The latest fulfilment services are diverse, from same-day delivery to having an order delivered to another retailer’s store for collection. Liz Morrell investigates the future of home delivery

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W hile the world of ecommerce might be unrecognisable today from 10 years ago, the frustration a customer feels due to a failed delivery is the same as ever, and costs the industry at least £787m a year, according to sector analyst IMRG’s Valuing Home Delivery Review 2010.

Retailers now better understand that offering a suite of delivery options can be necessary to minimise the frustration. But, of the many delivery services and technologies out there, which will be the ones that gain popularity?

Retailers are already using better communication to keep customers informed about the progress of their deliveries. An email or text will tell customers when their parcel will arrive and give them the opportunity to change the day of order, if required.

“It’s about keeping the customer informed and allowing them a limited amount of interaction with the retailer, such as asking: ‘Do you want it delivered today or in one or two days’ time’,” says K3 Retail marketing manager Nigel Stephenson.

In April 2009 Argos introduced SMS texting to support its home deliveries and last year sent customers more than 2.2 million messages.

“SMS messages are sent out in the late afternoon or early evening on the day before delivery to allow schedulers the maximum time to plan routes. Last week we sent just over 56,000 messages,” says an Argos spokesman.

Track-and-trace services, whereby customers able to track their parcels in real time, are also used more. But Peter Fuller, retail business unit director of Norbert Dentressangle, says such services vary in sophistication.

“Most carriers now provide track-and-trace as standard. However, they range from a system telling you when a parcel was put on a van, to being told a delivery time within one hour, to the name, colour and registration of the van,” he says.

Carriers are also shortening their delivery times. In September last year courier CitySprint launched a same-day service for retailers. But chief executive Patrick Gallagher is frustrated by the lack of take-up.

“Some retailers are doing more than others but there seems to be a malaise about offering customers better delivery options. I can only see that’s the perception of dealing with a fragmented market,” he says.

In February parcel service GeoPost launched Predict, a one-hour delivery slot service, whereby customers are given a one-hour slot for delivery of their goods on the day of delivery.

“When we launched we had 2,000 people signed up. We now have 3,994,” says GeoPost chief executive Dwain McDonald. “Ultimately we will go down a route whereby you choose the time of delivery at the checkout. We have the software to do it but it’s a question of whether we can get retailers to adapt their checkouts,” he says.

Future systems will work even closer together. “Retailers will need to provide delivery date selection at point of sale as a minimum,” says Wayne Holgate, director of home delivery software provider Axida.

Same-day couriers

Jonathan Smith, chief executive of Yodel, the newly combined DHL and Home Delivery Network, says customers find it hard to miss his couriers. “We have about 2,000 self-employed couriers who will catch you on three occasions and leave you their personal mobile telephone number. We are also working hard to find good ‘leave safe’ places,” he says.

In recent weeks Argos became the first large retailer to use Shutl - a new aggregator delivery service that uses same-day couriers. It comprises a ‘Shutl Now’ 90-minute service or ‘Shutl Later’, where the customer chooses a one-hour slot. The Argos trial will initially focus on 12 central London stores but should expand to further stores within the M25. “Consumers will expect and even demand this service elsewhere,” says Shutl founder and chief executive Tom Allason.

He says Shutl combines the advantages of speed and assurance of delivery time with a cheaper delivery price, sometimes beating standard next-day delivery prices.

The Royal Mail, while a little slower off the mark, is looking to emulate such initiatives. It will launch a 24-hour tracking service shortly, among other changes. “We already have a same-day courier service in London and that will expand geographically. Our plans will be at least to match the innovations of other players,” says Royal Mail fulfilment director Mike Brown.

The carriers market is polarising into specialists, but this is challenging for retailers.

“Finding a single courier that provides all of these services is difficult, so you end up having to integrate with lots of different couriers,” says Clipper Logistics group IT and project director Sean Fahey.

Some delivery services go back to basics. Electricals retailer Dixons Retail launched its ‘Follow Me Home’ service at its megastores earlier this year. “It’s a simple taxi service that’s only available if you order in-store,” says Dixons Retail operations director Sebastian James. “We are not profitable with our delivery service but that’s in common with every one of our competitors. It is an important service to offer,” he says.

Indeed, introducing value-added services could be the one thing that ensures customers do want to wait in for their goods. James says Dixons Retail is considering using its delivery infrastructure to deliver for other retailers and manufacturers, too. “For example, we could also be delivering garden furniture and assembling it,” he says.

IMRG delivery director Andrew Starkey agrees that this is a good idea. “If retailers agree to use one carrier then you create delivery coincidences but also give the opportunity for retailers to cross-sell,” he says.

Retailers are also experimenting with alternative delivery locations such as drop boxes - once seen as the solution to failed deliveries. “Drop boxes have been struggling to get off the ground for so long but the idea has still got a part to play,” says Starkey.

Dan Turner, director of ByBox, operates a chain of 350 electronic drop box lockers in stations, business parks and transport hubs and plans to add a further 1,500 over the next year. “We see lockers located on customers’ daily routes being the way to go,” he says.

Others are offering alternative collection points. MyLocal allows shoppers to collect their parcels from local pubs, while Collect+, a joint venture between Yodel and PayPoint, allows customers to collect from a network of 3,500 corner shops. “We are seeing a lot of customers take it up,” says Collect+ chief executive Mark Lewis.

According to Lewis, 75% of consumers are currently within a mile of a Collect+ location and, with the addition of a further 1,000 stores by next March, that figure will increase to 90%.

Other retailers are teaming up to provide delivery solutions. Earlier this year Asos announced it was looking for delivery partners and it is set to partner with Boots.

Robert Muldoon, group carrier manager at iForce, believes more companies will work together. “We will see more dotcom companies working with bricks-and-mortar companies to develop collect and return services,” he says.

Ideally, retailers want to offer free delivery and returns on the US model.

“The utopia is that we get so good at this we can offer free delivery for everybody,” says James. “What people want hasn’t changed. They want as narrow as a time slot as possible.”

And meeting that basic requirement could prove the one thing that finally changes the delivery perception.

“If you get really good at estimated time of arrival deliveries, then the demand for alternative delivery points is going to be less,” says Starkey.