Industry TalkRegular Industry Development Updates, Opinions and Talking Points relating to Manufacturing, the Supply Chain and Logistics.
Pandemic drives permanent shift in consumer behaviour
Online only retailers are snapping up failed high street brands – and shutting the door on physical retail. But while customers have moved online, there are still opportunities for traditional retailers – with the right approach and expertise. James Hyde, CEO of James and James Fulfilment explains how retailers can use outsourced fulfilment, delivery and returns as part of a multi-channel approach that gives customers what they want at home and in store.
If anyone was in any doubt about the future of retail, the purchase of Debenhams by Boohoo has surely sealed the deal. When an online-only retailer can snap up one of the UK’s high street stalwarts – and refuse to take either the physical stores or the warehouse operation – every bricks and mortar retailer needs to take note. And this is far from a one off situation, with ASOS looking to buy Arcadia’s brands – but none of its physical presence.
The pandemic has tipped many digital laggards to the brink and beyond – retailers unable to respond to customers’ move online face a challenging future. Customers will, of course, return to the high street eventually – but in what numbers and with what expectations of the retail experience remains to be seen. In the meantime, traditional premises-only retailers cannot rely on the prop of Government grants and furlough – too much has changed.
To be a Covid survivor it is essential to move to eCommerce – not just to generate some much needed revenue but also provide existing customers with a chance to stay loyal. Giving existing and new customers access to the retail business online during the pandemic will increase the chances of them remaining a customer – both online and in store – in the long term.
Of course there are few retailers that haven’t considered eCommerce in some form. But the logistics of distributing to a store estate has nothing in common with Direct to Consumer (D2C) fulfilment. Boohoo has a slick D2C operation and zero interest in the Debenham’s fulfilment model that was predicated on keeping physical stores in stock.
Store fulfilment is straightforward, requiring the movement of pallets from warehouse to lorry and delivering perhaps a couple of times a week to each store. There is no packing, no customs forms to complete. D2C is completely different – from the need to pick and pack thousands of individual items, with the correct address labels, and the coordination with multiple couriers and logistics companies, all within incredibly tight turnaround times. Add in international customers and that means additional paperwork and another set of transport providers.
It doesn’t matter how efficient the store logistics fulfilment might be, D2C is a far more challenging operation – and rarely something that can be achieved effectively alongside the existing fulfilment process. And eCommerce has to be effective: the speed with which familiar retail brands are disappearing highlights the risks. But the huge eCommerce demand also accentuates the opportunities.
Making eCommerce work
There are so many new issues to consider with D2C. With the volume of online orders rising so quickly, any fulfilment process must be completely scalable – and that means ensuring the same quality and accuracy of picking and packing for every single order. It means operating 24/7 to enable customers to order as late as 10pm for next day delivery.
What about delivery pricing? Customers often expect free delivery, but courier pricing varies considerably – one might be cheaper for larger products, and more expensive for smaller ones. Proactively managing the courier options offered to customers can make a significant impact on the bottom line.
And, of course, returns. No retailer can ignore the need for an effective returns process – one that is both easy for the customer and seamless for the retailer to increase the chance of getting goods quickly back into the supply chain.
This is where an outsourced fulfilment model is an obvious option. It offers not just a scalable D2C model but also the high quality, accurate fulfilment required to ensure a great customer experience. Plus, of course, a simple, seamless returns process. And, as companies discovered at the start of the pandemic, taking the outsourced approach can actually get a business up and running online in a matter of weeks.
A store distribution network doesn’t work for eCommerce – so why try? Ecommerce has become an essential component of retail – even more so as a result of the pandemic. But that doesn’t necessarily mean the end of physical retail. Future success will demand a melded strategy that works across all channels to provide customers with the experience they want at home or in store.