Last year, online retailers accounted for almost half the cash growth in retail spending, with sales increasing 15 times faster than the retail average according to a recent report from analyst Verdict Research. Though online’s share of retail remains small, its meteoric growth is sending shock waves through the wider retail sector as shoppers of all ages transfer their purchases online.
And it’s not just computer-obsessed kids buying the latest CD or DVD; both the age spread of online shoppers and the product ranges available are broadening which means those retailers without a presence in this sector have to think hard about how they open their cyber branch, while those that already operate online need to consider the extent of their online product offering and, most importantly, how they fulfil orders and get products to customers in the most efficient way.
Processing orders for goods online and delivering them to customers requires a different set of skills from traditional distribution and that’s why retailers are turning to e-fulfilment companies rather than their traditional third party logistics partners. These specialist distribution service providers have the technology and skills to share information between a retailer’s website and the warehouse. They have the experience to pick and configure parcels to be sent directly to individual customers’ homes rather than processing pallet loads of goods to stores and they also have the ability to handle returned goods, which are a significant aspect of the online retail business.
At the centre of any successful efulfilment operation is the IT system. It’s fundamental that the IT solutions achieve exactly what the business needs and the flow of information between the fulfilment provider and the client is arguably the biggest single driver in the success or otherwise of an e-fulfilment operation.
The fulfilment company has to be able to feed the client’s website with up-to-date stock availability data while the client’s web solution should create the data necessary for the e-fulfilment company to pick, pack and deliver the order.
Ideally, this exchange of information should be straightforward and should work effectively no matter what software the client uses.
Once an order has been processed, picked and packed it is equally important that information about its progress should be made available to the retailer and its customer.
Typically the greatest cost in efulfilment is the call centre and if you communicate to the customer what’s going on, you limit the amount of calls made to the call centre. Service providers must be able to communicate directly with the consumer or pass the necessary information to the retailer so they can inform their customer through their own call centres. This can be through something as simple as SMS messaging.
In a way, that last point encapsulates the golden rule of the e-fulfilment process. That is, by using simple, frequent and good communication the cost of e-fulfilment per order will fall dramatically and the contentment of online consumers will grow.
Mark Hewitt is CEO of iForce