Comprehensive review of the Metapack Home Delivery Conference 2012 and Sir Terry Leahy's speech.
Last year my colleague Jonathan Bellwood attended the Metapack Home Delivery Conference (read his review from 2011 here). This year I was delighted to be invited and here is my review of the most interesting parts.
Royal Mail kicked off proceedings this year with a stat attack:
Online shoppers that have been shopping online for more than 7 years spend £1,600 a year on average. If people become more valuable online over time, how can we drive loyalty over Client acquisition? Rapidly growing companies are often guilty of forgetting about their existing customers.
Online shoppers are 47% more likely to buy when they know who the carrier is. State your carriers upfront on your website to increase conversion.
Returns discussed, with women the worst offenders sending back 42% of clothes items. This does not shock me.
Returns, how can we improve how we handle them? My take is that RMA's (returns material authorisation forms) are out of date, a nightmare for customers and do not comply with one of the top 3 reasons customers shop online, "convenience". Send me a returns label and YOU the retailer should worry about the rest.
DPD brought the WOW! factor. Interactive services to help customers to predict the one hour delivery window. Their research has shown that cost is the limiting factor in our willingness to use text messages to organise first time delivery. They were prepared to eat £500,000 worth of text messaging cost in 2012 on behalf of customers to increase first time delivery success rate.
Sameday delivery. One obvious solution, one a bit left-field.
The obvious: City Sprint are the only wholly owned same day delivery network. They are seeing growth in 'twilight' deliveries between 18:00-22:00 AKA when we are at home. If your average basket size is over £50 this may be worth considering.
The innovative: "Think of Shutl as Paypal for same day deliveries"
Shutl are a technology company, not a delivery company. They aggregate quotes from multiple same day delivery couriers, to give you same day delivery for the same price if not lower than standard delivery. How?
Couriers' bids are determined by their service level which is built entirely from their customer reviews. Every customer review is posted onto Shutl's live twitter feed. Transparency and trust are key to growth and Shutl is eating both for breakfast.
GPS courier tracking that retailers can white label let you watch your order progress live.
Their customers are delighted and they are proven to increase conversion. Worth a discussion?
It is clear that carriers can deliver same day. But what about the bit that happens between when the order is placed to when it is picked up?
Central distribution centres that serve retail stores are not able to meet this demand with their existing warehouse technology.
Same day is undoubtedly the future and the carriers are ready but is your eCommerce fulfilment.
ByBox use lockers at train stations and in other public places to receive your deliveries. You can then pick them up at YOUR convenience. End result: Never miss a delivery.
I personally like the ByBox concept because I know that when I go to collect a parcel I will not have to wait.
The game changer: Send your customers more than they ordered and give them the option to buy at the collection point. The ultimate upsell.
We mentioned Collect+ in our review of last year and were pleased to see that they were back. They are adding 100 new pick up and return points each month on average.
It works and they are only getting better and better. We wondered not so long ago if eCommerce collect and return would fly? Question answered me thinks.
Accenture gave the room plenty of food for thought.
1. Online customers expectations continue to rise.
2. They are increasingly savvy with 72% using price comparison websites.
3. Competition online continues to intensify.
The reality: Retailers need to work harder to remain the same, let alone achieve supersonic growth online.
My top 5 takeaways from Accenture's presentation:
1. Real-time order information is the 'norm'.
Customers need to be kept informed from the moment they click buy, the order is confirmed, the order is picked, the order is despatched, the order is out for delivery.
Result = Reduce customer service calls related to order status.
2. Inventory must be visible to the customer and the inventory accuracy needs to be higher than traditional retail.
When customers order online your brand is guaranteeing your customer that the item they have ordered will be delivered when they want it.
3. The old way of processing returns isn't good enough.
Returns are increasing and they need to be processed rapidly. They can no longer fester like they do back from stores.
They need to be received reconciled and refunds arranged based on the information transferred from your warehouse.
More importantly, good stock needs to be back online and available for re-sale ASAP.
4. The warehouse is the core competency in eCommerce.
Retailers need to make decisions on how to best focus their assets.
How can they leverage existing retail stores to pick web orders? Can existing warehouse layout and technology be adapted to cope? Do they need to create a dedicated eCommerce warehouse to meet their customer expectation?
5. Execution for customer experience.
How can we deliver our customers the offline convenience when they shop online. This is really the key to differentiating with superior service in eCommerce. Up to minute stock statuses are key to this.
Accenture conclusion: Change needs innovation in fulfilment for service differentiation. Companies need to revisit their structure, technology and execution to replicate high-street success.
John Lewis - Online customer service
John Lewis are focusing on keeping customers up to date on order progress and giving proactive information on fulfilment exceptions. The aim is to engage customers to increase satisfaction.
Part of this has involved managing expectation e.g. A green van will not be delivering your order.
They have also focused on single SKU (stock keeping unit) locations to minimise orders being split between distribution centres. Split orders = double shipping costs = less gross margin.
Key customer service KPI's (key performance indicators) they recommend include number of inbound calls, complaints and number of emails received.
Sir Terry Leahy - Metapack shareholder and former Tesco head honcho
Sir Terry Leahy sees complex business challenges in a simple way. His advice for companies seeking growth reflected this and he looks to 6 key factors:
1. Trust. The online world is more and more about being transparent (see Shutl above). The growth of ratings review sites like Trustpilot are proof of this. They are even proven to increase conversion.
2. Information. We are undergoing a digital revolution and eCommerce customers are at the forefront of this. They tweet, facebook and are hungry for information.
3. Health and beauty. "We all want to live for ever and look amazing." eCommerce businesses serving these sectors are the next big bet.
4. Simple. Keep customer experience simple and satisfying.
5. Loyalty. Loyal customers spend more, complain less and are more profitable than disloyal customers. Too many customers focus on acquisition for growth and do not look after their existing. How many eCommerce businesses can be charged as guilty of this?
6. Green. In the future if you are not green you will not be able to grow.
Sir Terry Leahy likened eCommerce today to supermarket expansion 15 - 20 years ago. The big impressive malls too often had too many empty shelves and out of date stock.
The turning point for the supermarkets was to invest in central distribution centres, "re-organising the plumbing" as he put it.
"eCommerce today has a great front-end, but does not have the distribution, delivery management and fulfilment to back it up.
Online fulfilment is at this moment in time highly inefficient, but what we need to recognise is that once these systems are in place to support it, the potential for international growth is unprecedented.
"When is the turning point in growth at which your old systems need to be changed?" The reality being that you only know something was a turning point afterwards.
This is my first experience of Sir Terry Leahy and I enjoyed listening to what he had to say. The challenge for retailers listening is to then act. These are the questions that need to be asked at board level in the top high-street and online retailers.
How can we increase customer loyalty?
How can we reorganise our systems?
How can we meet these rising customer expectations?
Author: Oliver Rhodes