Daniela Cavinatto, Operations Director, Direct to Consumer, Lego
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1 A N E T A I L D E L I V E R Y R E P O R T
2 2 ETAIL DELIVERY BRINGS DEFINITIVE INSIGHTS ON HOW TO LEVERAGE OPERATIONS AS A COMPETITIVE ADVANTAGE TO ANY ORGANISATION SEEKING A TRULY OMNI- CHANNEL APPROACH TO E-COMMERCE. Daniela Cavinatto, Operations Director, Direct to Consumer, Lego
3 3 Delivering on customer expectations Your customers expectations are changing, it s about price, yes, but when it comes to getting the goods it s also about convenience, speed and transparency can you deliver? The explosion of multi-channel retail has had a profound effect on the market. Customers are getting used to making purchases on the go, fitting shopping around their busy lifestyles, and using multiple devices as they do it. Now, they want delivery to fit around their busy lifestyles too and are coming to expect a wide variety of delivery options and prices. Big companies have set the bar high next day delivery has led to Click and Collect, sameday delivery and even same-hour delivery. The challenge for retailers is that customers don t want to pay more, so retailers must try to achieve the best possible solution whilst working within the tightest margins. In May of 2016 we asked 100 Heads of Operations, Heads of Logistics and Heads of E-Commerce about where they stand, and what they predict for the future of delivery the results are presented here. Types of Retailer Respondents by Geography y We only sell products 19% or services online y We sell products or 64% services both online and in physical retail locations y We do not currently sell 17% our products or services online Industry Type y Bricks & Mortar 60% y Manufacturers 10% y Pure Players 30% y Denmark 4% y Finland 1% y France 5% y Germany 16% y Norway 5% y Sweden 5% y United Kingdom 64%
4 4 What percentage of your e-commerce sales require international delivery? More than half of retailers deliver up to 30% of deliveries internationally. For most retailers in-country deliveries make up the majority of sales. However, international sales have become increasingly important. 40% of respondents reported that between approximately a third and a half of their deliveries are international. 71% 61-70% 51-60% 41-50% 1% 1% 4% 19% 31-40% 21% This is in line with what we ve been seeing from our retailers and marketplaces. The UK has great well-known brands that attract international customers, and the complexity of international expansion shouldn t stop the growth potential in international markets. Partnering with service providers who do the heavy lifting simplifies integration and gets retailers up and running quickly. To accelerate revenue growth, retailers cannot afford to stay home % 11-20% 0-10% 7% 16% 31%
5 5 Where does your company deliver to? 98% The US is the non-european delivery destination for retailers y 2015 y % 61% 56% 57% 78% Cross-border e-commerce has become an important part of the business strategy for many European retailers, and in-line with this they have increased the reach of their deliveries over the last 12 months. Western and Eastern Europe took the top spots for delivery (98% and 66% respectively), followed by America (61%), and Asia (56%). 37% 45% 40% 33% 47% 39% US Eastern Europe Western Europe Western Europe is seen as the best growth area for retailers who seek to establish a global footprint. Western Europe (83%) was named as the number one growth area, followed by the US (74%) and Asia (73%). Middle East Russia Where are the biggest growth areas for retailers looking to establish a global footprint? 83% Asia 73% 74% 69% Europe in general is the biggest export market. However, we re seeing fast growth from the Americas and Asia. When approached correctly, international delivery doesn t have to be scary or cost-ineffective, both for merchants and customers alike. By serving up a DDP model, international consumers will not be surprised by additional fee requests upon delivery or worse refuse the package. Fully-landed cost calculations, behind-the-scenes compliance management and superior logistics execution ensure that international deliveries are as smooth as domestic ones. 31% 45% 24% Asia US 39% 26% Russia 12% 37% 20% Middle East Eastern Europe Western Europe
6 6 To what extent does Operations have a role in influencing overall e-commerce strategy? y 2015 y 2016 Operations is central to e-commerce strategy for 85% of retailers. Operations plays an increasingly important role in strategic e-commerce planning, with respondents moving away from a reactive stance. 40% of respondents see Operations as heavily involved in strategy, a significant increase on However, representation at board-level remained broadly the same, 45% down from 47% year on year. 24% 22% 40% 47% 45% Localising the customer experience upfront is critical to conversion. However, Operations is at the core of the e-commerce ecosystem. Data management, systems integration, catalog UE management and, of course, successful fulfillment, all impact bottom line revenue and customer satisfaction. The operations team has the expertise and visibility necessary to identify what s possible and bring great ideas to fruition. 8% 3% Operations is re-active rather than strategically involved 12% Operations is consulted on major changes and asked for input I am/the department is heavily involved in company strategy Operations is represented at the board level and is a core part of company strategy
