Member Article

Delivery amid Disruption: Looking towards 2019

Hot on the heels of the 2018 peak season comes the opportunity to analyse what worked, what didn’t and what we can do about it. I always find January an excellent opportunity to get insight into the challenges, innovations and customer expectations that are shaping the market in the coming year. After a year that has seen retail rocked more than ever before, I’m looking forward to seeing how we can steady the ship and how delivery can help set a course for success.

As always, there are a few key topics that the delivery sector will be wrestling with this coming year, so here’s my take on them.

Speed – same day is here to stay

Speed remains the panacea of delivery and the spectre of same day delivery is looming on the horizon. The challenge will be doing it well and making it profitable.

PWC’s recent global consumer insights survey found that 41% of consumers are willing to pay a premium for same day delivery, but our experience of the expectations cycle shows that once an enhanced option becomes commonplace, willingness to pay a premium tends to drop.

In anticipation of this need for speed, businesses will need to invest in infrastructure to support it. Increasing automation in picking, packing, labelling and despatching plus dynamic route scheduling and collaboration between retailers are all potential routes to delivery utopia, but they’ll need to work seamlessly together to achieve the desired result.

Integrating new technologies effectively will be a major challenge and the new Technology Stream this year looks set to shed important light on how retailers and carriers can get software development, systems integration and architecture working together to improve performance and visibility.

Long versus short-termism

Deciding on the best way to invest for the future is a thorny problem. Last year we heard that Amazon invests 6% of revenue back into infrastructure, operating a 20-year strategy in a bid to smooth over the bumps in the short term.

But when a sector is facing the kind of disruption retail is right now, it can be very difficult to think beyond the next quarter’s figures. Nevertheless, investment in delivery is critical if companies want to stay competitive and deciding which technologies to adopt and which innovations are best is crucial.

I believe that there’s still a lot of inefficiency in delivery which should be tackled first – missed deliveries are still costing a staggering £1.6bn per year. If we can get better at the basics, we can benefit both in the short term from reduced costs and in the long term from a better delivery network.

Personalisation and big data – show me you know me Another major trend that we’ll be discussing is undoubtedly the power of big data to enhance the customer experience. Dino Rocos, Operations Director of John Lewis, noted that retail has gone full circle – from the highly personal customer relationship of John Lewis’ first stores back in 1864, through the mass market era and now back to a customer demand for individual service that’s precisely tailored to their preferences and needs.

The advent of big data has made this almost infinitely possible. As Dino put it, customers want brands to “show me that you know me” by drawing the right personal insights from the mass of available data. This holds true for delivery, too.

Today’s consumers want delivery to work around their busy lives and that means flexibility. Customers are embracing options such as click and collect and the facility to change delivery preferences on the fly via their mobile if their circumstances change.

But how about using that mobile as a delivery address? Same-day delivery – to wherever you are – could tempt consumers to give carriers access to their real-time location, at least for the period of the delivery. It would require a major uptick in customer trust, and that leads me to another of the big topics: who owns the relationship with the customer? Is it the brand, the retailer, the marketplace or should carriers be aiming to build their own relationships with customers?

In my view, the answer to the first question is “everyone”. Brands, retailers, marketplaces and logistics have a symbiotic relationship in today’s ecommerce environment. They depend on each other for success. Delivery is a crucial part of the customer experience and affects likelihood of re-engaging with brands and is therefore a potential competitive differentiator.

Should carriers be building relationships with customers? Yes. Trust is fast becoming one of the most valuable retail commodities and customers need to trust that carriers will respect their purchases and property when delivering parcels - especially if innovations like in-home delivery are going to take off.

So, there’s a lot to ponder as we head into 2019. I look forward to seeing how the delivery sector is shaped over this coming year and the challenges and opportunities it brings!

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