Online only retailers are snapping up failed high-street brands – and shutting the door on physical retail. ASOS has acquired Topshop, Topman and Miss Selfridge; and Boohoo has acquired Debenhams, Dorothy Perkins, Wallis and Burton. Across these acquisitions, ASOS and Boohoo are closing traditional bricks ‘n’ mortar stores and are instead in favour of retaining these brands’ online and digital storefronts, with a view to selling existing stock.
While consumers have predominantly moved online through the past year, there are still opportunities for traditional retailers. Achieving success in this new ecommerce-focused landscape requires adopting the correct approach and expertise to achieve success long-term.
James Hyde, CEO of James and James Fulfilment explains how retailers – traditional and online – can use outsourced fulfilment, delivery and returns, as part of a multi-channel approach that gives customers what they want when shopping at home and instore.
Make way for the ecommerce era
If anyone has concerns about the future of retail, you only need to consider ASOS and Boohoo’s recent acquisitions of Arcadia Group’s brands to get an idea of where the future is heading. When you notice online-only retailers starting to snap up stalwarts of the UK high street – and when they turn down the need for their physical stores and warehouse operations – every bricks and mortar retailer needs to pay attention.
With that in mind, it is pretty clear that the pandemic has tipped several digital laggards to the brink and beyond faster than anyone ever expected. Those retailers that cannot respond to customers who are now moving online will likely face a challenging future.
When non-essential retail eventually opens after the third lockdown, customers will naturally return to the High Street. As this happens, retailers will pay close attention to just exactly how many people return; and to what extent the shopping experience is profitable, pleasurable and worthwhile. Until that happens though, traditional premises-only retailers cannot rely on the prop of Government grants and furlough indefinitely.
To manage this change and to be a Covid survivor, it is crucial for retailers to embrace ecommerce. They need to do this not just because they need the revenue; but because the move towards online, with its access to customer data, enables retailers to build long-term and loyal customer relationships. In addition to this, providing new and existing customers with access to their favourite retail brands online, through this pandemic, increases the likelihood of retaining their custom long-term; both online and instore.
Differences between Direct to Consumer (D2C) and store fulfilment
Today many retailers are transitioning to ecommerce in some shape. As they do so, it is important to acknowledge that distributing goods to a store estate is very different to D2C fulfilment scenarios. Boohoo has a slick D2C operation and zero interest in the Debenhams fulfilment model, that was based on keeping physical stores in stock.
Store fulfilment is generally straightforward. It consists of moving pallets from warehouse to lorry and, possibly, delivering goods a couple of times a week to various stores. No packing is necessary. There are no customs forms to complete.
D2C fulfilment is completely different. It comes with the pressure of needing to pick and pack thousands of individual items. Items must have the correct address labels, and there is often coordination with multiple couriers and logistics companies, who are all working towards tight deadlines for deliveries. Throw international customers into the mix and this means additional paperwork and another set of transport providers becomes necessary.
It doesn’t matter how efficient store logistics fulfilment might be, D2C is a far more challenging operation. Equally, it is rarely something that can be achieved effectively alongside an existing standard fulfilment process. Today, the stakes for customers are high and consumers are unforgiving too. So ecommerce has to be effective and the rapid loss of familiar retail brands from the high street emphasises these risks. That being said, the huge ecommerce demand also accentuates the opportunities. So how do we deliver ecommerce?
Scalable, 24/7 fulfilment and next-day delivery is critical today
As the sheer volume of online orders rises rapidly, it places pressure on firms to execute fulfilment processes that are completely scalable. Scalable fulfilment must ensure that there is no compromise on the quality and accuracy of picking and packing for every order. This concept of scalability must also consider that ecommerce vendors and fulfilment teams need to operate 24/7 in order to enable customers to order as late as 10pm for next day delivery.
As part of this, delivery pricing is crucial too. Today, customers generally expect free delivery. But, the problem is that courier pricing varies considerably across the board. One courier might be more cost effective for larger products, whereas another might be expensive for smaller ones. Proactively managing these courier options offered to customers, within D2C retail scenarios, can make a significant impact on the bottom line.
Within ecommerce, it is important to be able to offer customers slick and efficient returns options too. Retailers cannot, therefore, ignore the need for an effective returns process. This process must be easy for the customer and seamless for the retailer, as it strives to increase the chance of placing goods quickly back into the supply chain to drive profits.
Outsourced fulfilment provides retailers with the option they need to deal with these various challenges and deliver ecommerce. The approach offers not only a scalable D2C model, but also the necessary high quality, accurate fulfilment that delivers an outstanding customer experience. Equally, it also provides retailers with a seamless returns process that meets brand expectations. And, as companies discovered at the start of the pandemic, taking an outsourced approach can actually get a business up and running online in a matter of weeks.
As we’ve learned, store distribution networks don’t work for ecommerce. So why replicate a model that doesn’t work for this channel too? Today ecommerce forms a crucial part of retail. But, that doesn’t mean the end of physical retail. Success, therefore, depends on a multi-channel strategy – one that provides customers the best experience online or instore.
James Hyde, Co-founder and CEO, James and James Fulfilment