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30 December 2014

Delivering the experience

As more and more consumers do their Christmas shopping online, retailers and carriers are turning to mobile technologies in their attempts to become more flexible and efficient over the last mile. Sharon Clancy reports

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The Christmas buying rush started early this year, fuelled by Black Friday and Cyber Monday – that pair of rather recent US-import buying events straddling a single weekend. Commentators have had mixed reactions; some see them as good for consumers and the economy, driving more sales, while others say they simply pull forward sales that would normally have occurred later in December or in the traditional Boxing Day and January sales period.

With increasing amounts of this buying activity being done online, delivery companies are centre stage. If you were preparing a stress test to analyse the weak points in your delivery operations and determine whether you would be able to handle any planned or unplanned upsurge, it would be hard to find another date like the last weekend in November. 

Delivery: a differentiator

Reports suggest that online retailers are finally realising that the delivery part of the transaction is important for customer satisfaction and, consequently for their own reputation. Many have become more interactive in the process, rather than simply consigning the entire responsibility to the carrier. After all, the delivery is often the only touch point a carrier has with a customer. 

“As e-commerce continues to expand, all sectors of the market need to better understand both consumer buying behaviour and delivery expectations,” says Becky Clark, chief executive of NetDespatch. 

“Our research shows that the habits and expectations of UK shoppers are changing. We know that online shopping provides a huge opportunity for retailers, but in order for consumers to remain happy with their online experiences, the order, despatch and delivery mechanisms have to be efficient, which is not always easy or straightforward to ensure.”

In a survey by NetDespatch of 2,000 shoppers, teasingly titled Santa’s Using SaaS, the company found that 88 per cent of respondents would be using the internet for Christmas purchases. One key finding was that while most ( 85 per cent) worked full time, 75 per cent wanted items to be delivered to their home. 

It’s not entirely a surprise therefore, says Clarke, that 25 per cent of those online shoppers cite missing a delivery as a key irritant of lone shopping, given that they’re not there to receive it. Shipping costs at 26 per cent and returns at 14 per cent were the other two top irritants for respondents. 

Failed deliveries remain a major cost for home delivery companies, so NetDespatch was keen to discover what people felt about the alternatives. Nearly half (43 per cent) were happy for the item to be left with a neighbour and 28 per cent would be happy for it to be left in a safe location. Returning the good to the depot is the least popular option (5 per cent).

The cost of failed deliveries

According to IMRG’s Valuing Home Delivery Review 2014, the cost of failed deliveries across marketplace and multi-channel retailers from online orders will create more than £771 million in avoidable cost in 2014. “Recent innovations in e-retail delivery have already reduced this cost and provide shoppers with more choice, and more information about when and where they can expect their deliveries,” says Andrew Starkey, head of e-logistics at IMRG. 

Despite the high cost of missed delivery, the report estimates that costs linked to delivery failure may have almost halved in the last two years following innovation in e-retail logistics. 

It concludes: “Giving the customer the ability to engage fully in the delivery process allows them to make more informed decisions about the service they want and then to help manage the ‘final mile’ – cooperating with the delivery company to be in the right place at the right time.”

Sunday deliveries are starting to be offered by some parcel companies, including DPD. Others may soon have to follow suit to cope with the sheer number of parcels they now carry on behalf of online retailers and to improve first-time delivery rates.

David Upton, managing director of DA Systems, a leading developer of mobile data solutions for parcels carriers, points out: “Estimates by IMRG suggest that the cost of missing a delivery is £23. Take into account that margins for the carrier are already very low, probably no more than 50p a drop, missing a single delivery can mean no profit is made on the next 40 deliveries while you absorb the extra cost. 

“Even taking into account that pay rates will be higher at the weekend, the arrival of Sunday deliveries presents an excellent opportunity to improve reliable delivery rates – and at the same time increase the number of drops possible in a day (because roads will inevitably be less congested).” 

Sunday deliveries also sit well with the 24/7 nature e-commerce, he points out. “If you can order goods any time, anywhere, it’s incongruous to then have to wait for a delivery during business hours between Monday and Friday.” He does, however, think timed deliveries will still be a requirement. 

