24th February 21
For years, there was often a silo approach between physical and online retail volumes. And sometimes it was worse than a silo when the channels saw each other as competitors, despite offering the same customers the same products.
Thankfully, the value of online is recognised by businesses and integration has been achieved as board structures have evolved to combine responsibilities for customer channels.
2020 brought rapid acceleration of online volumes as many stores were closed and trips to even essential retailers were reduced. It meant many retailers who previously fulfilled online sales from a central warehouse found themselves overwhelmed with demand and other retailers needed to ramp up their online offer quickly. As a result, stores have become local delivery hubs. While this was already a well-adopted model for restaurants with takeaway options, retailers have generally been slower to adopt local delivery model.
Fast fashion stores in London spotted the opportunity to get a new outfit for that evening in their customers’ hands and offered two-hour delivery within the capital. And more upmarket fashion brands work with London-based Harper Concierge, whose model allows customers to select the things they want to try on, have them delivered to try on in an agreed one-hour time slot and then pay for the things they keep. They can even get styling advice for their fashion expert delivery driver.
Outside of London, DIY retailers have led the way as they recognised the importance of a customer being able to reserve and collect the vital items to complete their half-finished DIY project.
Other retailers who either didn’t already have their own delivery network set up or who were struggling to cope with increased volumes turned to the established delivery businesses already looking after food takeaway customers. A whole new fulfilment industry has been established with Deliveroo, Snappy Shopper, Wedeliverlocal, Doordash and more, all offering retailers well-established, local delivery options that bring their brands to millions of customers.
These local networks are big business. In 2017, the retail giant Target in the United States bought local delivery network Shipt! for $550 million. Impressive for a business that started in Birmingham Alabama with just 1,000 customers. London-based delivery business Deliveroo started in 2013 and covers many markets across Europe and as far away as UAE, Singapore and Australia. In January 2021, Deliveroo has raised an extra £132 from its shareholders that include Amazon, to value the company at “over $7 Billion”.
Read more about the business of Deliveroo here:
What does this mean for stores?
Offering local delivery in a tight time window adds extra complexity into the retail operation.
We’ve been working with retailers who offer store picked delivery options and Click and Collect to help them accurately measure the extra workload involved and optimise how they do things. Like most new processes, the store and support office teams are learning quickly, finding new ways to do things, and trying to get slicker at what they do.
We’ve found big variances in time taken between stores and different retailers, and with volumes of store picked orders only set to grow its an important part of the operation to get as efficient as possible. We’ve even seen the challenges of how to accommodate waiting riders and their expensive bikes, when leaving their means of getting around outside the store is not an option.
We’ve established a benchmark database for local fulfilment covering store picking, packing and the admin around it. We were able to tell one retailer that a benchmark business picked their orders on average over two minutes quicker than they did – and what was taking the extra time. For others, helping them get their packing stations better laid out so all materials are to hand has increased their parcel capacity as business grows.
If you’ve recently added store fulfilment to your customer offer, or want to get slicker to accommodate growing order numbers, contact us to chat about your challenges.