The gratification game

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The problem with online retailing is that it scores low on the instant gratification scale. For an excited buyer, the news that the product might take days to deliver can make them lose interest in completing the sale.

It’s just one of the problems associated with home delivery – timing is always an issue, along with goods arriving when the buyer is out and what to do about returns.

But there is an increasing range of services that address these issues. Aurora Fashions, whose brands include Coast, Oasis and Warehouse, now has a 90 minute courier delivery service in major cities for those customers that really must have it now.

It’s not cheap though – £9.99 per order. Hardly surprising given that it uses a courier service to provide the delivery.

Aurora’s service is provided by internet start-up Shutl, which aggregates the capacity of local couriers. Orders are fulfilled from local stores, rather than a centralised warehouse.

Shutl, which was founded by Tom Allason, who also founded eCourier, claims the record for the world’s fastest e-commerce delivery; a shopper taking receipt of their goods within 18 minutes of checking out online.

Shutl reckons that adding it as a option increases the conversion rate by 37 per cent. Customers include Argos, B&Q Tradepoint, Karen Millen and Laithwaites Wine.

Setting out Shutl’s ambitions, Allason said: “Our goal is to have sufficient coverage by November 2011 to give high-street retailers a significant competitive edge over Amazon and the other pure-play e-tailers this Christmas.”

Online fashion retailer ASOS has also upped its game with a service that allows customers to place orders until midnight for delivery the following day.

ASOS uses CitySprint to provide a £9.95 “twilight” delivery service to provide delivery between 6 pm and 9 pm the next day.

“This is the perfect solution for our customers who lead hectic lifestyles but also have a big appetite to shop. CitySprint’s creative solution is really helping us make a difference, allowing us to compete with the high street’s extended opening times,” says Robert Muldoon, customer delivery manager at ASOS.

But what works for fashion retailers is not necessarily applicable in other sectors of the market. Jon Tobbell, commercial director of delivery specialist Hermes, says: “Retailers and e-commerce businesses initially need to decide whether home delivery is to be a cost or promotional activity.

“The minimum offering for most credible online retail solutions has become a combination of a standard and next-day services. While some retailers offer a vast range of services such as AM/PM, timeslots, evening and weekends, a large proportion of traffic is still delivered via standard two to five day services in preference to premium solutions.”

The fact that shoppers are becoming more demanding is highlighted by a survey by Hermes, which suggests that regular online shoppers want services that make home deliveries more convenient, especially for those not at home during the day.

Jon Tobbell points out that 85 per cent of respondents thought evening deliveries were appealing, increasing to 93 per cent for those in full-time employment, while 75 per cent were in favour of going online to organise a collection from home or a safe place to return unwanted purchases.

“There was also a definite preference stated for deliveries to be left with a neighbour (61 per cent) or in a safe place (51 per cent) instead of receiving a card asking to rearrange delivery or collect from a depot (30 per cent). Meanwhile, in urban areas there is widespread appeal for parcel shops that are open from early morning to late evening that could handle deliveries (66 per cent) and returns (75 per cent),” he says.

Improving the standard of fulfilment was top of the agenda at a recent round table organised by DHL Supply Chain involving retailers such as House of Fraser, John Lewis and Marks & Spencer.

Joined up approach

Simon Waine, head of multi-channel logistics at House of Fraser said “We see a joined up approach between carriers and retailers to be a key enabler for step-change, particularly for peak trading and weather contingencies. Our customers expect us to be working in this manner”.

And Phil Courtney, general manager of multi-channel fulfilment at John Lewis said: “It’s in the industry’s best interests to ensure a consistent customer proposition and to deliver that proposition on an ongoing basis, no matter what channel they are shopping through.”

Three areas were identified for action: encouraging greater communication and openness from carriers in terms of capacity; working better with retailers around stock forecasting and predicted volumes; and greater visibility from carriers for customers around the location or timing of packages during peak times.

“Clear communication and collaboration with all stakeholders involved in the fulfilment processes of multi-channel retail is required,” said Paul Richardson, managing director of DHL Supply Chain, Fashion. “Downstream, emphasis needs to be placed on managing customer expectations in a clear, open and honest way.”

Some retailers are asking whether it is actually necessary to deliver to the customer’s door. A growing number high street retailers now offer online customers the opportunity to collect goods from the store. Jaeger Online is the latest to offer this service  – it offers free delivery to any of Jaeger’s UK high street stores within 48 hours of purchase.

Collect+, a joint venture between the PayPoint retail payment network, and Yodel, works on the principle that the goods are delivered to a local retailer for collection by the customer.

In its half year results, it said that volumes had doubled and it was now handling four million parcels a year. It now has 4,500 stores as part of the scheme and has done particularly well in the returns market with more than 100 retail brands taking advantage of the returns service.

Chief executive Mark Lewis says: “As we move into 2012, our next area of focus will be to develop further our Click & Collect+ service, which allows consumers to pick up goods bought online from their local Collect+ shop. Recent research shows that two thirds              of online shoppers are attracted to this concept and we expect it to be a key area of growth for us as it continues to revolutionise how we all shop online.”

