Autumn 2008

We round up a selection of keynote presentations at this year's Mail & Express Delivery Show

For possibly the first time ever at an express delivery event, last-mile deliveries and delivery solutions took pride of place at this year's Mail & Express Delivery Show, a new event from Triangle Management services that combined two previous ones.

'Certainty', 'reliability' and 'confidence' were terms mentioned with almost equal frequency by speakers from retailing and the parcel industry. In response, a range of speakers representing delivery systems such as the ByBox and ParcelXchange box-bank networks were able to offer possible solutions, as well as taking the industry to task where they felt it had failed to address delivery problems adequately.

Carding – are we missing the point?

'Online retailers say the majority of calls from consumers are about carding. Carriers say the same. Isn't someone missing a point here?'

That was how Chris Pearce-Ramwell, fulfilment practitioner-turned-consultant, summed up one of the most problematic aspects of home delivery.

'The card usually says something like *Can deliver any time between 9 and 5', and *Will retry tomorrow' or *Will retry the day after'. There's no opportunity for the recipient to advise the carrier of his or her own availability, and no invitation to engage in arranging the delivery.'

Sometimes, Pearce-Ramwell added, the delivery attempt could mean a round trip of twenty miles, 'and if it's in a rural area, there won't be much coincidence of drops with other consignments. In environmental terms, this is far worse than any damage done by wasting carrier bags.

'What if the consumer could have been texted,' he demanded, 'and told about the delivery attempt? Maybe then they could have called at the parcel depot on their way home to pick up the goods. We seriously need to start thinking about this.'

He added: 'The next generation of internet shoppers will use their mobiles for everything, so they'll expect this kind of interaction. Mobile growth is now faster than growth in internet use.'

There was an implicit warning to retailers here too, he said. They needed to use mobiles for selling as well as for improving their delivery performance. 'If you don't have a mobile solution, you're going to start suffering.'

He also felt that if carriers were to improve their delivery performance, they needed to lobby for better access to consumer information, and retailers had to accept the need for this. 'Currently retailers often won't give out their customers' mobile phone numbers. They're going to have to start doing it.'

In Pearce Ramwell's view, the concept of 'click and collect' (ordering online, fetching the goods from a retail store), which some retailers were touting as a popular consumer choice, was actually being driven by problems with more traditional delivery processes. 'A lot of customers have been burned too often by delivery problems. They want to know that when they've paid, they can definitely go and collect their goods.'

He admitted there could often be disputes about when and if a delivery had been attempted. 'But nearly every carrier can track their vehicles by GPS,' he pointed out. 'It's no longer a USP. So how about having a system where consumers have a barcode on the letterbox for the delivery driver to scan in order to prove he was there?

'You don't even need a barcode, in fact. You could time-stamp the yellow card.'

The last mile – it's also the most expensive

'The last mile is the most expensive link in the home shopping supply chain.' That was how Paul Carvell, chief executive of Business Direct, kicked off his wide-ranging description of the history and scope of last-mile delivery solutions.

'B2C deliveries often mean a compromise. Consumers are buying into an entire proposition that should include successful delivery, but it doesn't always happen like that.'

Comparing B2C deliveries with B2B equivalents, Carvell pointed out that a business consignment could be left at a factory reception area for collection by the appropriate department, 'but people working there can't use the same approach for private purchases.'

Carriers didn't always make life any easier, he said. The major integrators didn't differentiate between B2B and B2C deliveries, so they weren't necessarily able to apply special procedures to smooth the process of home deliveries.

It was problems with delivery that had prompted the emergence of special last-mile solutions such as having a product left at a post office for collection by the recipient. 'But post offices aren't necessarily open when people want to visit them.'

Retailers in mainland Europe were ahead of those in the UK in this field, Carvell thought. As an example, he cited the fact that catalogue retailer Otto had 13,500 'parcel shops' on the Continent, while DHL operated 1,000 Packstations in Germany, where goods could be left in lockers for collection by consumers. 'The capacity is 80,000 items a day,' he said.

Kiala, which was well established in some markets, used convenience stores as delivery points. France's Tabac retail network, which was in decline, had received a boost to its footfall through its involvement with Pickup Services. 'A key feature here is their very good IT system,' he thought.

While avoiding over-emphasis on the ParcelXchange box-bank network run by his own company in the field service sector, Carvell reported that it has started to play a significant role in the B2C delivery market too. He cited implementations in Finland (by Itella) and Ireland (by DHL), both of which were proving the value of locker-box solutions.

E-commerce – a great place to be

E-commerce is currently 'a great place to be', said Nick Allen, chief executive of Zendor GSI Commerce, but he warned that fulfilment remained 'a great hurdle'.

Of a reported 860 million packages handled in 2007, he said the failure rate of 8 per cent amounted to 69 million failed deliveries. 'Yet by some accounts, home shopping will account for 50 per cent of all retail by 2020. We've got to get it right.'

