(From Supply Chain Standard, September 2012)
With ‘click and collect’ now described as ‘mandatory’ by many e-commerce experts the implications for retail supply chains are significant and far-reaching – how will they cope with the challenges?
When Argos launched “Click and Collect” back in 2001 other retailers could only look on in envy: the company’s catalogue showroom format meant that it had a pretty accurate idea of stock availability at every location, so managing the goods “available to promise” for online shoppers was reasonably straightforward. But Tesco.com – launched in 2000 – was finding just how inaccurate its own inventory records could be with numerous stock-outs only discovered when its store-based pickers tried to fulfil home shopping orders from the depleted shelves.
A decade or so later shoppers expect just about every multi-channel retailer to offer a click and collect service, while a growing number also promise same or next day delivery: among fashion chains Oasis uses Shutl to provide a 90-minute delivery service, Next offers next day delivery for all orders placed before 9pm, while for orders placed before 7pm John Lewis promises “click and collect” from 2pm the following day.
While customers may take such services for granted, they can represent significant challenges for retailers – not least because very few, if any, multi-channel players can guarantee complete real-time stock accuracy at store level. New Look’s web site explains that “click and collect” orders will be available “three to five days” after placing the order and shoppers will be notified by e-mail when their goods are ready for collection. This may lag behind customer expectation but is, at least, an honest reflection of supply chain issues.
Others prefer to integrate web site with stock records and allow a wide margin for error, limiting the stores from which goods can be “collected” or else declaring online items to be “out-of-stock” when safety stock levels are breached. Both approaches can lose sales or increase shopper irritation when customers find that the items they want are available at the local store.
For some, RFID appears to be the answer with systems capable of identifying in real-time exactly what is available on the shelves, how many are languishing rejected in fitting rooms, what is in a shopping trolley heading for the checkout or how many are currently in transit and can reach the store in time to fulfil an order. As Marks & Spencer’s well-publicised RFID project has demonstrated, even the most prestigious retailers have problems maintaining accurate stock records. Item level sales recording at point-of-sale is all very well, but it only takes a few mis-scans or a couple of shoplifters to compound the inaccuracies.
Identifying which items are actually available in which store is clearly vital for click and collect orders fulfilled from store stock. Other retailers such as New Look, appear to prefer fulfilling click and collect orders centrally: picked and packed and sent with the next regular store delivery ready for individual collection. This overcomes other problems such as lack of compliance and poor in-store processes. Some retail systems direct “click and collect” orders to the till-point so that sales staff can pick up the details, assemble the order and place it ready for collection.
Again, great in theory but during peak times will store staff make such orders a priority or will they prefer to continue interacting with real shoppers? With all retailers looking closely at overheads employing extra staff to handle click and collect orders in every store seems an unlikely luxury, so good staff training and discipline are needed to make sure that the online orders are processed as quickly as those “90-minute” delivery or collection windows demand.
In the warehouse, picking and packing individual orders also brings problems. Many online retailers outsource their home delivery orders to specialist fulfilment houses while bulk picked store deliveries may be handled by a logistics service provider. Asking the fulfilment house to send items to stores overnight or for bulk pickers to move to packaging individual orders can add further complications – not least a need for increased capacity from the night shift if those “orders placed before 9pm” can be delivered next day.
When online sales amounted to at most three or four per cent of the total, click and collect orders were few and far between, but with analysts now predicting that in some sectors online retail will exceed offline by 2020, it is a very different story. By then queues of shoppers wanting to collect pre-ordered goods at a till-point will clearly be unmanageable – especially as many retailers regard click and collect as a sales opportunity with staff encouraged to promote add-on products or up-sell when the shopper collects.
Equally how many more Shutl-style operations will be needed as demand for 90-minute delivery grows? What about logistical needs of ad hoc inter-store stock transfers so that the right goods are available in the right store when the customer wants to collect? And will store or warehouse fulfilment for such orders prove the more efficient model?
As high-street sales continue to fall, many retailers are already looking to rationalise their store estates. Add a significant increase in click and collect orders and activity within those surviving stores could be very different in future.