Insights

How to Make Your Fulfilment Channel More Profitable

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The fulfilment channel plays a pivotal role in shaping customer experience, generating loyalty and creating a lasting impression of your brand.

There is no denying that the global shift from a push economy to a pull economy has sparked a new era of retailing. Retailers who may have once called the shots in terms of product choice, customer service and fulfilment have had to make way for an ‘always-on’, empowered shopper whose rising expectations have turned the old model on its head. This new paradigm insists on prioritising customer experience across every phase of the retail journey and is focused on flexibility, transparency and visibility across channels. Although logistics and fulfilment may be sometimes considered the least glamorous aspects of this journey, they offer strong potential for innovation and have powerful implications for the customer experience. In more mature e-commerce markets such as the US and the UK, retailers such as Sears, ASOS and Argos are successfully using the fulfilment channel to drive conversion, strengthen brand presence and establish mutually productive customer relationships. As online retail escalates in Australia, there is a growing imperative for local players to match best practice fulfilment standards – at least if they want to tackle global competition head-on.

Andy Powell, Director of Multichannel, Deloitte highlights the ways this ‘retail revolution’ has reworked fulfilment and logistics methods. “Models such as online, social, experiential, mobile, ‘always on/always connected’ and virtual, involve a shift away from the notion that a consumer will browse, choose, buy, and take possession of products at a physical location controlled by the retailer. The result is an explosion in small quantity personal orders, less physically aggregated inventory, more direct fulfilment, delayed fulfilment and home delivery. The key point here is that the supply chain is no longer hidden from the consumer but represents the final part of the experience. This means that an effective supply chain is now more than ever a ‘make or break’ element of retail success,” he offers.

Powell’s observation that the fulfilment channel or ‘last mile’ can make or break retail growth is reflected in findings from the Stress Free Shopping Campaign Effectiveness Survey, 2011. The survey discovered that 94% of online shoppers would like to choose between a standard delivery option or to pay more for faster delivery and that 45% prefer different delivery options for various products and circumstances. Lack of flexibility, convenience and choice was identified as the cause of shopping cart abandonment with 48% of customers abandoning products at checkout because of the delivery offering.

Business Through the Looking Glass, a 2011 report by IBM, explores the idea of ‘joined up retailing,’ based on inventory visibility and transparency across the supply chain. This allows retailers to minimise overstocking, while offering customers a seamless and intimate experience, by drawing on real-time data and interaction history. It also paves the way for fulfilment options that are closely attuned with the customers needs.

“The best of Australia’s multichannel retailers are getting there, through utilising buy online/pick up in-store channel partners acting as physical collection/return nodes to increase fulfilment convenience and cross-channel track and trace,” says Powell.  Australia may have not quite embraced an omnichannel fulfilment strategy, but the path towards it has been cleared.

For more insights and advice about e-commerce fulfilment, download the full Power Retail Special Report, Store-to-door: Navigating the Shipping Channel.

Neha Kale

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Neha is a writer and editor for The Media Pad, publisher of Power Retail. She has a background in business, arts and film journalism and an interest in new media and digital strategy. She is looking forward to exploring how retailers are impacted by the online space for Power Retail. Neha is a magazine junkie whose other addictions include coffee, travel and live music. She likes to run but has a long-time allergy to team sports.

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