Member Article

Can technology help support the increasing delivery options in 2018?

Written by Matthew Robertson, Co-CEO at NetDespatch

From the surge in inflation reflected by the fall in Sterling, to an unstable global marketplace and the ongoing unprecedented demand for technological advancement and sophistication, retailers all around the world have been confronted with complex challenges in 2017.

The trend in online shopping also shows no signs of abating. With the 1.2% growth in UK retail over the past year coming from online sales, consumers appear to be seeking bargains away from the high street, pushing up e-commerce by 14% year on year and now accounting for 17% of all retail spending. With UK shoppers expected to spend £1.2 billion this year during the week of the Black Friday period, which will be followed by the obligatory frantic Christmas season, sales figures have already been predicted to achieve an historic record.

So what trends can we expect in the retail and delivery industry in 2018?

Ecommerce takeover

In an annual Global Payments Report, Worldpay reveals that UK e-commerce will become the world’s third biggest market, worth £203 billion by 2021. This represents a compound annual growth rate of 9.7% in a market that already has near-universal smartphone and internet penetration. M-commerce is set to increase to nearly 50% in the next five years, while smartphones will outpace tablets in the same timeframe. Retailers should therefore invest in developing their own apps in order to build a seamless shopping and checkout experience for all users, across every channel. This, however, raises a challenge for carriers to ensure that they are responding to ever-increasing delivery demands.

Increasing delivery options

With the increasing number of options for customers to shop, whether it’s in-store, online or via mobile, retailers are now competing to provide more flexible services and increase the variety of delivery options. The rapid growth of the click-and-collect option is the incentive retailers needed to either look at providing an in-store delivery centre or look for partnerships with larger channels with the network to reach to their customers. In recent research that we conducted across over 100 retailers, we found that although delivery speed is important, consumer expectations have become more complex in order to fit deliveries around their busy lives.

Growing power of technology

Technology continues to be all-pervasive and carriers and retailers globally are developing unique delivery technologies in an effort to combat the last-mile delivery challenge, which represents over £60 billion in losses and is expected to grow by approximately 7% in the next five years. So while we wait for legislation here in the UK to legalise drone deliveries, in Switzerland carriers can now deposit goods directly into the boot of a car and last month Amazon US rolled out the Amazon Key, which allows delivery drivers to enter a home while residents are out.

Even with technology solutions such as artificial intelligence, who’s to say that carriers won’t be able to operate the entire parcel delivery logistics using robots? As the opportunity to interact with consumers continues to shift in 2018 to messaging apps, chatbots and voice-enabled tech, so this enables both retailers and carriers to have direct, automated conversations 24/7.

New threats

Every innovation has its benefits, as well as some unwelcome side-effects. As technology becomes more and more part of the delivery processes, it also means that carriers represent a bigger target for cybercriminals, who are not simply pursuing customer data, but are also aiming to disrupt business continuity, the Maersk shipping breach this year being a case in point. With so much at risk, taking steps to tackle the problems of cybersecurity is essential for UK businesses as it is no longer just the problem of customer data being breached. Also, the General Data Protection Regulation (GDPR) coming into effect on 25th May 2018 will force anyone who holds personal identifiable data to look closely at their security strategies. So while continuously looking for technologies to help reduce the costs and time of delivering parcels, carriers and retailers also need to be aware of the risks and security implications. This will have an impact on both carriers and retailers alike who have a lot at stake to lose if they do get breached. Not only are there stiff fines but there is also the reputational damage to consider.

With GDPR looming and the number of data sources ever increasing, 2018 will be the year that retailers and carriers alike will rethink their approaches to using data and step up their efforts to personalise the customer experience. In fact, according to NetImperative, 65% of consumers say they are becoming more conscious of what retail brands do with their data and 68% say they are very selective about the retail brands they share their data with.

And then of course we have Brexit on the horizon and I am not even going to try and predict the outcome of any talks or negotiations about leaving the EU. Needless to say that, in an increasingly saturated retail market, how both retailers and carriers continue to differentiate their service offering while also meeting customer expectations will be a key challenge in 2018, regardless of any macro issues.

This was posted in Bdaily's Members' News section by Matthew Robertson .