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Retailers have a mountain to climb: they see a burning need to add same-day delivery to their online shopping game, but lack the capability.
For its 2022 Bringg Barometer, The State of Retail Delivery and Fulfilment, published last week, delivery and fulfilment cloud platform provider Bringg interviewed retailers in the US, Canada, the UK, France, Germany and Italy about their goals and challenges.
Virtually all respondents, 99%, said they intended to add same-day delivery to their arsenal of fulfilment options within three years.
However, 36% reported that they had not got the technology for this.
And while 56% expressed a high degree of satisfaction with their delivery and pick-up options, 64% of them still reported issues with lack of automation and advanced technologies, while 43% were struggling with scheduling.
Currently, around 35% of the retailers surveyed are providing same-day service. Next-day delivery is the prevalent option, offered by 58% of the respondents.
Shifting to same-day service brings several challenges for retailers, pointed out John Haber, CEO of parcel logistics consultant Spend Management Experts.
It requires holding inventory in multiple locations (which tends to drive up costs considerably), retailers have to be able to segregate volumes and integrate with each of the final-mile providers they use and they have to overcome operational constraints.
Automation is a high priority for retailers for this year. Currently, only 35% have the entire fulfilment process automated, while 5% operate wholly manually. This lack of automation, combined with poor visibility, makes it hard for them to scale their processes. As a result, only 29% felt they were doing a good job with regard to delivery windows, which they attributed chiefly to lack of real-time data and technology.
Inadequate visibility is a huge problem, with 61% reporting issues in this area and 26% saying they were struggling with visibility when dealing with third parties. More than one-third (36%) identified real-time order visibility and tracking as their biggest pain point – which was triple the number from Bringg’s 2021 barometer.
Lack of visibility casts a large shadow over brand image control, as retailers are in the dark about their fulfilment providers’ performance, says Mr Haber. Consumers will not blame delivery firms, particularly those with little brand recognition, if a delivery goes awry, they will blame the retailer, he adds.
This lack of control increases with the use of crowd-sourced delivery providers. Nevertheless, Mr Haber expects this segment to gain ground in the market, thanks to the flexibility and cost advantages it offers.
“It is certainly a solution for the future. It just needs a lot of improvements to be made,” he said.
According to Bringg, 33% of retailers are using crowd-sourced fleets in their fulfilment strategy. Owing to the need for proximity to distribution points and markets, the use of multiple providers is the norm. Bringg found 17% use up to five providers, 49% employ between six and ten and 34% work with 11 or more partners for the final mile.
Retailers have to integrate their IT system with each of their delivery partners, which is usually the biggest obstacle in setting up a successful partnership, Mr Haber says. This offers huge opportunities for platforms that have integrated with multiple fulfilment players, ideally with a range of operators from large established firms to crowd-sourced outfits, he adds.
As for physical constraints, retailers were not able to set up hundreds of locations for inventory, like Amazon, to ensure same-day delivery capability, he said. To get there they have to improve their ability to ship from store, something that most had not mastered.
Faced with the choice of serving a customer in front of them or processing an online order, they are geared to deal with the person in the store. In addition, they are haunted by the vision of customers walking into a store and finding empty shelves because of lively fulfilment activity.
In terms of online order fulfilment, the coming three years are going to be a challenging journey for most retailers.