He had a variety of suggestions for retailers about how to improve delivery performance. 'Be up-front on web sites – let customers know what delivery services to expect,' he said. 'Be as flexible as your business strategy allows. If you can afford time-slot and named-day deliveries, offer them.'

He quoted the sobering statistic that 42 per cent of 'WISMO' (where is my order?) telephone enquiries came before the due delivery date. 'So it pays to be informative – give consumers a *warm feeling' by explaining what's happening during the delivery process.'

Amongst his other advice, he said retailers should be 'linked up' and share data; should be engaged – especially with carriers; and should be 'supplier-aware'. There was a particular need for effective management of drop shipments – goods called up from suppliers and delivered direct to consumers.

Retailers should be prepared for last-mile issues, Allen said, and should consider alternative ways of achieving first-time delivery success. And they should only insist on customer signatures for really valuable items – a policy that could prove cheaper in the long run than demanding signatures, and paying for far more re-deliveries.

The leading delivery solution is the garden shed

'The market-leading solution for unattended consumer deliveries in the UK is the garden shed.' That was how Stuart Miller, founder and chief executive of ByBox, launched his assessment of current unattended delivery solutions.

He contrasted this situation with practice on the Continent, where various post office organisations such as Deutsche Post and La Poste were committing themselves to box bank delivery solutions. He said 90 per cent of German citizens were within ten minutes of a Packstation box bank (using hardware currently produced by Keba in Austria).

Miller pointed out that drop-box solutions for field service applications has existed in Britain since the late 1980s. There were subtle reasons for the growth in this market, he admitted. 'Customers are very intolerant of failure, and there is a drive for 100 per cent product visibility.' He also pointed out that field service operations tended to be very predictable.

However, the massive growth in home shopping meant that these box-based solutions had now become more relevant to the B2C sector too. 'Consolidation is the key,' he maintained, explaining that this meant consolidating home shopping consignments for delivery to single locations such as box banks.

He then considered what would be the best locations for electronic box banks. Petrol stations forecourts and supermarket car parks offered partial solutions, he said. 'They will work.' But what consumers really wanted was locations on their daily journey to and from work.

That led him on to describe ByBox's plans to convert public telephone box sites into hybrid phones and delivery box banks (reported in Fulfilment & e.logistics, issue 48 – or see www.fulfilonline.com/48). Up to a thousand boxes would be converted in the first phase, he said, starting with a smaller number at launch time in October. 'There are 80,000 phone boxes in the country altogether, so the opportunities are enormous.'

Initially the focus would be on commuter railway station sites, ideally at the end of popular commuter routes, he said. But existing ByBox sites would also form part of the emerging network. He also saw attractions in siting box banks immediately outside some of the 170-odd post office branches that were due for closure.

'Unattended delivery should be part of the furniture of home shopping deliveries,' Miller said.

Home delivery demands the right blend of services

'The secret of successful home delivery operations is a blend of operations to ensure a good vehicle fill.' That was the recipe proposed by Peter Louden, chief executive of carrier Nightfreight. The company offered both bespoke and shared network deliveries, he said, and had special expertise in awkward-shaped consignments and two-man deliveries.

He said there was a clear trend among customers towards added-value services such as 'wet-fit' and connection of bathroom and kitchen equipment. 'People are becoming more prescriptive about what they want. We're being pushed towards delivering in more urgent time windows.'

He said his own company was working on developing 'express' services with two customers, which in two-man operations meant delivery within 48 hours. 'We're going down the same route as with one-man deliveries,' he said, adding: 'People want certainty – especially when they're making a distress purchase.'

Customer service – the only differentiator

'You can't expect customer loyalty any longer in home shopping,' said Andrew Maher, general manager of group logistics at retailer Empire Direct. 'Customers shop around. So customer service is often the only differentiator.' Margins were low in his business, he added, 'so you have to move more boxes.'

Empire ran its own two-man home delivery fleet, he said, working from its main base in Bradford and depots at Arbroath and Northampton. There were also regional distribution centres in Nuneaton and Perivale. Most orders were taken at Leeds, where there were two call centres.

'Balancing stock is always a problem,' he said. 'But you need to meet customer demands. The customer is king.'

What shoppers want from delivery

ASOS, or As Seen on Screen, is a pure-pay fashion e-tailer, offering 80,000 product lines and 2 million stock items. It can handle 30,000 orders on a peak day, and turns over its stock in four to six weeks. It has recently been growing at 80 to 100 per cent per year.

Having set the scene on the company, Derek Weaver, head of operations at MetaPack, went on describe some revealing findings thrown up by a consumer 'exit poll' on its web site. When online shoppers were asked what type of delivery option they favoured, the voting came out as follows:

Saturday deliveries: 65 per cent

Nominated-day deliveries: 60 per cent

Monday delivery of goods ordered over the weekend: 58 per cent

Same-day delivery between 7am and 10am: 44 per cent

Same-day pre-6pm delivery: 38 per cent

Other key findings

Prefer nominated-day delivery to same-day: 75 per cent

Would make use of text alerts about deliveries: 77 per cent

Want evening or pre-9am delivery: 72 per cent

Would pay up to £20 for same-day delivery: 10 per cent

It also emerged that consumers would be twice as likely to make use of nominated-day delivery if evening delivery were offered.