In addition, eBay is to begin offering the hundreds of thousands of people that sell using the online market, an integrated service allowing them to print postage labels. Collect+ will be one of the parcel service providers for the new service, helping to boost the number of private individuals, e-pportunists and micro businesses using the service.

ByBox also offers an alternative to delivery to the home. The service was originally designed to supply parts to engineers out of hours, but it now offers the service to retailers as an addition to the delivery mix.  It also offers a “free” return service within 24 hours of purchase.

So which option should you choose? The answer, perhaps surprisingly, seems to be all of them. This is not a “one-size fits all” market. Companies wanting to meet the needs of different customer groups will probably want to work with a number of delivery specialists rather than relying on just one approach.

It’s a view endorsed by Jon Tobbell, who says: “Retailers should be prepared to work with multiple partners to ensure they are using a specialist for each specific area. For example, a suitable same day carrier is probably not going to be the most appropriate choice for a next day or standard service solution.”

Yuletide messages: If it’s Christmas, there must be a glitch…

Christmas can easily break a parcel carrier – volumes go through the roof, but everyone wants rock bottom rates. And then there is the question of staff, do you bring in temps who don’t understand the operation or the routes, or do you try to cope with your existing staff?

History is littered with examples of carriers taking on too much additional work resulting in a high level of delivery failures, unhappy customers and lost contracts.

Keeping customers informed can go a long way to keeping them happy, and, in the run-up to Christmas, Collect+ was warning customers that: “We’ve had an exceptional number of parcels dropped off in our stores this week. As a result we have a small number that are taking one or two days longer than expected to be delivered.” P4D (Parcels 4 Delivery), which uses a number of major carriers, maintains a blog warning customers about service problems.

Visitors to the blog in early December would have found warnings about snow affecting deliveries in Scotland and        northern England.

In addition, P4D’s ad-hoc Yodel service had to be suspended for while owing to a technical fault with hand-held scanners. And: “City Link has offered a same day collection service and this has been very popular. Unfortunately, the service has been so popular that the City Link network has struggled to cope with the demand.”

Operations: Carriers reorganise to meet changing market conditions

Like most sectors of the logistics market, parcel carriers have been finding life tough over the past couple of years and companies have been restructuring to meet the challenges ahead.

Parcelforce, Royal Mail’s domestic parcels business, is now lumped in with the loss-making letters business. Nevertheless, it has been showing growth – 15 per cent last year leading to record profits, according to Royal Mail’s annual report. And in the first half of this year Royal Mail is reporting a five per cent rise in UK packet volumes.

Even so the division as a whole produced a loss of £41m – not as great as the £55m loss a year ago.

At the same time TNT Express was last year demerged from the Dutch Post Office. Increasingly divergent strategic profiles and the limited synergies were cited at the reasons for the split. The group believes that separation will enable greater focus and transparency as well as facilitating participation in possible sector consolidation and acquisitions.

Yodel, the business created from the take over of the domestic DHL Express network by HDNL, has ambitions to be a £1 billion business. But first, not surprisingly it has been going through a major rationalisation of its depot network.

Core to any parcels delivery service is the network and the moment two carriers merge, they end up with two networks. To integrate its two networks, Yodel is closing 45 depots around the country. “We have been running two operational networks since early 2010 with limited flexibility. Having concluded the planning process we are now able to communicate how we will move to one operation,” said chief executive Jonathan Smith.

“This is not a decision we have taken lightly. We have to make these changes to meet the needs of our customers and create a sustainable and profitable business model.” At the same time it has also been developing a new sorting centre at Wednesbury to meet the needs of its ambitious growth plans.

Smith said: “We are very excited about this development as it strengthens our current ambition to become a £1bn business.”

Yodel has also introduced a catalogue tracking tool called Houndit for Catalogues to enable tracking, tracing and reporting on the delivery of catalogues. The system jointly developed and implemented by Yodel and Skillweb enables each catalogue to be scanned as they move through the delivery process all the way to the doorstep, improving visibility and facilitating item tracking where it had previously been cost prohibitive.

UK Mail has been taking action to reduce the fixed costs of its business with the closure of two depots and some restructuring in a number of other areas. But it has also been launching new products aimed at the e-commerce market – notably ipostparcels, which is aimed at small traders and e-bayers.

Rather than queuing at a Royal Mail post office counter, the customer can book collections from home or work. ipostparcels offers next day collection and delivery services. This service is targeted at customers who need to send the odd parcel or for those using online marketplaces to sell products such as eBay sellers or e-commerce businesses. Customers can also drop off parcels at one of UK Mail’s 50 depots.

Case Study: Return to Jaeger

Fashion brand Jaeger Online has just signed up to the Collect+ returns service which allows customers can drop off an online purchase at any one of 4,500 UK drop-off stores from where Collect+ will return the purchase direct to Jaeger on their behalf.

Jaeger chief Belinda Earl says: “We already offer customers a returns service to any of our UK high street stores and our partnership with Collect+ further enhances that offer, providing even more convenient and flexible options.”

Established in 1884, Jaeger is a global luxury British fashion brand, renowned for designing contemporary, innovative and stylish womenswear, menswear and accessories.

Collect+ reckons that over 84 per cent of the UK’s urban population can reach a one of its  stores within one mile and over 85 per cent of the UK’s rural population within five miles.

Logistics Manager, January 2012

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