Shippers need to focus more on 'demand chains' and less on supply chains
Companies need to focus more on “demand chains” and less on supply chains if they ...
Retailers must focus on what customers want – as opposed to keeping up with the trends of same-day and next-day delivery.
This was the takeaway from the Logistics is the New Retail session at this year’s Multimodal event in Birmingham yesterday, during which Spiral4’s Andrew Starkey declared: “Delivery does drive retail.”
He added: “We are finding retailers offering next-day delivery when their consumers aren’t asking for it.
“They do it for a competitive edge, but what consumers really want is knowledge – they want to know where their goods are and when they will arrive.”
In March last year, 6% of all attempted deliveries failed, but over the past 12 months, that has risen to 13% – or 14,200,000 packages.
Mr Starkey blamed this increase on the big shift towards providing next-day deliveries – although he noted that bad weather had also played its part.
“My main concern though, is that this shift towards next day is not sustainable; 45% of consumers abandon the check-out process if they are not happy with the delivery options,” he added.
“And 50% are influenced by reviews of delivery services left on social media, so rather than offering services consumers don’t want, [retailers] need to ask them what they want.”
The head of operations at John Lewis, John Munnelly, said that in the past decade, distribution had gone from being a “necessary evil” to “lifeblood” of the retailer’s business.
Mr Munnelly agreed that the advent of same-day and next-day delivery was something of a trend.
“It’s something you need to be seen to be offering if you wish to stay fashionable, but we are seeing a big growth in click and collect,” Mr Munnelly said. “Around 50% of our e-commerce is click and collect, with 70% going through Waitrose stores and 30% through John Lewis. But we have also seen a surge in next-day deliveries,” he added.
Approximately 70% of John Lewis e-commerce not delivered by click and collect goes next-day, compared with some 20% a decade ago.
This change has had a knock-on impact on the UK warehousing sector, with logistics consultant Lynn Parnell noting that 20% of the logistics market is now taken up by e-commerce for omni-channel.
“This has led to a change in the way warehouse operators consider their staff, with a shift towards a more permanent workforce,” said Ms Parnell.
“Previously, having qualified staff was not a major consideration, it would fall around 50th on a list, but now it has become more urgent and would be in a top 10 of considerations.”
However, with the rise of more promotional peaks like Black Friday and Cyber Monday, an ability to meet demand with qualified staff is becoming harder.
Ms Parnell said that on these promotional days, people would be expected to do overtime and there would also be a need to supplement this with extra labour – but Mr Starkey pointed to challenges: “The big problem with transient labour is that, unless aided by technology, they cannot be as efficient as the guy that’s there everyday.
“But technology can be used here, and it can improve productivity,” he added.