EBay’s purchase of Shutl is the latest in a long list of delivery innovations and launches in retail this year. Rebecca Thomson takes a look at how this crucial battleground is developing.

EBay has bought courier service Shutl

Last month, eBay revealed it is buying speedy fulfilment specialist Shutl as it continues to develop delivery options.

The news was the latest in a long line of delivery-focused developments in retail this year, as the industry wakes up to the difference that effective fulfilment can make to sales.

EBay itself has been at the front of the pack. The Shutl deal came just a few weeks after it revealed it will launch a click-and-collect service with Argos, enabling eBay shoppers to pick up products from Argos branches. The same service has since been introduced in the US, in partnership with Toys R Us and Best Buy, and eBay says more retailers are lining up to sign for similar arrangements.

The etail leader is also developing its eBay Now service, which enables shoppers to receive a product on the same day they order it.

The service is available in Chicago and will launch in 25 cities including London next year, and Shutl’s courier marketplace will help it to deliver on its same-day promise.

Getting in on the act

EBay is among those leading the way on delivery innovation - as it has done in many areas - and it is not alone in focusing on fulfilment.

Selfridges, for instance, which had concentrated on leading-edge store retailing until now, made headlines this year when it revealed it is to launch a drive-thru click-and-collect service for its well-to-do shoppers.

The supermarkets have launched similar services, allowing shoppers to pick up groceries from collection points in stores’ car parks. Asda is rolling out the service at a rate of 10 stores a week, and aims to offer drive-thru collection of online groceries at all of its stores by next summer.

Tesco, meanwhile, offers drive-thru at 200 shops and wants to increase that to 300 next year. It is also piloting its first off-site click-and-collect points at a school and two car parks in York, and plans to extend that to libraries and sports centres.

In July Waitrose revealed the launch of temperature-controlled delivery lockers for click-and-collect customers in store and at remote locations.

It is clear same-day delivery, or delivery that adapts itself to the customer’s habits such as click-and-collect, has been priority number one across the retail industry.

In October, AO.com (formerly Appliances Online) became the first retailer to offer comprehensive same-day delivery for large white goods such as fridges, and Currys and PC World have promised same-day delivery on the launch day for Apple’s new iPad Air today. Dixons launched same-day delivery for online orders in August, costing £14.99, and next-day delivery costing £4.99.

Dixons ecommerce director Jeremy Fennell has said delivery options are a core part of its multichannel offer. He said shoppers’ expectations are high and that this can be hard to marry with high logistical costs - the answer is in part to provide services worth paying for. “One of our strategic challenges is offsetting the cost of delivery, and by creating value in our proposition that customers are prepared to pay for we can do that,” he said.

John Lewis managing director Andy Street spoke of the importance of delivery back in March, and the retailer has made strides in its offer this year.

Street described delivery as “the unsung part of the multichannel story”, adding: “The website is critical, but actually it’s not the company’s competitive advantage - that’s the fulfilment piece.”

The department store group has a partnership with sister retailer Waitrose that enables its shoppers to collect online orders from the grocer’s stores.

John Lewis is also investing heavily in a new distribution centre to add to its current facility in Milton Keynes - around £205m is being spent in total.

Tony Walford, a director at the Supply Chain Academy, says it is this sort of behind-the-scenes investment that is important. He says retailers will need to look increasingly at how products are ferried to waiting online shoppers.

“It’s not so much the delivery process, it’s about how to control inventory,” he says. “If you are able to replenish an ecommerce order from a shop, then the need for a central warehouse supporting ecommerce changes.”

He adds Amazon has long benefited from being able to consolidate its inventory into fewer locations, compared with high street retailers that must stock stores and deliver online orders from distribution centres.

Having inventory at more locations costs more, he points out. Retailers need to use what they already have to give themselves an advantage. “Use inventory that is already close to the customer rather than shipping it from a single central location,” he says.

Staying local

This local approach is an emerging trend in delivery and it’s the rationale that Shutl relies on - local couriers are the key to providing its swift 90-minute delivery service.

Aurora Fashions was an early adopter of the 90-minute service, while John Lewis’ tie-up with Waitrose exploits the grocery chain’s more local network of stores. EBay president Devin Wenig said when the Now service was launched that approximately 75% of what people buy is local, found within 15 miles of their home.

“Traditional retail isn’t going away,” he says. “But it is transforming and that creates enormous opportunity.”

But, while a huge amount of work has gone on in delivery, it’s a hard nut to crack. Delivering online orders is an expensive business, but shoppers often expect it to be free.

It’s a conundrum that has kept many value fashion players from trading on the web. Earlier this year, Primark supply chain director Martin White asked the supply chain industry to help his company come up with ways of trading profitably online.

At the moment, delivery is too expensive to make it worthwhile when Primark’s margins are so tight.

The retailer did begin trading online through Asos but the trial has since ended. Other players in that market will be watching closely to see what Primark is planning next.

Delivery and fulfilment will continue to be a central part of what makes a multichannel offer work, and it’s one area where retailers have succeeded in producing a flurry of innovative answers to a complicated problem. But there is still work to do, and fulfilment remains an area to focus on.

Retail delivery innovations of 2013

  • Asos upped the ante in June by launching 15-minute delivery slots through its Follow My Parcel scheme. Customers can track parcels in real time at no extra cost. They can book a one-hour slot initially, and can then track the parcel to see when exactly it will arrive. Asos is working with logistics specialist DPD.
  • House of Fraser unveiled a service in July that enables customers to order products for delivery in the evening of the next day. The aim is to make staying at home for deliveries unnecessary - a common bugbear among shoppers who work during the day.
  • Retailers have picked up the pace on same-day delivery this year - AO.com (formerly Appliances Online) and Dixons have both launched services, and Asda has revealed plans for same-day delivery of food orders.