Against a backdrop of memorable world events, the home delivery landscape has not escaped its share of controversy and challenges in 2016. The EU referendum has caused economic uncertainty, increases in the UK living wage have further squeezed margins in the retail sector and the driver shortage has continued to be a growing concern for the transport industry.
Despite these trials, the delivery sector has not stood still. Instead we have seen new partnerships, technological advances and innovative thinking emerge across the sector to significantly increase the delivery choices available and make the delivery service itself a brand differentiator.
Let’s take a look at 6 of the hottest topics that have made the news this year.
Increased demand for shorter delivery timescales in 2016 has forced retailers and carriers to push their current operations to the limit in a bid to beat competitor offerings. With the introduction of same-day delivery services, from companies such as Amazon, Argos and Wickes, the battle for competitive delivery propositions has clearly begun to dominate a number of retail categories.
Headline – and market share – grabbing promotions aside, 2017 will be about balancing customer demand with profitability. Retailers will have to invest in technology that provides real-time inventory visibility, allows them to offer flexible and profitable delivery windows at the point of purchase, and enables two-way customer communication that allows customers to change bookings quickly and simply and improves first time delivery success.
The ability to share data seamlessly between customers, customer service agents, fulfilment operations and transport teams across fully integrated systems is key to delivering on the service promised at the point of purchase.
2016 saw much industry discussion about how to maintain profitability with click and collect offerings, but we have not seen as many brands as expected implementing additional charges for the service. Most notably, the £2 click and collect charge introduced for Tesco Direct orders in February caused backlash from customers and was removed for the run up to Christmas. It seems consumers are drawn by the convenience and lower cost of click and collect services, so it’s up to retailers to make their offerings sustainable or accept the added costs in order to drive in-store footfall and sales.
There will most likely be continued focus on click and collect services during 2017, but it will be important for retailers to ensure that service levels are mirrored across all delivery options. For those customers preferring home delivery or for two-man products that must be delivered direct, retailers must ensure that the customer receives an equivalent level of service and adopt technology to offer a range of convenient options to suit customer needs, especially as the first port of call for disgruntled consumers is increasingly social media.
Last mile delivery failures cause retailers a great deal of expense. One way of tackling this problem is enabling unattended but secure deliveries. A debate has been raging for a few years in home delivery around the potential of deliveries without customer intervention, such as car boot or locker deliveries. In 2016, we saw a collaboration between ICA, PostNord and innovative start-up Glue who took this to a new level when it started testing grocery delivery to the fridge without anyone being present. While Naked Wines partnered with Inpost to deliver wine to secure lockers and Argos trialled stores in tube stations to offer a convenient location for customers to pick up their goods on the way home.
While this is not a solution for large items requiring 2-man deliveries, clearly lockers can help reduce costs for retailers delivering smaller items. There are fewer delivery destinations, helping retailers control transport costs while still offering convenience for the consumer but retailers need to find a profitable way to universally implement this approach and consumers need to be comfortable with the practise too. The ability to provide accurate delivery windows and regular progress updates still remains.
This year Amazon has rolled out one-hour delivery within selected areas, same-day grocery deliveries, and in-home shopping buttons for one-day fulfilment of popular goods. For many retailers, trying to match the delivery services of the global retail giant is unrealistic, but consumer expectations rarely take this into account. In particular, Amazon’s foray into grocery has created a new threat for the ‘big four’ UK supermarkets who have already been competing against discount retailers like Aldi and Lidl.
The key to competing with Amazon will be to offer a reliably speedy service; provide added-value services or brand differentiators where possible; and invest in technology to optimise the supply chain. In reality, one-hour delivery isn’t possible everywhere and it may not actually be the nirvana for every consumer. Choice, convenience and cost all need to be weighed up when considering what can and should be offered. What’s important is having the ability to consistently deliver on that service promise across all delivery channels.
The rise of driverless technologies has had its fair share of media interest in 2016 as transport operators look at new ways of driving down costs and dealing with the driver shortage. The use of drones has been more widely examined with the Rwandan Government operating a substantial blood delivery service by drone and Domino’s testing drone delivery of its pizzas in New Zealand. Elsewhere, the first deliveries by unmanned trucks were completed in 2016, while the UK became the first major country to host trials of Starship Technologies self-driving robots.
However, it is still debatable if driverless technology will ever be adequate for mainstream adoption. As well as the obvious security, safety and regulatory considerations to tackle, the absence of a human driver raises questions regarding dealing with damaged or incorrect items, providing added-value service offerings and the capture of proof of delivery for the delivery operation. Retailers and logistics providers will need to consider how to offer the same level of service and mitigate the risk of increased customer disputes before unmanned deliveries can be considered as a viable delivery solution.
2016 has seen various mergers and partnerships formed that will expand the service provision available to customers through extended networks. The biggest acquisition of the year within the retailer sector was the procurement of The Home Retail Group, including Argos, by Sainsbury’s creating a formidable network of supermarkets, retail and convenience stores that will no doubt form the basis of a fulfilment operation geared to providing increased choice and convenience for the customer.
Other notable tie-ups included the FedEx acquisition of TNT and the Walmart partnership with Uber and Lyft, which represents a slow, but steady move towards more collaborative fulfilment operations. Using existing local delivery networks, social delivery services or simply combining operations to create wider networks, will allow the retailers involved to offer customers more delivery options and quicker service in the most sustainable and cost-efficient way.
One thing is clear when looking back at the top trends of 2016: convenience remains king for the busy consumer.
As a result, the retailers and carriers that have been most successful are those that have utilised technology, strategic partnerships and optimised operations to reliably offer customers the convenient delivery solutions they demand.
What do you think this means for 2017? Will we see more carrier collaboration, will retailers and supermarkets introduce more options to keep up with customer demand and challenge Amazon domination? Let us know what you think on LinkedIn or Twitter.
