GUEST COMMENT Mastering the Christmas rush

Many retailers are setting early deadlines this week for orders placed online and picked up in-store. Craig Sears-Black, UK MD of Manhattan Associates, says that if the right process sits behind it, retailers can offer this service right the way up to Christmas Eve and still make a profit.

Cyber Monday set online retail records, according to Experian. Online shoppers in the UK made a total of 112 million visits to retail websites in the space of that one day – Monday December 3. This figure is an increase of 32 per cent on 2011. Retailers are continuing to experience relentless increases in online orders with a substantial shift to premium delivery to ensure packages arrive before Santa is parking his sleigh.

Analysts around the industry still expect that there will be a lot of panic buying online on Christmas Eve, especially with customers looking to take advantage of click-and-collect services.

However, many retailers are limiting their chances to capitalise on these opportunities by having to set themselves early deadlines for orders to be made. For some, even if stock is in the customer’s local store to be collected, they can’t sell it online since they often don’t have sufficient visibility.

There are those who can: Argos and HMV allow orders until very late in the day on Christmas Eve and John Lewis will take orders until the end of Saturday December 22 for most products. However, for every store that’s able to process click-and-collect orders right up until the last minute, there are many, many more whose deadlines will have passed.

Selling at a profit

Retailers have the opportunity to make more online sales right up to Christmas, but they must not do so at the expense of their profit margins. The challenge is not only a question of logistics, but of a highly complex cost equation.

Click-and-collect multiplies activity for most retailers by processing the online order and then also managing the collection process in store. If these orders are processed in the same way as those made for home delivery, then the amount of individual picking and packing increases significantly.

Most organisations were set up to simply manage retail orders, which means that their online processes are often inefficient. Online orders cost more to handle and while store-orders remain in the majority, why change? However, as online orders increase as a percentage of the business, companies need to make sure that their warehouses and whole supply chain are set up to handle the new profile of their customer orders to maximise profitability.

Optimising carrier management and utilising the existing retail transport infrastructure are current areas of focus to minimise handling costs. However, retailers will find that they need to invest in mechanical handling automation within the DC to keep up with volume requirements and minimise unit picking costs.

Using an online mentality to fulfill click-and-collect

Online and click-and-collect orders are not the same thing, but having an online mentality makes it easier to capitalise on the opportunity.

Fulfill from store

By far the most effective way to administer click-and-collect and to maximise opportunity to sell existing inventory is to pick the item from the store. Not only is it the cheapest option in terms of processing cost, but it’s also the quickest way to make the products available to the customer. Picking from store is how retailers can make orders available the same day.

This requires all of the right supply chain management and order management technologies to be in place. Retailers must know where their whole inventory is located in real-time and with high levels of accuracy in order to make click-and-collect promises. If retailers don’t know where products are within their enterprise, they can’t be sure that if someone clicks, that they will be able to collect.

Moving to fulfillment from store stock is not just a technology challenge but retailers find that it requires a significant change in management process as well. There needs to be shared responsibility for real-time store stock visibility and accuracy.

The rewards are worth it through stock optimisation and also a significantly improved customer offering. Click-and-collect within two hours is set to become a premium service in coming years but will, in due course, become a standard service.

These capabilities also open up the real possibility of not just express click-and-collect but express delivery. Will click and deliver to home within 90 minutes become a standard offer for some?

Zero disappointment retail

Retailers must have the mentality that they will get the customer what they want. And most do. The challenge as we move into a retail environment where more and more flexible fulfillment is demanded, is how to continue doing this while still making a profit. Full visibility of the enterprise on a single platform is the first step to achieving it.