Twitter
Facebook
Linked In
RSS
Login or Register
New to InternetRetailing?
Register Now
Internet Retailing
IREU Top500 The Customer Report: 2018

IREU Top500 The Customer Report: 2018

You are in: > Home > Magazine > Magazine Articles

This is your 1 complimentary article for this month

Become a member for unlimited and immediate access.


Register
Already a member? Log in here

Who is leading in operations & logistics? (IRM53)

Linked InTwitterFacebookeCard
Who is leading in operations & logistics? (IRM53)
Who is leading in operations & logistics? (IRM53)
The latest InternetRetailing Dimension Report examines the area of Operations & Logistics to discover which retailers have the winning formulae when it comes to delivery, collection and returns.

Operations and logistics, once behind the scenes, are now very much in the full glare of the customer view. Shoppers who have ordered online not only want to take control of where and when they’ll get their purchases – but to track them along the way.

Delivery, thus, is at the heart of the online promise and today’s leading retailers have handed consumers control. They’ve worked closely with the logistics industry to give customers the final choice of where they pick up or take delivery, and how they return any unwanted goods.

The best retailers have transformed expectations. By showing what is possible, they set a level that becomes the minimum competitive level. Fast delivery to a convenient point is now largely taken for granted – and the boundaries are constantly being pushed.

But such innovation comes at a cost and it’s important that such sterling service does not go unrewarded. In high street retail, we calculated that the fixed costs of building a shop were paid up front, with retailers moving into profitability once that amount was covered.

In cross-channel retail, each parcel sent comes at an unavoidable cost, even when the scale is massive and the individual cost is low. To achieve, and to retain, profitability, operations and logistics must function consistently at a high level. This is an area that holds within it some of the most important aspects of cross-channel success, which retailers must master to succeed: capability, experience and profitability. That’s why the IRUK 500, 2015 Performance Dimension Report on Operations and Logistics is critical reading. You should have received a copy along with this issue of InternetRetailing and you can view the digital version online at internetretailing.net/iruk.

In the report, its Editors, Jonathan Wright and Chloe Rigby, explain the thinking behind the report, and how IR’s research team has gone about measuring the industry’s deliveries, collections and returns. IR Knowledge Partners also share their insights to extend the scope of the in-house research.

Here, InternetRetailing Senior Researcher Martin Shaw considers what the IRUK data tells us about delivery, collections and returns.

UK retailers today work hard to ensure that customers receive the goods they’ve ordered in the most convenient and cost-effective way. Just as importantly, retailers try to ensure that it’s as easy as possible for customers to return unwanted or faulty items. What though sets the best-in-Dimension retailers apart – and how is that manifest in the three key areas of delivery, returns, and collection?

MAPPING DELIVERY

Retailers in the IRUK 500 have differing approaches to fulfilment. This is because different retailers target different kinds of customers who have different interests and priorities, and fulfilment options and operations develop in response to these consumers’ needs. While it may be important, for example, to get a new item of clothing delivered in time for a party at the weekend, consumers may be more patient when ordering a hard-to-find item from a niche retailer. Nonetheless, it’s striking that even among mainstream retailers, there’s a surprising divergence in the number of delivery options on offer. Clearly, for whatever reasons, some retailers see offering delivery options as a point of differentiation.

This leads to an intriguing question: is it fair to say that more options and faster fulfilment are definitively ‘better’ from the customer’s point of view? And if so, is the underwhelming showing of some of the UK’s largest retailers in this area a transitional problem, or, have these companies left the field in the battle for customer loyalty, yielding it to the likes of Amazon?

A recent PwC report found that just 16% of businesses make money from ‘multichannel’, so perhaps a broader appeal within a diverse market begins with fulfilment efficiency. With that in mind, what is the most efficient delivery offering for a retailer to make?

In a recent webinar run by InternetRetailing’s sibling eSeller.net, Chris Dawson of Tamebay suggested that, even for small retailers, the best proposition includes at least three fulfilment options. The first is the standard option with a low threshold for free delivery and a three to five day timeframe. There should be an expedited, if costly, next-day delivery option for those shoppers who need something urgently.

Rounding out this optimal set of delivery options is a ‘no rush’ option, free for any order value. This final option would appeal to both retailers and shoppers over busy sales days such as Black Friday, when most customers only require their goods by Christmas and delivery services can’t otherwise cope with the spike in demand.

BEST PRACTICE RETURNS & collection

Turning to returns, top retailers offer customers easy, rapid and inexpensive returns on unwanted or faulty goods. These companies aim to minimise both the likelihood of a return being made, and try to cut the costs when this happens.

This has resulted in a retail landscape where ecommerce returns policies conform more to consumers’ demands than ever before. But still not everyone is happy. Customers have come to expect a service that’s both free and easy. A recent UPS study found that 54% of online shoppers read returns policies prior to purchase and are more likely to buy from stores that allow them to send goods back for free.

Compare this to IRUK 500 research showing that a majority of the UK’s large retailers offer free returns and refund the original delivery charge. Are retailers responding to consumer demand, or are they fuelling that demand by increasing convenience?

It’s evident from our research that even companies from the same sector have adopted very different returns strategies.

When it comes to click and collect, this service is only offered by 44% of retailers in the IRUK 500, and by 58% of the largest 100. It’s a service that promises increased convenience for consumers, but also more efficient fulfilment: couriers can deposit dozens of orders at a collection point at once, without the risk of failed delivery. Some retailers offer click and collect from a store within the hour, highlighting the advantage multichannel retailers have in this area. Other options include third-party networks such as CollectPlus and collection points at train stations.

Top500 companies are fulfilling ecommerce orders and returns in different ways. Some appear more ‘advanced’ than others, perhaps because a strategic decision has been made to emphasise customer service in an era of transparent pricing.

By making fulfilment and returns faster and cheaper, retailers have in turn produced a more demanding consumer market, in a self-reinforcing cycle. This process is enabled by technology and can be expected to continue as ecommerce becomes more popular.

Our research suggests it’s not safe to generalise about the state of logistics in the retail industry. Even among the largest companies, those in similar sectors are pursuing different strategies, and while the ‘best’ can broadly be measured by speed and number of options, success could well derive more from the retailer’s cost efficiency than the customer’s convenience.
Linked InTwitterFacebookeCard

Become a Member

Create your own public-facing profile
Gain access to all Top500 research
Personalise your experience on IR.net
Internet Retailing
We are the magazine, portal and research source for European ecommerce and multichannel retail, hosting the board-level conversation for retailers, pureplays and brands across all of our platforms. Join the conversation.

© InternetRetailing Media

Latest Tweet

Internet Retailing
Tamebay
eDelivery
Twitter
Facebook
Linked In
Youtube
RSS
RSS
Youtube
Google
Linked In
Facebook
Twitter