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Four highly practical approaches to operations and logistics

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Customers want speed and convenience when it comes to online fulfilment – but with demand set to outstrip supply, how will leading retailers keep ahead? Penelope Ody highlights best practice among IREU Top500 retailers.

1. Consider car-based options…

Not content with its Amazon Key – which is now live in around 40 cities in the US and allows delivery drivers to leave packages inside the house rather than on the doorstep, by using a smart key system, mobile app and local Cloud Cam – Amazon has now launched “Key In-Car” for Prime members. This is initially available for Chevrolet, Buick, GMC, Cadillac or Volvo cars with a model year of 2015 or later. Both services are intended to combat the “porch pirates” who regularly steal packages left on doorsteps.

The “Key In-Car” system uses the car’s internet connection to allow delivery drivers one-time access to the boot. Shoppers provide details of their car – make, colour registration number etc – to the Amazon Key app, which handles the car-unlocking sequence. Cars need to be parked close to the shopper’s home address in order to use the service, which is currently being rolled out to 37 cities in the US.

If the scheme proves popular with shoppers then it might be another Amazon product worth emulating.

2. …or even a ’drive itself’?

Much has been written about the potential of drones in tomorrow’s fully-automated deliveries and although Amazon, despite various trials, has yet to launch any significant drone delivery services, there have been some successful projects. 

If drivers’ wages continue to rise the economics of developing high-tech alternatives shift and robotics may prove to be a cost-effective option. While self-driving cars and robotic ‘deliverymen’ may still seem a futuristic step too far, fully automated self-driving convenience shops, which – ultimately – will be allowed onto roads, are already a reality and have the potential to become a new sales channel. Instead of customers driving to a store to collect their groceries, the shop will come to the customer, such as making a regular visit to a remote rural location or to an individual home. 

Swedish start-up Wheelys, which operates mobile coffee shops, already has a prototype automated convenience shop in Shanghai and expects to have a fully mobile shop in production this year.

3. Consider multiple warehouses…

With customers valuing speed of delivery, and a looming shortage of truck and van drivers, it makes sense to put stockholdings as close as possible to major areas of consumer demand. In 2014 Amazon opened a a 40,000-sq ft “Prime Now” hub in Manhattan to service urgent orders for a limited selection of products from New Yorkers within a few hours with the help of bike couriers. A year later it opened a second warehouse in Brooklyn. Last year it announced plans for a 975,00 sq ft warehouse on Staten Island putting the entire product range within a few hours of its “big apple” customers. If retailers are to offer two-hour deliveries in certain regions, then they have to have in-depth stock accessible within that timeframe.

4. …with Brexit in mind

Asos is another IREU Top50 retailer expanding its warehouse options with Eurohub 2 in Berlin – its second EU-based distribution centre. The site can hold 9million stock-keeping units with further expansion planned. It means that post-Brexit, Asos will be able to supply its EU customers from within the single market, without the need to worry about them being charged the common external tariff (CET) on delivery for any orders supplied from the UK. 

With CET running to 10-15% on many product categories, it’s something that other online retailers with a significant EU customer base also need to consider.

This feature first appeared in the IREU Top500 Operations and Logistics Performance Dimension report, part of the IREU Top500 series of reports. You can explore this series of reports by clicking here

Image courtesy of Amazon

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