“It’s especially unrealistic to expect customers to wait in all day at a weekend for their parcels, so using messaging systems to provide an ETA window is an essential part of the strategy to improving the overall service.”

Technology matters 

Technology can help here, argues Nigel Doust, chief executive of delivery platform specialist Blackbay. “With the IMRG predicting online retail spend of £107 billion in 2014 alone, e-retailers risk losing market share if they are not deploying technology, which delivers critical information to improve the delivery experience for their customers.”

Indeed, technology is already playing a key role in achieving higher success rates for first-time deliveries. DPD’s Predict and Follow my Parcel services have set the benchmark, and been joined by Blackbay’s Expect and Hermes’ Parcel Manager. 

With DPD’s Predict, customers are allocated (and informed of) a one-hour delivery window, and offered a host of rescheduling options both the night before and actually on the day of delivery. These can be accessed via a smartphone, tablet or desktop at any point during the delivery if the customer can’t be at home to accept their parcel. 

Customers who are available on the delivery day then receive advanced notification of their exact one-hour timeslot, and can track their driver using a unique mapping tool all the way around his route to their front door. 

DPD has been a pioneer of this type of service. Chief executive Dwain McDonald comments: “In the main, online shoppers want their parcels delivered straight to their doorstep, so Follow My Parcel and our new nationwide Sunday delivery service are based on helping retailers give their customers what they want – a great delivery experience, right first time. Retailers know that reflects well on them and is a key factor in driving repeat online purchases.”

Knowing what to expect

Blackbay’s Expect also provides consumers with an interface to control, track and interact with their deliveries and collections. “Expect improves the overall relationship between the delivery company, the e-retailer and the consumer by allowing multi-way communication, consumer preference management and specific time delivery windows for delivery,” explains Nigel Doust. 

“The driver receives real-time information on the consumer’s availability, allowing the consumer to limit the amount of time they need to wait for a delivery. This is supported by regular text and email communication of progress and unexpected delays. In addition the consumer can interact directly with the delivery driver, via the web portal, to divert or reschedule deliveries, which in turn gives the consumer greater control and helps the delivery company become more efficient.”

He points out that that consumers are known to return to those e-retailers that provide a good delivery experience, and adds that delivery companies able to support this approach not only save costs, but are also adding value to the e-retailer’s offer. “The retailer gains more repeat business through happy consumers who get their goods when and where they want – whilst the carriers improve their first-time delivery rate, reducing the cost of failed delivery.”

Hermes Parcel Manager app allows online shoppers to be updated about the status of their Hermes deliveries in real time on a smartphone or tablet. Carole Woodhead, chief executive of Hermes, says: “Our recent International research reveals that more than twice as many Brits are using smartphones and tablets to buy products online as the French and the Germans. 

“As people are using these devices more often, we wanted to create an app that provides increased visibility, reduces inbound enquiries for retailers and improves the first-time delivery rate.” 

The app is dual-branded with various Hermes retailer partners such as New Look, River Island and Cotton Traders, helping to provide an extension of the overall brand experience. Parcel Manager also provides push notifications so customers can receive direct updates on their parcel’s progress.

Strategic planning for peaks

Scheduling software can help companies handle increased order volumes in December without paying too much for quick-turnround deliveries arising from last-minute orders or peak demand, says Paragon Software Systems. 

By modelling potential peak scenarios, retailers can identify the fleet resources needed to meet demand, ensuring they have the right size and mix of delivery vehicles available to meet customer delivery schedules, says managing director William Salter. 

“Even if there is an unexpectedly high volume of last minute shoppers, by strategically planning for these types of peaks, retailers will be well prepared to handle them for the optimal cost.”

Paragon’s routing and scheduling software allows business to model different what-if scenarios to optimise Christmas delivery routes and schedules and establish which models will give the best transport cost savings. Users can test alternative options such as truck sizes, driver shifts, distribution centre locations or time window options. 

Modelling scenarios can also determine the optimal number of drivers, vehicles and fleet mix required across the week, as well as the number of drivers needed per shift. For each scenario, the software calculates optimised routes and schedules, and outputs the total fleet resources, miles, drivers’ hours, CO2 emissions and transport costs so that retailers can make the best possible cost-based decisions.


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