Smooth delivery options are front of mind for retailers because customer expectations are sky high. It is vital supply chains are as watertight as possible.

Logistics

As every retailer will be aware by now, consumers are getting more demanding. They expect a choice of goods to be widely and quickly available, and delivery systems are coming under more pressure as a result.

Failing to get the right product to the right customer at the right time means retailers risk not only losing that customer, but damaging their reputation thanks to the power of word of mouth.

With so much at stake, how do retailers ensure their supply chain is as seamless and efficient as possible?

Retail Week challenged the industry’s leading multichannel operators, analysts and delivery providers to identify the core aspects of a first-class multichannel logistics operation.

Cost-efficient fulfilment

Fulfilling what’s promised in the sale conditions in the most cost-effective way as possible is one of the most important aspects of the supply chain to get right, according to Alek Adamski, associate partner at retail consultancy Kurt Salmon. “In reality, this [fulfilment] is still a loss-making area for many retailers as they try to cope with single unit sales from supply chains originally designed to deliver larger quantities to store,” he says.

He adds many retailers are now building for scale and efficiency to cope with today’s multichannel volumes and performance requirements.

Argos is working hard to make fulfilment as fast and cheap as possible for both home delivery and local collection. Fulfilment, or the way customers obtain products, is a critical part of a first-rate multichannel logistics operation, says John Walden, managing director of the general merchandise giant. “Retailers without access to cost-advantaged or next-day fulfilment across a national network may find themselves with a limited online sales opportunity,” he says.

“With modifications to our supply chain, we believe we can provide customers with the most product choice, available the fastest, whichever way they choose to shop with us.”

He points to recent initiatives including the ‘1-click Check & Reserve’ service, which improves the speed and convenience of reserving products for store collection, and trials of a new ‘hub and spoke’ distribution model, which utilises existing Argos’ store network and replenishment capabilities for quicker fulfilment on a range
of products.

With availability and accuracy “mattering most to customers” shopping in physical stores and online, getting these fundamentals in the central supply chain is critical, believes Rob Thompson, Waitrose’s head of supply chain development and support. The grocer is investing in a new management system in its fresh food warehouses, which includes the introduction of electronic picking and scanning of cases of goods in an effort to improve accuracy, and is seeking to improve availability “through stock management routines, improving forecasts of sales and getting assortments right in store”, Thompson says.

One way to reduce costs and overheads is to adopt a direct dispatch model, recommends Harry Manley, managing director of software provider Omnica. Under direct dispatch, suppliers process and fulfil each order, meaning retailers don’t need to run their own warehouses. Andrew Dalziel, sales and marketing director of software provider Kewill, says having no warehousing facilities means retailers can remove links in the supply chain and become leaner and more streamlined, Dalziel says. “Direct dispatch is essentially channel-neutral and works in the same way for orders placed via any channel, providing a good degree of future-proofing for retailers contemplating further investment in new channels, for example mobile and increasing collaboration between channels, with initiatives such as click-and-collect.”

Accurate and real-time stock information

Real-time stock visibility is a core strand of a top multichannel operation. Tom Allason, founder and chief executive officer of delivery specialist Shutl, says: “For multichannel retailers who operate a network of stores - one of their greatest single cost as a business - they need to be sure they are getting the best return on their investment. Having accurate, real-time visibility of store stock will help these retailers to fulfil online orders from store, allowing them to compete with Amazon on one of the only playing fields where they can win - customer convenience.”

Shutl works with retailers including Argos, Aurora and Maplin, enabling them to provide shoppers with two delivery options - either within 90 minutes of purchase, or an hour window within the next working day. By using technology that integrates with the retailer’s ecommerce platform, Shutl “ensures retailers get accurate stock information,” according to Richard Wilding, professor of supply chain strategy at the Cranfield School of Management.

By implementing a central back-office system, retailers can provide one view of all stock and channels, which is fully integrated with store tills and websites, says Ed Friel, director of logistics service provider Torque, whose clients include Mountain Warehouse, TM Lewin, Crew Clothing, and Sweaty Betty. Crew Clothing is among those investing in this area, Friel says, and is benefiting from joining disparate or disconnected systems and stock cycle processes.

Robust returns policy

Now that consumers expect to be able to return products quickly and easily, an efficient, customer-friendly returns process can make a huge difference to customer loyalty and overall profitability, asserts Cantor Fitzgerald analyst Kate Calvert. “Dealing with returns is where you’re going to lose margin,” she says, pointing to Next as an industry leader when it comes to a slick returns process. The fashion retailer has cleverly integrated its Directory catalogue into the Next Retail arm, she says, “with the two businesses working as one”. This integration means catalogue returns can be made through Next stores and customers essentially think of the two operations as one brand.

Many of Next’s competitors are working hard to bring their returns policies up to scratch, according to Calvert: “They’re all investing a lot of money but are in catch-up mode.”

Pointing out how much of a financial impact dealing with returns can have on a retailer’s bottom line, observes Martin Brickell, director of supply chain consultant Total Logistics. “In retail up to 40% of products get returned.”

He adds dealing with them can be more than three times the cost of picking and dispatching.

Brickell highlights Collect+, which allows consumers to send, collect and return parcels at local corner shops, as a way for retailers to deal with returns with “less hassle” and cost. The service, which is used by retailers including Asos, House of Fraser, Asda and Littlewoods, “deals with the problem of returns without incurring charges”, agrees Wilding, who adds it has very low-risk levels for consumers.

As multichannel growth continues apace, offering consumers a seamless multichannel experience, could make all the difference between success and failure.

The importance of smooth delivery

66% of customers abandon their basket at checkout because they’re unhappy with delivery

67% cite free delivery as the most favourable delivery option

90% would shop again with a retailer if they were happy with the delivery of their goods

74% would be unlikely to shop again with an etailer that charges for returns

Supply Chain Awards

Got a great supply chain? There is less than a month to enter the Hermes Retail Week Supply Chain Awards, celebrating the best examples of work in the retail supply chain from the past year. All categories and criteria details can be found here, and the deadline for entries is May 24.