Seasonal sales during the peak period in the run-up to Christmas can account for up to 50% of a retailer’s annual profits, highlighting just how critical the festive period is for retailers of all types and sizes.
By Evan Puzey, Chief Marketing Officer at Kewill
Retailers need to guarantee their usual standard of service despite an increase in consumer demand, whilst also offering additional options that will draw in the crowds. In addition, it is vital that customer orders arrive on time at Christmas, regardless of whether logistics are managed in-house or processes are outsourced.
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However, even with the right practices in place this is a tough order for any retailer to deliver on, with heightened volumes of orders and potentially severe weather conditions to contend with. What exactly is the best way to manage logistics and ensure that customer expectations are met, delivering a stress-free Christmas?
Building a multi-channel strategy
Taking orders and completing the consumer transaction are only the start of the order fulfilment process.
Whether a traditional bricks and mortar retailer or a pureplay online retailer, you have to ensure that back-end processes are in place so that the end-to-end product lifecycle operations run smoothly and customer expectations are met.
With consumers becoming increasingly fickle, it is ever more important to ensure a high level of customer service from browsing to the shopping experience, ease of ordering and finally delivery.
Current trends in logistics to fulfil across all channels include click & collect, track & trace, next day delivery, with click & collection points being the latest initiative driven by consumer demand for more control over when, where and how goods are purchased and received.
If the consumer does not receive their order quickly and undamaged, they are likely to shop elsewhere next time; and with the growing popularity of social networking, it’s likely that they will share their negative feedback globally, discouraging potential future customers.
As online sales have grown consecutively over the past four years, delivering on time at Christmas has never been so crucial, but with sales on the increase it’s only going to becoming tougher for retailers to process higher volumes of orders along with more varied delivery options.
There have been many stories over the past decade of internet orders not arriving until after the crucial date – not least in 2010, when snow and harsh weather conditions severely affected delivery times.
So when it comes to guaranteeing that your customers receive their orders in good time ahead of Christmas, what is the best delivery management method?
Direct Despatch
In recent times, an ever increasing number of retailers are opting for a direct despatch model. Many retailers have outsourced the delivery of the goods to their suppliers, so that when the customer places an order, the retailer processes it directly with their supplier who then delivers the goods directly to the end customer.
This allows the retailer to offer a wider product range and react to changing trends without the initial outlay of purchasing and holding inventory, improving cash flow while reducing the risk.
While retailers may benefit from not having to hold the physical goods or take care of the actual logistics, they must still manage the information and financial flows with their suppliers. The supplier then picks and packs the goods, prints the delivery note, package label and returns label, before shipping direct to the consumer.
With an increase and wider assortment of orders placed, fulfillment becomes more complicated in the run-up to Christmas. Direct despatch automates the entire process, allowing suppliers to gain easy and fast access to order information, reducing complications and eliminating the chance of manual errors, whilst streamlining the process to shorten delivery lead-times.
The rules of diminishing returns
A growing headache for omnichannel retailers is returns, which represent the weakest link in the supply chain for many, eating away at profits and customer satisfaction.
An obvious downside of increasing sales via non-direct channels is the practicalities of returning unsuitable or unwanted goods, coupled with customer expectations and of course legal requirements under distance-selling regulations, covered by federal and state law.
Customers who haven’t physically seen or touched the goods they purchase, or experienced the all-round experience of selecting them in a store, are more likely to return goods. Apart from the practicalities of not getting what they envisaged or wanted, there just isn’t the same level of personal engagement.
Apparel retailers and their suppliers have historically borne the brunt of customers ordering multiple items and sizes. It is therefore imperative that retailers provide detailed product information, e.g. an accurate clothing size guide, to reduce the likelihood of returns.
Apart from the higher shipping costs that are usually absorbed by the retailer and greater value of inventory in the supply chain, the more time goods spend in transit the more likely they are to be lost or stolen. Theft in this area are becoming a more significant problem and the cost again directly impacts on retailers’ (and also carriers’) profits.
Ultimately, it’s about ensuring customer promises are met. Customers who have received the goods they expected, within the promised timescale, and in the anticipated condition are significantly less likely to experience dissonance and returns, saving retailers and their suppliers on returns costs and refunded revenue.
For customers who do need to return goods, the process should be straightforward, with clear returns labels included within the parcel.
Time will tell which retailers are geared up for the Christmas peak. Some retailers may have the processes and systems in place, while others may incur additional costs or sadly risk missing the Christmas Day deadline, disappointing expectant customers… and everybody knows that Santa can’t be late!
For more, visit www.kewill.com
Great points around the importance of returns. As online sales continue to grow, so too will retailer’s return rates and the associated costs. Not only dies this impact their bottom line significantly, but can mean disappointed and frustrated customers if the retailer can’t engage with them quickly enough or in the most appropriate way.