According to the Interactive Media in Retail Group (IMRG) - a UK online trade association - UK shoppers spent £91bn in 2013 and by the end of the same year global business-to-consumer e-commerce sales passed the 1 trillion euro mark for the first time.
The boom in home shopping has had a significant impact on the retail sector and radically changed the way retailers and their parcel carriers now operate.
In fact if these retail figures continue to rise (and it’s looking likely that they will), it is certain that a new generation of increasingly sophisticated consumers who are highly social digital natives will push through this growth as more and more sales are made online.
Enhancing the customer experience
Today, retailing is a multi-channel experience underpinned by innovation and technology. And the significant growth in the e-commerce market means that the delivery of goods has become an ever more important part of a retailer’s customer service from both a speed, convenience and delivery perspective.
The proliferation of smart devices means that in just three clicks we can purchase goods. If we buy an item online it can be delivered on the date and time to the destination of our choice. We don’t have to wait. Consumers know what they want and retailers and carriers need to ensure they are meeting those requirements.
That said, delivery continues to be a major customer gripe. The biggest annoyance of ordering online is that you can wait up to anything from two days to two weeks for the goods to arrive. In today’s era of immediate gratification, this is simply not acceptable - and can mean the difference between retaining and losing a customer.
A recent Royal Mail report, entitled ‘Delivery Matters’, found that successful deliveries from a trusted partner can have a ‘halo’ effect on relationships with customers, helping retailers to build repeat, sustainable business.
YouGov carried out a separate study which further underlined the need for a speedy delivery service. It found that nearly half (46 per cent) of UK consumers favour next day delivery over any other. Yet one in three retailers (36 per cent) is failing to offer its customer the next day option. This could mean they miss out on expected growth in online sales by failing to offer the basics in terms of delivery and returns.
A key challenge in delivering (literally) what consumers want is that many parcel carriers have built their businesses around in-house legacy IT infrastructures and they don’t have easy to use intuitive technology that enables them to seamlessly deliver the goods or effectively track parcels. As a result many are struggling to meet retailers’ (and consumers’) demands in terms of where, when and how they want to receive their purchases.
The shift to conducting business online has led to a rise in volume and variety of packages, parcels and services handled by carriers. New services have evolved such as CollectPlus, the UK’s largest store-based parcel delivery and returns service, which is a great example of a click and collect offering.
Right now, for a retailer to capitalise on the continued growth of online sales, it is essential that its chosen carrier is able to offer a range of services to suit the customer’s increasingly diverse delivery requirements.
Clunky in-house parcel shipping systems are now becoming an inhibitor to many carriers, but most cannot afford the weighty capital outlay involved in designing new systems, nor do they have the time to wait for a new IT development project that could take months and years to complete.
Every cloud has a silver lining
As with so many industries, cloud technology is revolutionising the way things are done. Archaic, power hungry chassis based solutions and old-style real estate are no longer fit-for-purpose as budgets are further squeezed and users become ever more demanding.
With the cloud, carriers are able to upgrade their technology without incurring hefty upfront charges and there is no hardware, software or structured licensing models. They can flex and scale their requirements to suit the needs of the business as cloud opens up a range of options that allow for large leaps in capability with smaller amounts of in-house effort versus traditional build in-house solutions.
Today retailers and carriers alike cannot afford to turn their backs on cloud computing as it represents a key tool in the race for innovation and competitive advantage. Indeed, cloud has a way of opening up opportunities for the business, of freeing the company to dream up new products and services, innovate on existing offerings, and lower the cost of experimentation.
SaaS-based web shipping platforms can be incredibly robust, delivering transparent, trackable, scalable and repeatable processes that seamlessly integrate with the carriers’ own systems. This in turn enables the fast on-boarding of retailers, which is important for an industry that is highly competitive and fast moving.
These platforms provide the carriers with agility, new ideas and help them to constantly innovate and grow their business, but most importantly enable carriers to deliver a continuous provision of service, which in this new, ‘always on’, retailing world is a key imperative.
At the end of the day how online retailers optimise their delivery service will be become a key differentiator in the next 12 months. The latest IMRG figures indicate that in the UK alone, 940 million parcels will be dispatched in 2014, up 19 per cent on the previous year. Carriers must ensure that they have systems in place that enable them to meet this growing demand.
Market leaders are already changing the definition of what ‘next day’ means by offering later and later cut off times. The consumer demand and expectation for same day delivery is coming and online retailers who streamline their next day courier delivery service now will be best placed to compete in that space.