OrderWise in July 2021 - v21.7
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With Christmas now imminent, consumers will be expecting to receive their gifts and purchases as soon as possible from retailers across the country. This rising pressure on businesses has been pushed further by eCommerce giant Amazon, offering services such as Prime which boasts quick deliveries and efficient distribution. Because of this, there is now an expectation for every retailer to keep up with this trend and to adapt to the demand for rapid fulfilment that is being posed by consumers.
This mounting pressure being steered by Amazon is now impacting many carriers and retailers, as they need to work even harder to meet these expectations of quick delivery. From this, businesses have no choice but to offer convenient services such as next day delivery or same day delivery to help meet customer demand and drive buying loyalty. However, recent research shows that businesses are falling far short of these expectations, and it is costing everyone involved in the distribution process.
According to The Valuing Home Delivery Review 2018 (the results of which were revealed at this year’s eCommerce Expo), UK retailers, their delivery partners and even consumers are losing a collective £1.6 billion a year, due to failed delivery. This extensive study analysed data from 200 retailers across 120,000,000 deliveries, looking at scenarios such as when delivery fails first time, the order is collected, when a delivery window is missed or when an order is lost. Across these scenarios, lost orders proved to be the most expensive, costing an average of £147.14 per delivery – with retailers burdening the lion’s share of this figure.
The reason this sum is so high, seems connected to the fact the study also highlighted the rising popularity in next day delivery. The study, conducted by IMRG, showed that 2-3 day delivery is down 5% from 2016, with next day delivery up by 5%, showing clear correlation between the two. This percentage of orders using next-day delivery continued to increase over the summer, accounting for 56% of orders delivered in the UK during August 2018, whilst the volume of economy deliveries has dropped by 4 percentage points to 41.4%.
This clearly shows that consumers are continuing to lean towards next day delivery as their preferred method of fulfilment, and it is clear from the £1.6 billion cost figure that businesses are currently overstretching themselves. A lot of retailers are clearly offering next day delivery to keep up with Amazon and their competitors but are lacking the resources and infrastructure to meet these promises. The result is a detrimental impact on revenue, with customers no doubt left dissatisfied when their deliveries are late to arrive or lost altogether.
So, the question is, what can businesses do to meet these consumer expectations and help drive growth rather than damage their profitability? The answer to this, starts in the warehouse.
As many retailers enter their busiest period of the year, this study highlights just how important it is for businesses to have the capacity to deliver orders quickly, accurately, on time and in-line with consumer expectations. To achieve this, businesses should have a solid warehouse infrastructure in place that provides an accurate and efficient despatch process, ensuring vital delivery windows aren’t missed.
Paper based picking processes are now a thing of the past, with many businesses instead using wireless barcode scanning devices to ensure maximum accuracy and efficiency in their order fulfilment. Larger retailers and distributors, most prominently Amazon, are then using warehouse robotics to further reduce costs, increase fulfilment capacity and get ahead of their competition. Therefore, any business still using paper pick notes in their warehouse operations should be making it a top priority to introduce greater automation into their daily picking and packing processes. By removing the need for paper within their warehouse, retailers can enable commons tasks and picking processes to be conducted quicker, with multiple orders picked at once. What’s more, businesses can reduce the risk of paper pick notes getting lost or wrongly altered, minimising the chance of orders being sent out incorrectly.
As well as creating a paperless picking environment, businesses should also look at how much staff time is spent travelling the warehouse rather than picking. Research shows that 70% of picker time is spent walking between bins, therefore it is also important for companies to minimise staff travel times. An easy way to achieve this is by implementing fastest walk routes, ensuring pickers always take the most efficient path to collect products. What’s more, if there is already sales demand on for products when they arrive from suppliers, companies should look to despatch these items at the point of goods arrival. By eliminating double handling items and reducing travel time, retailers can maximise their order despatch volumes and boost their capacity for more next day deliveries.
However, it is not just in the warehouse where businesses can alter their processes and help to minimise the risk of failed deliveries. Another way to avoid these situations is to simply keep customers in the loop through despatch and order update notifications.
Andrew Starkey, Head of e-logistics at IMRG, advised on the back of the Valuing Home Delivery Review that carriers invest in technology that allows them to warn a customer of when a delivery is due. However, with DPD and other courier providers already using such technology, consumer expectations dictate that retailers should also be taking the extra steps to communicate order progress with their customers.
A good, simple way of doing this is by alerting customers by email or SMS message when their delivery has been shipped or order is ready for collection. By using tools that automate the sending of these notifications, businesses no longer need to rely on their carriers but instead ensure themselves that customers are kept in the loop regarding order progress. Not only does this promote excellent customer service that drives repeat business, but also helps to keep down the volume of failed deliveries.
So in conclusion, it is clear that retailers at the moment are losing revenue and damaging their profitability by striving to keep up with the pace of fulfilment being set by Amazon. With the popularity of next day delivery only moving upwards, it is important that businesses don’t set themselves for a failure by offering this service, instead ensuring they have the right infrastructure and capacity in their warehouse operations to deliver on these promised delivery dates. Therefore, by streamlining despatch processes and ensuring customers are always kept notified along the way, retailers can massively reduce their contribution to this £1.6 billion failed delivery sum, and instead push forward their own business growth.
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