Planning for an end-to-end service

Penelope Ody, 28 November 2013,

Christmas is coming and the geese are getting fat – but will they be delivered on time? Or shall we see retailers taking matters into their own hands?

For most of us Christmas is one of the highlights of the year: a long break from work, family reunions, parties, presents and far too much to eat. For retailers it is the peak trading time: exhausting and worrying but also exhilarating and exciting with a definite adrenaline rush. For carriers and their staff? Well, perhaps rather different.

My cheery “soon be Christmas” comment to the latest delivery driver to bring my online order was greeted with a long face and a pessimistic reply: “I’m already working 13 hours a day,” he said, “and there’s still a back log – I’m dreading Christmas.”

As multi-channel retailers have discovered, making a profit out of home delivery is easier said than done. Inevitably as margins are squeezed costs must be cut and the trimming spreads along the supply chain in both directions. Producers are under pressure to reduce prices while carriers must offer more for less – be that faster deliveries, tracking services, or customer alerts giving the estimated time of arrival for each package. With growing emphasis on the need to provide a good “customer experience” there is certainly less “tip and run” from drivers these days and most do at least wait until you are almost at the door before starting to thrust the “failed delivery” card through the letter box: many of them even smile.

Vital experience

Retailers are constantly looking for distribution companies that will offer both lower prices and better services, and margins for home delivery also come under pressure. As a result, the sort of staff issues that clearly preoccupied my latest delivery-man mount. For retailers dependent on carriers to enhance that vital “customer experience” it is a worrying time.

As Dino Rocos, operations director at John Lewis said at Descartes’ recent Omni-channel Retail Summit: “We ship 9.5 million parcels a year and at present we have uncomfortable reliance on the carrier network. Some carriers are in a financially precarious position and some are not moving forward as we would like.”

While Rocos was at pains to point out that John Lewis has good and stable relations with the three carriers it currently uses, he is also someone who takes the long view and as the number of home delivery orders continues to rise, an alternative solution may be needed. The company has operated its own “two-man” delivery fleet for years so large consignments are handled in-house. Long ago and far away each department store would also deliver all orders locally – although only on designated days to any specific district. Now, Rocos is looking to establish a fleet of smaller “one-man” trucks which will ultimately take over much of its home delivery business.

“We expect to bring operations in-house in time,” he said, “as click and collect levels off. The days of tip and run are gone and we have invested heavily in our two-man delivery crews – they are certificated for installing a wide range of electrical goods and consumer electronics. We are aware that our carriers are not working uniquely for us and also that home delivery demand is outstripping capacity. We don’t want to be in a position where we can’t honour our commitments to our customers.”

The plan is to monitor the geographical distribution of home delivery orders and, as the numbers in any location stack up, then a one-man delivery fleet will be introduced into that region. “We will need to see which locations provide for cost-effective growth,” he said.

It’s an interesting move and one that reflects the importance of customer service as a prime differentiator. Rather than risk a bad tempered driver or inefficient third party distribution depot, large retailers – preoccupied with the need for consistent customer experience and worried about brand erosion if they fail to live up to expectation – may well follow John Lewis’ example. Studies suggest that “brand advocacy” is disproportionately driven by the after-sales experience – including  home delivery and return handling.

Off sick

Another of my recent online purchases, promised “next day” delivery but actually took two days, as the depot – and I quote the supplier involved who eventually managed to get through to the depot concerned and rang me back with an explanation – “had a lot of drivers off sick and the agency driver got lost and couldn’t finish the day’s deliveries”.

Such failures are not only irritating for the shopper, but expensive for the merchant in terms of staff time wasted in sorting out complaints and potential damage to the brand image.

Delivery failures are something we’re likely to hear more of in the run-up to Christmas if previous years are anything to go by: Google “Christmas delivery failure” and you come up with 1.8 million hits, a great many of them detailing the non-arrival of Christmas orders over the past five years. Small wonder Dino Rocos is concerned about honouring customer commitments and no wonder many this month will be worried about those Christmas deliveries.