Thanks to changing technology, concepts that were once regarded as innovative, high risk, too complex or simply too expensive are rapidly becoming standard – and that applies both to IT and logistics services.
Once upon a time, a decade or so ago, there was ASP – application service provision – a way of accessing expensive software via a hosted third party system in much the same way that logistics companies use 3PLs. The preferred term soon morphed into managed services which is still with us. Then there were web services, which meant pretty much the same thing only you could do it through an internet browser rather than a dedicated piece of kit, and more recently software on demand or software-as-a-service (SaaS) has seen a major shift from IT as a capital investment to a mere operational cost.
Today the hot topic is cloud computing, the idea that all these services and applications are out there in the ether and you just have to push in the right plug – rather like connecting to the telephone or electricity supply – to access the brave new world of digital information and computing power.
Ten years ago many IT directors would have viewed the idea of putting business critical applications into the hands of third party “clouds” with horror; today such developments are regarded as normal – the shape of things to come.
It is the same when it comes to e-shopping and home delivery. Back in 2000 buying online was still largely a minority sport for the techno-savvy. Retailers may have paid lip-service to the concept of multi-channel but few really believed that internet sales could ever form a significant part of their operations. Like the proverbial customer, bricks and mortar were still king.
As last Christmas’ sales demonstrated, shopping online is also now the norm for many people. Not only were there new peaks in pre-Christmas trade – with e-sales in many sectors up by 35 per cent year-on-year reaching around £6.4billion in both November and December – but shopping comparison site Kelkoo estimated that around 22 per cent of total UK Christmas spending was online. Even the generally conservative Office of National Statistics has internet sales now accounting for some 10.5 per cent of UK retail trade at peak times. It was the same with the “January” sales: Experian Hitwise reported online shopping traffic on Boxing Day up by 12 per cent on the pre-Christmas high while at www.johnlewis.com – always a bellwether for the industry – sales were up by 45 per cent year-on-year on Christmas Day.
Equally, as Christmas also demonstrated, all that online trade generates not insignificant problems for the home delivery operators. A combination of shoppers eager to receive their Christmas orders in good time and November’s appalling weather meant that the backlog of It’s chaos at the depot: there are 4,000 parcels overdue for delivery and I’ve not had any time off in two weeks.undelivered goodies began early. As one rather harassed Home Delivery Network driver told me in early December, as he stood on the doorstep: “It’s chaos at the depot; there are 4,000 parcels overdue for delivery and I’ve not had any time off in two weeks.” Goodness knows how he felt by Christmas Eve.
While such chaos readily generates critical headlines in the mass media, and may encourage consumers to shop ever earlier for Christmas to ensure delivery, it also brings new interest in innovative IT tools to improve operations. For companies like Metapack, launched in 1999, the growth in e-shopping has brought an equivalent sales boom. For much of its early years the company struggled to persuade users that its slick delivery management tools could be useful: today customers are queuing up to buy. Like cloud computing it is a concept whose time has come.
Back in 2001 Metapack was advocating “PuDo” a pick-up/drop off exchange that allowed shoppers to select convenient locations for delivery of their e-shopping by networking carriers, shoppers and merchants together. The company also launched a shopping centre collation tool bringing the same idea to the bricks and mortar world so that all the goodies could be collected from stores and taken to a central final collection point leaving customers to enjoy a shopping trip unencumbered by parcels.
Such customer-centric concepts may well be in the future but Metapack is still focusing on tools that deliver added value to consumers. Interestingly, a recent analysis of its users’ delivery figures suggest that customers are willing to pay for that added value with premium services now accounting for 57 per cent of all deliveries compared with just 20 per cent three years ago.
Successful e-shopping depends on efficient delivery and shoppers know that these can be pre-arranged days in advance and timed to within an hour, because that is how their groceries arrive. As Metapack chief Patrick Wall puts it: “Customers are preferring to pay a premium to have the goods in their hands as quickly as possible. it is now clear that the market will swing further in favour of next day, tracked, nominated day and time specific services”.
Individually scheduling the delivery of more than half of all home delivery dispatches may fill logistics planners with the same dread that IT managers would once have regarded clouds and off-site applications, but if that is what shoppers want and are willing to pay for, then that is what e-tailers may need to offer. For merchants, enhancing customer choice can add value, improve satisfaction and deliver competitive advantage. Premium prices would also, presumably, be something that most couriers might just appreciate.