There was no 'average size fits all' carrier service suitable for all ASOS customers, Weaver said, though Home Delivery Network had proved a key carrier. But a multi-carrier solution was needed, preferably based on an automatic carrier selection system such as MetaPack's.

Marketing departments – are they stopping box systems from succeeding?

'Why haven't drop-box solutions for unattended delivery taken off?' asked Charles Gallichan, restating the topic of his presentation. His company, Giraffe Marketing, sells the Hippo Box drop-box system, and amid some laughter from the audience he commented: 'If it had been my choice, I wouldn't necessarily have picked such a negative theme for my talk.'

Nevertheless, Gallichan proceeded to address the subject as stated, and came up with some telling insights into what is right and wrong with the unattended delivery market at the moment.

In principle, he said, drop boxes aren't rocket science. 'The theory is great. People order things online, and expect them to be delivered to their own address. But 50 per cent of people are away from home between 9am and 4pm, so a drop-box outside the door looks like an ideal solution.'

In that case, why didn't box systems work? Well, they did work, Gallichan said. Demand for his own range was growing steadily. Lately he had even sold some examples to people in multi-occupancy blocks of flats.

However, a key obstacle to greater use of boxes (or any other delivery solutions, for that matter) was lack of opportunity for dialogue between retailer and consumer. 'Retailers seem extremely disconnected. They blame carriers for delivery failures. Their marketing departments say delivery is not part of their responsibility.

'Even pure-play etailers have this attitude,' he added. 'If you ask them whether they've ever visited a parcel depot or been out with a driver, you'll just get a blank look.'

One of the problems was a basic lack of opportunity for online shoppers to provide delivery information when ordering. 'There might be provision on the web page to enter an alternative delivery address, but usually there's no opportunity to enter information about using a drop-box.'

Carriers for their part seemed to show indifference to drop-boxes, he said. 'No carrier has ever to my knowledge suggested using drop-boxes to retail customers. They tend to concentrate on chasing volume, and leave it to their drivers to find delivery solutions.'

Ironically, he said, some drivers refused to deliver goods into drop boxes, even though they didn't tell customers why. And retailers didn't help their own case by demanding proof of delivery, which effectively ruled out use of drop boxes for many consignments (despite an option to display a unique scannable barcode inside a Hippo Box).

'So what?' Gallichan demanded as he summed up. 'Does all this matter?' His answer was a resounding yes. 'Customers are getting smarter.' He cited a survey mounted for IMRG showing that around half of online consumers examined the delivery arrangements of etailers before placing orders. He also cited a Harris survey showing that 74 per cent of home shoppers were unhappy with delivery performance.

For many people, drop-boxes represented a solution to these problems – one that online retailers would find it increasingly hard to ignore.

'A lot depends on the behaviour of marketing departments,' he suggested. 'They need to offer proactive delivery solutions.' Moreover, he said, they needed to offer a range of solutions covering their likely customer requirements, not just a single solution.

Currently, Gallichan concluded, etailers were aiming too low in their aspirations, and failures were happening too often. To accept a failure rate currently put at around 11 per cent was simply not acceptable in the long term.

Delivery solutions are already out there

'Consumers expect home delivery to be available, and to work. Retailers should regard it as a basic *hygiene factor' in their offering.' That was the advice of Robert McCarthy, former managing director of John Lewis Direct, who is now developing Parcel Country, a network of community-based home delivery agents.

'It's amazing how many etailers don't have a text box on their web site where consumers can enter delivery instructions,' he said.

He resisted promoting his own new service directly, instead advising retailers: 'You should be supporting the range of delivery solutions that are already out there.' They should consider how to present premium delivery services more effectively, he suggested.

McCarthy acknowledged that some retailers tended to object that they couldn't support any delivery solution until it offered national coverage. 'Not true,' he said. 'Somebody's got to take the initiative at some point.'

Retailers should regard delivery costs not as a surcharge, he said, but simply as a cost of service. 'They should aim for a consumer-oriented view of home delivery.'

Don't let delivery issues run out of control

'Who is a busy customer?' asked consultant Jonathan White of The White Company. His answer: 'People like you and me.'

'It's easy to purchase online,' he said, 'but sometimes not so easy to receive. Yet if the industry doesn't resolve delivery issues soon, the situation its going to run out of control.'

He said plenty of delivery solutions were now available, and retailers needed to embrace them. 'Personally I'm a great believer in intelligent delivery boxes, but retailers need to offer choices.'

Echoing the sentiments of several other speakers, he commented: 'Insistence on obtaining a customer signature can significantly hinder the delivery process. Retailers who are guilty of this should put themselves in their customers' shoes, and question whether it's really necessary.'