Commerce Trends

by Manhattan Associates

Delivery isn’t just about logistics infrastructure

Customers are demanding – that’s a fact. More so now than ever. Having experienced shopping with ‘best of breed’ on-line retailers, they want their goods and they want them now. Times have changed and shoppers are more impatient than ever for their purchases – delivery times of two or three days are no longer acceptable.

We’re nearing a point where even next day delivery isn’t fast enough for some. Ebay’s acquisition of Shutl comes as it looks to offer UK customers one-hour delivery options, and the fulfilment battle won’t stop there – the battle lines have just been drawn. Shutl’s current delivery record is 14 minutes and 58 seconds – a sign of things to come.

Too few retailers are offering their customers the choice and speed of delivery options that they demand. Recent research by Manhattan Associates found that only 13 per cent of UK retailers can deliver next day. That’s simply not good enough. Only 11 per cent currently ship from store. Retailers simply aren’t making the most of their assets. Having the capability to fulfil an online order using store inventory so the customer can take delivery of a product in hours rather than days – by collecting from the store – could mean the difference between saving a sale and making a profit on that order or not. This is where retailers with a bricks-and-mortar presence have a significant advantage over pure-play online retailers – and they need to exploit it.

Delivery isn't about logistics

Delivery isn’t about logistics

Even being able to ship goods from a store – with the additional expense of paying a courier service to get the goods into the hands of a customer in the timeframe demanded – can be more profitable for the retailer in the long term. Retailers may not generate the same margin on fulfilling an order in such a way but offering services such as this builds brand loyalty and greater revenue and profitability in the longer term.

By not offering customers multiple and flexible fulfilment options, retailers are not only risking a lost sale, but also a lost customer. Consumers are fickle – recent research found that only 15 per cent of people believe it pays to be loyal to their favourite brands.

So how can retailers fix it?

Too many are falling into the trap of thinking that order fulfilment options are intrinsically tied to physical logistics infrastructure. Whilst that is true to an extent, fulfilment’s most important partner is visibility. Visibility of network-wide inventory, including stores, and treating all available stock as a single inventory pool allows retailers to implement a single, cohesive, fulfilment strategy that serves all channels. This will match supply to demand in the fastest and most profitable way.

This is achievable for retailers with an effective multi-channel management system. It allows them to get goods to customers quickly and efficiently, meaning they can offer a seamless shopping experience and increase the likelihood of earning long term customer loyalty, as well as allowing them to keep costs down. The battle for customer loyalty is equally about profitable fulfilment.

At present, 37 per cent of UK retailers still treat their individual retail channels separately, meaning stores and warehouses are working in individual siloes. This makes it time-consuming and costly to locate inventory and fulfil orders. Retailers with a real-time 360-degree insight into their inventory and customers will seamlessly be able to view product availability across channels, and dispatch and fulfil orders both quickly and profitably.

The days of shoppers waiting around whilst calls are made to neighbouring stores in a bid to source the item are over. Today’s shoppers expect store assistants to be able to tell them instantly that a product can be delivered, collected from another store or can be made available for collection later within a specific timeframe. In this way, out-of-stock situations need never occur.

In order to win the battle for customer loyalty in today’s fast paced retail industry, and stay profitable, retailers need to have a single view of customer orders and a single view of inventory.

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