Convenience and speed are increasingly important to consumers when ordering goods, meaning retailers offering the best fulfilment options have a competitive Christmas edge.

With Cyber Monday already behind us, the starting pistol has been fired on this year’s Christmas shopping rush. IMRG and Capgemini’s e-retail sales index predicts a 15% rise in online shopping to £4.6bn this festive season compared with last year, and fulfilment specialists will be laden with deliveries right up until the big day.

Delivery has become a retail battleground and businesses are innovating to compete – etailer Very, for instance, offered next-day delivery to revellers at the V Festival this year, and Aurora Fashions has heavily publicised its 90-minute service. But while these are clever services, the majority of retailers are still advancing steadily towards offering cost-effective next and, in some cases, same-day delivery and click-and-collect.

Meeting customer demands

Consumer expectations, however, are advancing at a faster rate than many retail services, according to the fulfilment specialists. Simon Deane, information services director at logistics specialist Wincanton, explains: “We get a sense that the customer is driving the changes now. Technology is allowing them to become pretty choosy about fulfilment.”

DPD’s Predict service, which enables retailers to text consumers to give them a one-hour slot on the day of delivery that can be rearranged if necessary, and Shutl’s super-quick delivery remain among the most admired and innovative services in fulfilment. Patrick Gallagher, chief executive of CitySprint, admits DPD, which delivers for Amazon and Dixons among others, “stole a march” on the industry. “I have seen others deliver that solution but DPD has shown us the way,” he says.

Retailers including Oasis, Argos and Maplin are using Shutl’s high-speed service to deliver in 90 minutes

Retailers including Oasis, Argos and Maplin are using Shutl’s high-speed service to deliver in 90 minutes

Shutl offers a high-speed service that allows customers to choose a one-hour delivery window or request delivery as soon as possible. This helps retailers, including Argos, Aurora Fashions chains Warehouse, Coast and Oasis and electricals specialist Maplin, to offer delivery from store within 90 minutes. “The quickest delivery we have done is 15 minutes,” says Tom Allason, founder and chief executive of Shutl.

“Consumer expectations only move forwards,” adds Allason, who believes that, as more consumers use advanced delivery services, demand will grow further. “Expectations are based on what you experience,” he says. At present, he concedes, expectations are “very low”, making it easy for such services to dazzle customers.

Convenience versus speed

Undoubtedly, these innovative services are helping to push the market forward and, as more retailers sign up, the pressure will be on their rivals to follow suit. The general sense among fulfilment specialists, however, is that consumers are not always looking for the speediest option – more often they want a range of options so they can pick the most convenient.

“People expect a free delivery service and are generally prepared to pay a premium to get it faster,” says Tony Matthews, head of ecommerce at logistics specialist Arvato. “But what consumers really want is a delivery to be made when it is promised.”

Services such as delivery to a neighbour are becoming popular to ensure shoppers receive goods, says Patrick Wall, chief executive and founder of delivery management company MetaPack. He also points to CitySprint’s MyTime service, which allows consumers to pick a specific time and date pre-checkout, as a “leap forward” in terms of fitting in with consumers’ lives.

He believes at present it is retailers that are the biggest barrier to a shift from static delivery options, offering two or three standard or premium services at a set price to all customers, to dynamic services, which calculate options based on the consumer’s postcode. “I don’t think retailers take enough care of the options they offer,” Wall says.

Investing in IT systems

To achieve that kind of progress, many retailers would need to invest in IT systems that bring their stores and online businesses together, and that integrate with the range of distributors they use.

Allason says only a minority of retailers have real-time visibility of stock in a collective system. But he is optimistic that it will keep growing. “None had it five years ago, one had it three years ago and 10 to 15 have it now,” he says.

Real-time stock visibility will be the key to opening up delivery options. Wincanton’s Deane explains: “If we accept that customers want a higher degree of flexibility then retailers need to be more flexible in how they get product to the customer. It shouldn’t matter where the product is bought. But that needs a more flexible, fluid supply chain and a shift away from hard boundaries.”

Investment in IT to service multichannel growth has been a recurrent theme this year. Retailers across the spectrum including John Lewis, Pets at Home, Wickes, Republic and Maplin have all been investing. Deane points out that not all retailers can afford to make that investment up front, which led Wincanton to create its “supply chain in a box” system.

Baby specialist Kiddicare uses the solution, and Deane says the business is using the tools to support its shift to bricks-and-mortar retail.

The Kiddicare format has always worked well online, but transferring its success to stores meant a few challenges had to be overcome. Deane says: “We supported that move, helping Kiddicare to build stock using our warehouse and inventory planning. It was up and running in a few weeks.”

Multichannel solutions

In terms of offering convenience, click-and-collect is the service that has resonated most with consumers. Wall attributes its success to the way retailers have recognised the benefits of it and devoted resources accordingly. He explains: “It brings customers in store and frees them up to do more shopping.” 

Collection lockers is another initiative that has capitalised on the convenience trend. Amazon is trialling its lockers in various locations, including in Co-operative stores and convenience group McColls shops.

The Collect+ network, used by Very and Asos, is also expected to gain traction next year, and more retailers are predicted to follow John Lewis’ example of extending click-and-collect to enable customers to collect orders from other retailers. At present the department store group offers click-and-collect to sister grocer Waitrose stores, but it is understood to be keen to extend this to other retailers.

The need for collaboration between retailers in terms of logistics and infrastructure is widely acknowledged on the fulfilment side. Dean Wyatt, vice-president of retail at DHL, predicts this will be seen in many ways. “Retailers on the same high street could receive deliveries from one lorry – in the way pubs currently do. Thinking more broadly is necessary now.”

The evolution of delivery services is expected to be rapid over the next 12 months. Shutl is in talks with some etailers to bring its 90-minute service to the online sector at a price of about £6, and it is also looking across the Atlantic to the US for expansion opportunities. It is known to be in talks with at least two retailers in the country.

Next year, all eyes will also be on Amazon, which is believed to be launching its own delivery service – a move that would have huge impact on the fulfilment sector.

Wall says one-hour time slots will become the norm, and predicts the next step will be a service whereby orders received by 12pm will be delivered in the evening. Whistles already offers this in London and Next is said to be trialling the service.

Retailers have learnt a lot from the heavy pre-Christmas snow in 2010.

Retailers have learnt a lot from the heavy pre-Christmas snow in 2010.

For now, however, attention remains fixed on the crucial weeks to come. Fulfilment specialists have increased staff numbers – some have tripled employee levels – to cope with demand, and contingency plans, in case of a repeat of 2010’s pre-Christmas snow chaos, have been in place for several months.

CitySprint’s Gallagher is realistic, pointing out that there is “no magic solution for snow”, but he adds:

“In adversity, people always respond and in that situation it is about being creative.”

Plenty of lessons were learnt in 2010 by both retailers and fulfilment specialists – with any luck, only Santa’s sleigh will be more reliable this year.