International home and online shopping retailer improves customer fulfilment proposition
Shop Direct Group, the UK’s largest online and home shopping retailer, operating across 49 countries is using 'direct despatch' as one of its key strategies to increase customer choice, keep its costs low and ensure excellent customer service.
Direct despatch is designed to eliminate the need for multiple warehouses or for all products to be kept in stock within its warehouses, freeing up capital that would otherwise be invested in inventory. This also enables logistics costs to be kept to a minimum, with the majority of products transported direct from the supplier to customer, rather than from the supplier to the warehouse, to the brand and then on to the customer.
With over 75% of the Group’s sales now online, it can sometimes be unclear to the customer if a product is really in stock until after placing an order, potentially leading to inaccurate delivery lead times and unsatisfied customers. The ongoing challenge with direct despatch is gaining real-time visibility of stock, which impacts the ability to detect and notify customers to any delays in the fulfilment cycle.
In order to address these challenges, Shop Group Direct embarked on a competitive direct despatch project with trade and logistics provider Kewill to gain even greater control of its direct despatch service, driven by an initiative to deliver on the ‘customer delivery promise’– in which all customer orders are delivered on or before the promise date communicated at the point of order.
Optimising experience and demand
Pauline Lauder, planning and operations director at Shop Direct Group, commented: “To ensure we leverage our market-leading reputation and maintain a best-in-class direct despatch service, we constantly take steps to make sure our lead times are met and communicate our delivery promise effectively to customers, suppliers and carriers. By delivering short, competitive lead times and accurate stock availability on key products, we can maximise the customer experience and increase demand.”
To enable competitive direct despatch, Kewill agreed with Shop Direct that each of its suppliers would put a default lead time against each of its stocked products. This information was then transferred into the system and made visible to customers on Shop Direct’s websites and via contact centre advisors for those customers ordering via telephone.
This way, if there is any variation to the original estimation, the supplier is able to manage by exception and notify Shop Direct that the product is either low in stock or out of stock in the stock status’ facility. For example, a mattress supplier has a five-day lead time and at Christmas they know that they close up for two weeks, so they update Shop Direct that, from 15 December to 6 January, its lead time will extend from five to 15 days because they are closing down for this period.
Exceeding customer expectations
This is updated on the system and then sent to Shop Direct, which in turn is able to recalculate all of its algorithms and calculations that work out its customer delivery promise date on all orders placed from that particular supplier, ensuring the customer is kept informed of the longer lead time. Customer expectations are therefore more accurately set from the point of order, ensuring greater customer satisfaction.
Shop Direct requested that orders are delivered on or before the promised delivery date and not after, which was a key driver for this project. Since the start of the competitive direct despatch project, which saw the implementation of a new ‘stock status’ module, Shop Direct's customer delivery promise has continued to improve, with it consistently hitting its delivery key performance indicator (KPI) targets.
Lauder said: “Kewill was tasked with the significant challenge of developing a solution that would cater for our complicated needs. It is an intricate functionality to manage when you consider the continual change to stock levels, including thousands of products, all of which need to be made visible across our many brands. On top of this, the system has to be simple to use for our supply base, something that Kewill delivered.”
Optimised stock holding and sales
The Kewill stock status module allows for supplier delays in order fulfilment or exceptions in future holiday periods, when the business is closed, to be highlighted in advance. This ensures that the Shop Direct ‘customer delivery promise’ calculations can be adjusted accordingly, so customers are provided with an accurate delivery timeframe when ordering.
The system has reduced the delivery time on direct despatch products, as well as enabling an option for next- day delivery at a small premium. This has contributed towards the retailer being able to offer a more competitive direct despatch service, to match or exceed that of its main online and high street competitors.
“We now have improved stock availability information flow from suppliers, enabling the flexibility to define cut-off times on direct despatch – for both individual suppliers and products – providing the flexibility to support next day deliveries," Lauder added. "Quicker and more accurately dated deliveries have also had a positive impact on our returns and cancellation rates.”
To build on the benefits of the competitive direct despatch, Shop Direct now has plans to develop further enhanced services such as timed deliveries.