Retail strategy expert Lee Gill examines the challenges posed by the rise of online shopping and the convergence of the digital and physical supply chains
The growth of online retail shows no sign of slowing down, with IMRG estimating that £107 billion is due to be spent online by the end of 2014, which is putting unprecedented pressure on retailers’ fulfilment capabilities.
Lee Gill, VP of retail strategy EMEA at supply chain vendor JDA
, says that in addition to this, increasing competition and more demanding consumers are also forcing a contraction in order-to-receipt windows, from days to hours and even minutes.
Home delivery issues
“According to recent figures, 1 in 5 consumers said they had experienced problems with online home deliveries in the past 12 months, with 61% stating they would switch retailers based on an ‘unacceptable’ online experience,” said Gill.
“In this environment, retailers such as Argos, Tesco and John Lewis are turning to ‘click & collect’ services as a more cost-effective fulfilment alternative to home delivery and to offer greater convenience to some customers.”
Gill notes that popularity of these services is growing, with nearly 1 in 2 consumers having used such services in the last 12 months, citing cost and greater convenience as their primary motivations.
“In fact, John Lewis boss Andy Street recently said he expects ‘Click & Collect’ to account for more online sales volumes than home delivery this Christmas,” commented Gill.
Yet despite this surge, Gill feels it’s clear that a significant number of online orders are failing to live up to the brand promise of providing a seamless interaction regardless of channel.
“More than half of consumers believe that retailers’ online and offline channels are not that well integrated,” he said. “This inconsistency means that retailers are at risk of damaging their brand and of receiving rapid and negative exposure on social media.”
The challenge that retailers face is ensuring that they can scale their ‘Click & Collect’ services for future growth, and deliver a truly consistent experience between their online and in-store operations, according to Gill.
“Customers don’t want to experience long waiting times in store due to a lack of staff, or worse still wait while staff fail to locate orders. Ensuring that online and offline parts of the business are not working in silos is key to achieving a seamless experience for customers.”
As digital and physical supply chains converge, retailers need technology that affords optimal visibility over the goods at all points in their supply chain, according to Gill. “This allows fulfilment to take place from any inventory location in the most efficient and cost-effective manner,” he said. “Retailers need to begin re-engineering supply chains into a fulfilment network. For example, truly efficient order fulfilment might come from a DC, from a store, or even from a returned item.
“What’s more, retailers need to make sure that they always have the right staff, in the right place, at the right time, in order to meet these new service requests.
Making intelligent decisions
Gill feels that by using advanced demand and fulfilment tools alongside labour management solutions, retailers can make intelligent and efficient decisions about where to source inventory from and where to position their people in order to effectively fulfil customer orders.
“Luxury brand Mulberry is using demand and fulfilment solutions to ensure timely product availability and to have better visibility of inventory,” he explained. “This has enabled the company to drive operational efficiency and improve customer service levels, through having a more responsive supply chain.
“The rise of omni-channel has undoubtedly created an environment of heightened complexity for retailers,” concluded Gill. “Fulfilment excellence is quickly emerging as the new retail battleground and it will be those retailers that do this effectively and profitably, without damaging customer service, who will be the eventual winners.”