7 7 Which of these features do you currently provide to your customers? y 2015 y % 80% 80% 80% 86% 65% 63% 40% 39% 50% 43% 47% 42% 53% 52% 44% 45% 41% 41% 43% 24% 23% 14% 8% Click and collect Guaranteed nextday delivery UK Guaranteed next-day delivery Europe Free delivery Europe / text updates Money back guarantee Discounted delivery over X amount Online parcel tracking Free delivery UK Delivery options Re-delivery option Free delivery over X amount 20% of retailers do not yet offer online parcel tracking and 17% do not offer any or text updates. It s clear that guaranteed next day delivery has retailers running scared and for good reason. Great players in the industry have tried to do this and have not always been successful. A terrific alternative is to offer free returns which makes buying online less risky for international customers. We ve seen sales lifts of up to 40% for some of our retailers who offer free returns, averaging an 870% ROI.
8 8 How advanced do you believe you are with the following delivery features compared to your direct competitors? y Behind the curve y About the same y Advanced Convenience Speed Reliability Cost of delivery Most retailers feel that their delivery features are on par with their competitors. 56% of retailers feel advanced in terms of reliability against competitors this reflects a general confidence in delivery options which is shared amongst many senior executives. Every single factor is critical when implementing an omnichannel fulfilment strategy. Consumers are expecting a seamless experience every step of the way. In many cases they re willing to pay more for one of these benefits than others. Conduct ongoing analysis about trends in your customer behaviour that can help you decide where to spend your time, resources and capital to match the delivery experience to what your customers expect.
9 9 How difficult is attracting, developing and retaining high quality talent to your delivery organisation? y 2015 y % 46% 41% 33% 56% of retailers do not have an issue attracting the brightest talent. Behind the headline figure, however, 44% of retailers still report some significant challenges in attracting and retaining top quality talent. In addition, 10% of respondents found it easy, compared with only 4% the previous year. 6% 3% It's very difficult Its somewhat difficult Not an issue 4% Easy 10%
10 10 How important is exploiting the advantages of capacity management systems to enhance your operations? y 2015 y % of respondents now see capacity management systems as quite important or critical 72% Uncertainty around the usefulness of capacity management systems is still a mixed bag. In 2015 only 2% were unsure of their usefulness this has shot up to 28% in % 28% 20% 20% Getting the job done should not trump investing in organised and effective capacity management. Maximising efficiencies in this area can help reduce deployment times and improve services across your e-commerce ecosystem. It's critical It's quite important 6% 6% It's not important 2% Unsure
11 11 At any given time, I am aware of, or can quickly and easily find out, exactly where a delivery is along the supply chain. y 2015 y % of respondents have a good level of supply chain visibility. 57% 59% The biggest change on last year is that 37% of respondents do not feel that they have a good level of supply chain visibility and they are not directly seeking to improve it. 41% 37% Having clear visibility across your supply chain is critical for all facets of your e-commerce channels to work efficiently. Not only is delivery accuracy important to meeting your customers expectations, but it allows retailers to improve resource management, ensuring stores are staffed appropriately (and cost-effectively) to handle deliveries. 4% Disagree and hope to increase visibility and real time information availability 2% Disagree, but I don't think it is an issue Agree
12 12 How strongly do you agree with the following statements: y Disagree y Neither agree nor disgree y Agree y Strongly agree More and more retailers will continue to turn stores into fulfilment centres Retailers are offering customers more delivery options than are practical and feasible to operate Click & Collect will become the default delivery method for the majority of retail consumers Retailers predict that alternative delivery and collection methods will increasingly dominate the high street. There s a strong recognition among retailers that they need to move towards seemless omnichannel capabilities. A good approach is to always think locally - even with inventory. If merchandise is close by, it gets to the consumer faster and at a lower price. Ultimately, merchants have to think of their stores as part of their virtual warehouse, and be able to ship from anywhere to everywhere.
