E-commerce Consumers in Control

E-commerce is big business in the UK; in 2012, residents spent a world-leading average of £1,083 per person online (according to the November 2012 IMRG CapGemini e-Retail Sales Index), up 14 percent compared to the previous year.

And a report published by The Boston Consulting Group in March 2012 predicted that 24 percent of all UK consumer retail sales will be made online by 2015.

In this article – SCM’s first opinion column – Andrew Starkey, Head of e-Logistics at IMRG, the UK’s industry association for e-retail, discusses the growth of e-commerce in the UK, and explains how logistics providers and e-tailers are working together to deliver on the promises of this retail channel. Join our discussion and give us your perspective by posting a comment at the bottom of this page.

“Traditionally, the restrictions of the UK postal service have determined when ‘home shopping’ orders could be delivered. But the introduction of different delivery models, and an increase in competitive choice, has meant that for some time retailers have been able to to dictate the service levels they wish to offer.

“However we are now moving into the age where the consumer is firmly in control. They have the ability to browse and shop from any website, at any time. With this comes the recognition among forward-thinking e-tailers that ‘service’ – in the guise of delivery and logistics – is a crucial part of the retail promise to the consumer; sitting right alongside product and price.

“E-tail logistics is now a board-level agenda item; leading retailers such as ASOS and Amazon use it to create competitive clear water between themselves and the rest of the market, and to drive growth in turnover and margin. They have done this by recognizing what consumers want and working closely with their supply-chain partners to deliver it, creating their own solutions if generic services don’t fit the bill.

“Fulfilment and delivery operators are increasingly cooperating with each other to:

• Meet ever-later order acceptance and dispatch times (as late as midnight for next-day delivery is now being achieved by at least one UK retailer)
• Open new routes for cross-border consumers who aren’t satisfied with the service provided by domestic retailers
• Offer a range of service speeds, with dynamic carrier allocation on an order-by-order basis

“The 2013 IMRG UK Consumer Home Delivery Survey found that what consumers want – apart from low-cost delivery – is the ability to specify and anticipate delivery. Three-quarters of the survey’s respondents rated the ability to specify a delivery day (and ideally, a time slot), and to receive accurate delivery advice before ordering and in-transit (to enable them to predict delivery), as important to improving their e-tail experience.

“This means that, in the future, the battle for competitive advantage between e-tailers (and their supply-chain partners) will be in the data and information arena.

“Five years ago, supply-chain data belonged to operators, who used it to control costs and operations. More recently, this data has been shared with e-tailing customers to facilitate operational interface efficiency and contract management. Now there is demand for this information from consumers, who regard the management of order acceptance, right through to successful and timely delivery as part of the ‘product’ they are paying for.

“The same survey also asked consumers:  ‘what parts of the delivery process would you like to be updated on?’ More than three quarters of respondents considered these points to be important or very important:

1. Warning in advance if there is a problem/delay with delivery (89 percent)
2. Informing them of a failed delivery (86 percent)
3. Informing them of the dispatch date and tracking number (84 percent)
4. Confirming the expected delivery date the day before delivery (83 percent)
5. Confirming the expected time slot that they can expect delivery (81 percent)
6. Informing them about the progress of their orders (76 percent)

“From these results, we can see that consumers are data hungry when it comes to their online orders. This need will only develop as consumer choice widens and is no longer solely influenced by service speed and cost.

“UK e-tailers have been developing alternative delivery channels, generically known as ‘click and collect’ services, which give customers the option to order or reserve items online and collect (or return) them in store.

These in-store options are being supplemented by third-party lockers and manned ‘pick up and drop off’ (PUDO) networks that expand e-tailers’ footprints. In-transit updates will only become more important in making sure the customer and his goods are in the right place at the right time.

“All these factors mean that, in the short to medium term, e-tailers and their supply-chain providers need to collaborate closely to:

• Open efficient and cost-effective new routes to cross-border markets
• Provide timely and accurate delivery updates to end customers
• Optimize delivery costs; not all business-to-consumer orders will be delivered to homes – many will be fulfilled in-store or be delivered via third-party business-to-business channels

About the author
Andrew Starkey
Andrew is IMRG’s Head of e-Logistics and runs its e-retail delivery and logistics programme. He is an expert on the UK postal and e-retail home-delivery markets, and is also the founder of the strategic e-retail and postal consultancy Spiral4.

IMRG          
IMRG (Interactive Media in Retail Group) is the UK’s e-retail industry association.

Formed in 1990, IMRG is setting and maintaining pragmatic and robust e-retail standards to enable fast-track industry growth, and facilitates its community of members with practical help, information, tools, guidance and networking.