Retailers need to plan for online peaks and troughs

Almost a third of British online shoppers experienced problems with their orders over the Christmas period

Almost a third of British online shoppers experienced problems with their orders over the 2014 Christmas period.

Of the 31% of displeased shoppers, 49% suffered from missed deliveries and 45% experienced late deliveries or never received their goods at all, according to a study by YouGov.

Providing a bad customer experience during the busiest time of year can cause irreparable damage, so why are retailers offering online services if they can’t deliver the goods?

The research highlights the need for retailers to up their game when it comes to customer fulfilment. But the retailers also need to understand that buying online is now a major part of the consumer shopping habit and must plan for the new peaks that online shopping brings.

Days before Christmas, Sainsbury’s and Waitrose both suffered from IT glitches, resulting in the cancellation of some customers' Christmas food deliveries. Earlier in December, Asda, Marks and Spencer and delivery firm Yodel had all been unprepared for the surge in sales.

Jason Shorrock, retail strategy director at supply chain software company JDA, which partnered with YouGov to conduct the report, said the increase in online orders over Christmas was all about the convenience.

“Customers found it more convenient to order online than battling on the high street, finding somewhere to park and fighting around the shops,” he said. “So retailers have to expect this trend to grow and must invest in excellent services around it.”

Miya Knights, senior research analyst for Europe at IDC Retail Insights, told Computer Weekly retailers simply didn’t get their planning and forecasting right last year.

Retailers have to expect the online shopping trend to grow and must invest in excellent services around it

Jason Shorrock, JDA

“Such crucial processes need to factor in continued year-on-year growth of consumer mobile and wireless technology adoption,” she said. “Demand and capacities are likely to keep increasing exponentially for the foreseeable future, and will have a knock-on effect on seasonal buying peaks and troughs, as well as on consumer shopping habits and cadences as a result of the introduction of promotions like Black Friday.”

Christmas sales results

During the first week of January, retailers have been announcing their Christmas sales figures, with the likes of John Lewis and Sainsbury’s reporting huge volumes of traffic from online shoppers. 

Tesco, too, reported a 22% increase in online shopping through its Tesco Direct channel, along with a 12.9% rise in its online grocery business.

Marks and Spencer was one of the few retailers claiming a decrease in online figures, with its M& sales down by 5.9% in the 13 weeks to 27 December 2014.

While its new website was said to have performed well operationally, with an improvement in customer conversion and satisfaction, M&S chief executive Marc Bolland blamed unsatisfactory performance on its e-commerce distribution centre, which affected the .com and, in turn, general merchandise sales.

In its trading statement, the retailer said it had already made progress in addressing this and had returned to its improved delivery proposition.

M&S recently revamped its website, and other retailers are doing the same – such as Sainsbury’s with its HTML5 Christmas ordering mobile site – but both M&S and Sainsbury’s experienced problems in fulfilling orders and delivering goods.

This suggests the problem doesn’t lie in the customer-facing technology, but the back-end and distribution models. Shorrock said retailers need to follow up the front-end technology with convenient collection or delivery, “or it destroys the point of it”.

Black Friday

Shorrock pointed out that online channels create “spikier and more variable” demand, compared with the traditional bricks and mortar environment, and retailers need to take this into account.

In addition, the Black Friday sales weekend may have taken retailers by surprise in the UK, as the event in recent years has predominantly been a US sales period which sees shoppers hit the high street the Friday after Thanksgiving.

But Knights said Black Friday – and its online equivalent Cyber Monday – are two trends UK retailers chose to adopt and market, so “not being able to meet that capacity and demand, from a customer perspective, is unacceptable”.

While the Black Friday sales contributed to peaks in online shopping, much of the mania around this growing shopping trend surrounded the number of people who visited the high street to take advantage of the offers, queuing and, in some cases, fighting to get their hands on marked-down goods.

Knights said the Black Friday sales affected all retailers this year – not just traditional gift stores and electrical outlets, but also grocers because they are increasingly stocking non-food items.

“So the stampedes for the likes of flat-screen TVs not only attracted higher seasonal footfall for non-food items, but for food too,” said Knights. “The Black Friday rush into stores could therefore easily have had a knock-on effect by encouraging people to also do their grocery shopping earlier than in previous years – at the same time as they’re buying their bargain TV, for example – leading to peaks in demand at times that did not match the usual pre-Christmas peaks in demand.”

2014 saw many changes in the way consumers shop, from stepping back onto the high street for Black Friday sales to their increased use of online shopping channels. But if retailers don’t catch up with the new consumer trends and improve their distribution planning they could end up damaging brand relationships, causing customers to shop elsewhere.  

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