Q1: What are the key points that retailers should consider before commencing the procurement process for their logistics platform?

The key consideration should be the desired customer experience you wish to create, and then how to translate this into your fulfilment offering. This “translation” should focus on three elements:

1. your delivery offering (delivery speed, Track & Trace, insurance value, flexibility to change delivery day and times by customer)
2. your delivery charging (when do you ship free of charge and when do you charge a premium above the standard)
3. your returns policy (how comfortable do you wish to make it for customers to return products)

Naturally the above will need to be directly checked against affordability within your business model.

Q2: What are the key questions that retailers should ask of all shortlisted options?

The first key question is related to the fee structure offered between you and your potential fulfilment partner. This will determine the split in risk as well as the related split in the spoils, and therefore the pricing model you choose can significantly influence the resulting behaviour in your fulfilment partner dependant on their level of agreed investment in the project.

For example, on one end of the scale is the rate card fee by activity (pay as you use), with possible fixed periodic costs for management time or IT setup and minimum order volumes. On the other end of the scale is % of the sales construction, whereby your fulfilment partner is only paid once you have sold your products.

The second key question relates to the sharing of best practice. What is your potential fulfilment partner bringing to the table in terms of market knowledge and recommended practices. This could go as far as assisting in break-even analysis regarding the project. You should have the feeling that your fulfilment partner can objectively review options in your offering without feeling judged on any choices that you have to make for your business model.

Q3: What are the key points you should consider for your first year service review with your service/platform provider?

First of all you need to review basic performance of the agreed services, as this would be mandatory to establish a trust relationship.

Second to review is the responsiveness of the fulfilment partner with improvements that were required due to changing circumstances, or set-up errors by both parties. It is imperative to react quickly and correctly for both parties in order to keep pace with market developments.

The third key measurement is the proactive behaviour displayed by your fulfilment partner to reduce costs or increase customer experience. This is anything above and beyond the agreed service and will help you to outperform your competitors in your market.