Free delivery has been the most powerful drawcard for retailers to attract customers to their online stores and undoubtedly, the most successful online marketing tool ever devised for ecommerce. However, this is changing, and retailers are starting to offer faster deliveries to attract customers to their online store, which poses a different set of cost challenges. Antonio Bruni, CEO of South African logistics company Picup, looks into this in more detail.
Same-day and on-demand delivery follow a completely different model to the economy solution, with lower order volumes and the increased manpower required for faster fulfilment, these express options warrant a higher delivery fee.
Ecommerce makes up only 1% of the overall retail market in South Africa compared to 8.3% in the USA. While this might be small, we look to our global counterparts to set the trends and test the waters. The time it takes for South Africa to catch up will be determined by the speed we start adopting the mindsets of these global frontrunners — which is fast-paced and innovative, always evolving in order to win customers over by providing a better and more convenient user experience all round.
Small to medium retailers in SA have all the resources available to set up an ecommerce solution quickly and seamlessly, there are easy to setup ecommerce websites using pre-populated themes with plugins for inventory management, payment gateways and delivery that make purchasing quick and easy for customers.
One can start selling online within minutes at a minimal fee compared to a few years ago where an upfront development investment was required. Once the platform is set up, the fulfilment and delivery component require some careful planning.
Etailers need strong distribution networks that are quick and efficient, their customers cannot wait for long periods for the delivery of products. They will need to consider which courier is best in which area, i.e. local or international. This will normally result in juggling accounts with multiple courier partners.
To determine the cost, one would need to plug in the various courier rates into the ecommerce store, and then it’s up to them whether they’d like to offer any discounts or mark-ups on delivery. Because of low volumes, their rates are likely to be higher than established ecommerce stores, resulting in a possible barrier to entry.
For the large bricks and mortar retailers, making the move into the ecommerce market requires a lot more consideration on all fronts as scaling becomes more complex than shipping one package from a nearby warehouse to a nearby customer.
Crucial to delivering a reliable logistics solution is choosing the right Transport Management Software (TMS). Inventory management is the most important part of the delivery chain for large traditional (bricks and mortar) and online retailers. If they get this right, it allows them to offer a variety of delivery options seamlessly.
However, succeeding here is not easy as a number of decisions need to be made, mainly around warehousing and distribution. When it comes to warehousing, a centralised dark store is the obvious answer for some retailers to take the hassle out of distribution.
A dark store is a large retail facility that resembles a conventional supermarket or store, but is not open to the public, only housing goods used to fulfil orders placed online.
The advantages of a dark store are that one can manage inventory in real-time, it is faster to replenish stock and managing returns is easier with one centralised location. More importantly, it allows for faster picking and packing timelines due to optimised store layouts.
European retailers are already making use of goods-to-person pick stations where orders come in and a route is optimised for a mechanised system to send goods to the picker via a conveyor belt. This allows for cost effective same-day, next-day, economy and other delivery options.
The biggest advantage is that from these dark stores or centralised warehouses, smaller hubs can be serviced in strategic locations where order volumes are high. Middle mile vehicles can run daily loads from dark stores to hubs. These then act as an express lane for drivers to collect and deliver parcels, they cover shorter distances between drops that are optimised to ensure efficacies.
Fulfilment from individual stores works when they are small. For small to medium retailers, an outsourced dark store may not be the best option, low order volume and costs are the key factors influencing this decision.
When order volumes are low, they can be picked and packed from stores at the same time while servicing walk-in clients. However, as online orders scale, managing this becomes hugely time consuming. Stock control and returns become challenging along with picking and packing space on the floor, in addition to managing deliveries.
The conclusion to inventory management and making the right decision simply lies in order volumes. Big retailers cannot afford to wait, they need to invest in ecommerce now.
They need to ensure stock is available around the clock, ensure all the delivery options are available at the right price and last make the customers’ ordering experience flawless from start to finish. As the way we shop continues to evolve, so do the touchpoints.
Consumers are used to the friendly shop assistant who goes to check in the back for shoe sizes or the cashier who swipes a gift card and checks that one hasn’t purchased two left shoes.
With the convenience of shopping online, one is faced with the helpful customer support tweet or the friendly voice on the other side of the phone. The only real human interaction comes into play when goods are delivered. The delivery drivers have therefore become the face of the brand and need to be trained customer service ambassadors.
Tech-enabled logistics platforms like Picup are changing the delivery landscape for good. While technology plays its part in improving efficiencies in a drivers’ schedule, there is far more to creating a trained customer service ambassador. Our delivery legends go through rigorous on-board training before setting off on their first delivery.
They are also empowered to perform better with our earning model that rewards hard work and productivity. Each driver manages their own business, equipped with the best technology to improve efficiency day-to-day.
For retailers to get orders to customers swiftly, they need to ship items from nearby stores using on-demand delivery companies and by using click and collect points.
Because fast and free isn’t easy, selecting the best combination of service types is the way forward for etailers and will clearly give retailers a competitive advantage. Delivery options could include a three-hour, same day or next day delivery, or specific time slots where customers can choose a date and time when they want their order delivered.
Alternatively, they could choose the economy option with delivery between two and five business days. Click-and-collect is another option where the customer can choose the closest collection point where they want their order to be delivered.
As the ecommerce market continues to grow, so will the desire to deliver and receive orders quickly and cheaply. While most people are willing to wait for their orders if it’s free, there is an increasing number that are willing to pay for faster deliveries as the on-demand culture grows globally. For decades customers were used to the same delivery standards.
Big players are working around the clock to improve their service levels by introducing new technology and improved delivery standards. However, they face limitations in their ability to implement new innovation into their well-oiled machines.
Smaller more technology-focused businesses like Picup are changing the delivery landscape by being more agile. They are able to trial and test new and potentially better ways to make a customer’s experience more pleasant.
Modern crowdsourced driver networks like Picup ensure their drivers have all the tools readily available to deliver the goods day in and day out. They have built a network of drivers that are trained and motivated to earn more with a unique driver earning model.
Picup improves the driver experience with an incentivised delivery model. They have created a platform where the drivers are able to manage their own business, much like the way Uber’s platform works with their drivers. This also gives customers more visibility on their deliveries, using delivery notifications and live tracking to help drivers minimise failed delivery attempts.
There is no first-time success with getting this right from the get-go, it requires constant trialling and testing of delivery routes and algorithms and companies need to adapt as they go. While the ultimate goal is on making delivery profit, Picup’s primary focus at such an early stage of its business lifecycle is to grow and sustain its crowdsourced driver network.
Retailers and etailers that plan to compete in future will have to invest in ecommerce. Shortcuts will stunt their growth and, before they know it, they will be at the back of the queue.
Customers also need to realise that there is a lot more that goes into picking, packing and delivering their online orders. They need to be loyal to the providers that stick to their promises and provide an online shopping experience that keeps them coming back.
