placement of order to delivery and returns. Yet the volumes are unlikely to warrant major investment and the operations team will resist any disruption to its well-oiled B2B-oriented machine!

The dynamics of online trading B2C are different at all stages of the fulfilment process. In a B2B environment, the supplier is dealing with an account-based system, with invoices submitted following delivery and within pre-determined credit limits. In B2C, the supplier wants to process payment prior to delivery. This demands a new step in the process as the supplier must be certain that the customer is who they say they are. With an established B2B customer base, all the delivery addresses are known and correct. Ensuring the right address in B2C is equally important if delivery is to be completed satisfactorily, yet capturing such details is often overlooked.

Ensuring payment in advance is essential to avoid fraud. If you stick your head above the B2C parapet, there are plenty of people willing to take goods without paying for them. With recent high profile product launches such as computer games, up to 50% of orders placed have been fraudulent. B2C is an easy way for a thief to check if a stolen credit card is usable.

In a high street environment the issue of out-of-stock is not critical to making a sale, in that the retailer can fill any gaps with other merchandise and the customer is likely to have a choice of alternative products. For consumers looking to buy specific items online, if the e-tailer cannot show that the product is available then they will become frustrated – here, small variations in stock availability become more critical.

Bulk orders

It is in the area of warehousing and despatch that the distinction between B2B and B2C is most marked. Most distribution centres are set up for bulk orders, in pallet or multiple case quantities.

To meet the order needs of consumers, a secondary pick area is required, with shelving or flow racking so that individual items can be picked. If justified, conveyors and picking by light can be used but, as a more labour intensive process, for health and safety reasons a B2C operation will need to be sited apart from the forklifts. A high degree of pick accuracy is vital to the success of e-fulfilment.

With the smaller order size comes a major increase in communication points. A