Mobile shopping matures, but retailers must link up dispatch

Mobile shopping matures, but retailers need to rethink logistics

Mobile retail is showing signs of maturity, but retailers need to link up dispatch systems to meet customer expectations.

Mobile purchases are growing by 47%, according to the IMRG Capgemini e-Retail Sales Index.

The index showed that £8bn was spent via mobile devices – 79% of which were tablets – over the 2014 Christmas period, up from £5.1bn in 2013.

IMRG CIO Tina Spooner pointed to a strong correlation in the growth of mobile retail and click-and-collect services. "From August to October 2014, a fifth of online sales were click and collect," she said.

Mark Lewis, online director at John Lewis, said convenience was likely to remain high on the list of customer needs this year and expected both online sales and click-and-collect volumes to remain strong. 

"With this comes the need for a solid back-office function, both in IT and distribution, and this remains a key focus [for John Lewis] throughout 2015 to ensure we meet continue to meet customer demand," he said.

The e-Retail Sales Index showed that e-commerce sales grew by 14% in 2014, totalling £104bn.

Adgild Hop, principal head of retail consulting at Capgemini, said 2014 had been an "important milestone for the online retail sector, with the £100bn mark being exceeded for the first time".

However, online retail during December recorded just 5% year-on-year growth – the lowest ever in the index for this period – due to discounting around Black Friday.

Separate figures from Experian and IMRG estimated that £810m was spent online on Black Friday 2014, the biggest day ever for UK online sales.

"Black Friday was unquestionably a success for the value-seeking consumer, but for retailers its success is not quite as clear. As the index reveals, spending was brought forward a month, at much lower margins for retailers, as a result of the discounts available to customers in November," said Hop.

Fast delivery presents retail challenge

In addition to the massive discounts that affected December sales, IMRG found that deliveries for online purchases made on Black Friday put logistics under extreme pressure. 

To succeed in omni-channel, retail brands must have really good front-end technology, but it is useless unless the back-end fulfillment technology is re-engineered to cope with peaks in consumer demand

Paul Coby, John Lewis

"Carriers and partners have a huge amount to do," said Andrew Starkey, head of e-Logistics at IMRG. From a logistics perspective, in terms of shipping purchases out to customers, he said there was "no economic way for retailers and logistics to sustain Black Friday throughout the year".

While it may make sense to pick and dispatch online purchases quickly by increasing the resources or capacity an online retailer can throw at shipping products out of its warehouses, the later in the day a product is ordered, the harder it is to guarantee next-day delivery. 

With retailers set to follow Amazon’s lead in offering customers the ability to order products up to 10pm for next-day delivery, Starkey warned that a shrinking dispatch window would create a logistics challenge.

In his experience, while some retailers have joined-up logistics systems, many run legacy systems that are not integrated in a way that makes it easy to determine online product availability. An item could be at one of several distribution centres, in-store, on a container or being returned. 

"All of these inventory management systems are different. The challenge is that there is no single view of product inventory," he said.

Speaking at the National Retail Federation (NRF) in New York, John Lewis chief information officer Paul Coby said that to succeed in omni-channel retail brands must have really good front-end technology, but it is useless unless the back-end fulfillment technology is re-engineered to cope with peaks in consumer demand.

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