David Ashwell, MD of Logistics, AO World, spoke to Emma Herrod about how the company manages next-day delivery for its own retail operations and for third parties.
AO.com is well known for its retail operation selling white goods and technology but for the past twenty years it has also been operating 2-man deliveries for third parties. This it does through the use of its own 7.5 tonne and 3.5 tonne AO.com liveried trucks, white vans and vehicles branded with its 3PL operation Expert Logistics. “We make deliveries 7 days a week, 362 days a year,” explains David Ashwell, MD of Logistics, AO.com, and with a promise of next-day, 7am – 7pm delivery to its own customers AO delivers to 95% of UK postcodes, every day. Customers are able to choose the date and time slot for their delivery when they place on a order.
AO.com operates a hub and spoke model with two National Distribution Centres (NDCs) in Crewe holding stock for the entire UK operation. From here, orders are trunked out to 17 outbases which are located across the UK from Dundee to Exeter. The company plans to have a further two outbases operational before the end of March.
No stock is held at the outbases since they operate as locations to move customer orders onto their final mile delivery vehicles. In fact, as Ashwell explains, items don’t even touch the ground anywhere between the NDC and the customer’s home since the company uses trailers with moving floors, walls and ceilings which move the items from the lorry onto the final mile vehicle. The fleet also backhauls so that vehicles don’t return empty to an NDC.
Goods in, returns, rubbish and packaging such as polystyrene are all handled by the fleet, along with electrical items for recycling such as a customer’s old washing machine. AO operates its own AO Recycling plant in Telford which is compliant with the Waste Electrical & Electronics Equipment regulations.
In all, 5,500 skus are held for next-day delivery with products sold ranging from white goods to TVs and computers. Ashwell explains that a lot of the products which AO sells are susceptible to damage so the majority of the pick and pack process is undertaken manually. Narrow-aisle, man-up trucks from Toyota are used between racking so that every item is accessible. The company does have plans for some automation to be added in the future but this will only be a small amount.
The company has no plans to outsource any of the final mile side of the operation preferring to retain responsibility for the entire customer journey. A number of small parcels are delivered currently by DPD, but all 2-man operations are handled by AO’s fleet. “In order to deliver the amazing services we have to be in charge of the entire customer journey,” says Ashwell, adding that “no-one loves your customers as much as you do”.
It also means AO has complete control and full visibility over the complete operation with certainty of the location of every item of stock and vehicle. If something goes wrong the company can act immediately, he explains. And, because it delivers everywhere next-day the customer won’t be waiting very long for a replacement item.
A central ‘Mission Control’ is on hand so if a vehicle breaks down the driver gets in touch and another can collect the load and take over the deliveries. AO will contact all of the customers to let them know of the delay. “Drivers can contact customers as well,” says Ashwell.
This love for the customer and understanding of how the logistics operation supports the retail proposition is what continues to help its third party logistics operation win business, he explains. Traditionally, Expert Logistics has been delivering customer orders for white goods manufacturers including Hoover and Electrolux but it has recently signed its first contract to deliver customer orders for furniture manufacturer The Cotswold Company.
For brands, such as Hoover, which are sold on the AO website, one lorry could be collecting stock direct from Hoover to replenish AO stock or to fulfil a customer order as well as carrying products which have been ordered from another retailer and will be delivered to the final customer as part of a contract with Expert Logistics.
Everything comes into Crewe and then customer orders are loaded between 6pm and 2am before being delivered to the outbases and onto the correct vehicle for the final mile delivery. A customer could order at 11.55pm and have their order delivered at 7am the next day, explains Ashwell.
The company offers installation services as well, which sees it able to deliver, install and remove products in one visit to a customer for any of the built-in products it sells.
AO is constantly looking for opportunities and overcoming challenges as it works within its motto of having the “happiest customers by striving to do things in a better way”.
Operating its own warehouse management system and having IT programmers based at Crewe mean that it can constantly push the proposition, integrate into third party systems – whether as a brand to be sold on the AO site or as a logistics customer. “We can do things quickly,” says Ashwell.
Since AO operates in Germany as well, the entire hub and spoke operation is replicated there.