13 13 How mature is your omnichannel strategy? y We ve been working on our 26% omnichannel plan for a long time and are mature in the process y We ve recently rolled out an 36% integrated omnichannel strategy and are just starting to see results y Our omnichannel strategy is in 36% development and we expect to roll-out soon y We re not thinking about an 19% omnichannel strategy at this time 19% 26% 62% of retailers are now operating at an omnichannel level. 36% 36% Many large retailers have begun to roll out omnichannel strategies. It's not a simple process - and retailers should consider even single channel optimization a tremendous win. It's important to monitor progress and observe what's happening with your competitors.take cues from your consumers and industry trends on where and how to spend your time, money and resources.
14 14 Are you incorporating cross-border e-commerce / geo-expansion into your omnichannel strategy and plan? 39% No Yes 61% Cross-border e-commerce is an important part of the omnichannel strategy for 61% of retailers. European retailers are looking to growth markets to increase their revenue, and doing this effectively means incorporating cross-border e-commerce into their omnichannel strategy. International expansion can t be optional for retailers looking for growth. The opportunity is just too great.
15 15 Which buying channel/approach is the most used by your consumer base? y Not used at all y Sometimes used y Frequently used y Highly used Making most of their purchases online from a search engine shopping site or marketplace Making most of their purchases online from our website Entering our physical store and subsequently making a purchase online Entering our physical store and making a purchase while they re in-store According to retailers, the most popular channel for consumers is online. That being said it is notoriously difficult to track the buying behaviour of consumers from online to in-store and back again, especially, in an environment where so many customer journeys begin in one channel and end in another. While physical stores are reinventing themselves, online retail continues to grow in strength. Investing in both click and mortar will keep channels balanced and allow customers across age groups, demographics and regions to engage with you on their terms.
16 16 What kind of shipping / carrier options do you offer to your consumers? y We re looking to expand 32% internationally and will add new carriers to fulfill for global consumers y We offer a variety of carriers to 1% our consumers and let them choose for themselves y We use the major carriers 89% (UPS, Fedex, DHL) y We use a single carrier for 12% simplicity 89% The vast majority of retailers use mainstream carriers to fulfil their deliveries. 32% From convenience to personalised service to competitive pricing, serving up a multicarrier option serves both retailer and consumer very well. Allowing customers to select the best option for their needs helps meet expectations and drive consumer loyalty. 1% 12%
17 17 Which shipping capabilities are most important for your in-store fulfilment channel? y Not very important y Indifferent y Important y Very Important Enabling stores to fulfill web orders Enabling stores to transfer product between store locations Enabling stores to ship to warehouses and / or direct to consumers Visibility of inventory across all locations Retailers most value the capability to fulfil web orders in-store. As retail stores become fulfilment hubs, one of the most important investments for retailers will be visibility and analytics. Facilitating inventory visibility for both domestic & international transactions will enable localized shipping, improving inventory turn, quicker delivery times, lower shipping rates and of course, improved customer service.
18 18 About Pitney Bowes We power transactions that drive commerce At Pitney Bowes we thrive on helping our clients navigate the complex world of commerce. We provide data so businesses can market to their best customers. We enable the sending of parcels and packages across the globe. And, we secure payments through statements and invoices to keep our clients moving forward. v 15,000 employees internationally v 90% of the Fortune 500 served v 90+ years of innovation v 1.5 million small businesses supported About WBR Digital At WBR Digital we design and execute bespoke content marketing campaigns all year round, delivering our clients unparalleled access to the wider WBR event audience. We believe in creating rich content that engages and inspires. We conduct in-depth industry research, then add analysis and a double-shot of creativity, before marketing it for you, to targeted audiences of your choosing. It s industry research, it s thought leadership, it s quality content it s the perfect opportunity to generate qualified sales-ready leads. Contact us to find out how your business could benefit from: v Lead generation campaigns that fit your priorities v Bespoke webinars, benchmarking reports and whitepapers v In-depth research on current fast-moving issues and future trends v The opportunity to position your company as a thought leader Contact: Tanyel Crossley, Head of Digital Publishing Tel: +44 (0) Tanyel.Crossley@wbr.co.uk
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