Home shopping: Signed, sealed and delivered

Consumer jitters over ordering online have finally been overcome, but now convenient delivery is the next hurdle Melanie May reports.

For many years, the biggest barrier to internet shopping was consumer concern over payment. People fretted about what would happen to their credit card details if they were inputted online, and it has taken a long time for consumers to gain confidence in the system. Last year, though, all the signs were that this barrier had finally been overcome. For the first time UK internet spend reached £2.5bn during last Christmas, according to the Interactive Media in Retail Group (IMRG). But while the online payment barrier may have gone, it has been replaced by a new one - delivery.

Internet shoppers are used to shopping fast and at a convenient time, and they expect delivery to mirror this. And it's not just internet shoppers; consumers in general want delivery to suit them, not just the retailer or carrier.

In part, it's retailers like Amazon and Waitrose, with its delivery partner Ocado, that have upped the ante. If Amazon lets you track your orders and choose your delivery address, and Ocado can deliver your groceries within a one-hour slot, why can't everyone else?

Carriers get the blame

It's a problem many are eager to solve. "Everything else about home and online shopping is very convenient but the experience falls flat on its face when it comes to delivery," says Andrew Starkey, sales and marketing director of Collectpoint, which provides alternative collection points, such as petrol stations and stores for deliveries.

But why is delivery such an issue in the first place? Starkey is not alone in putting most of the blame at the feet of the carriers. "Retailers have woken up to the fact that consumers want more choice, but between them and the consumer are the carriers," he says. "Not all do home delivery. Those that do find it difficult and expensive."

The problem is that unlike B2B delivery, where carriers make few drops to addresses where there is always someone there to accept it, with B2C, a carrier may have to visit numerous addresses, dropping off low value goods, with no guarantee that there'll be anyone home. "This is when costs start to mount up," says Keith Jordan, fulfilment director at fulfilment firm Zendor. "If a carrier sets out with 45 deliveries, and gets back with 40 left in the van because no one was in, they've then got to do something about it."

Different orders require different delivery treatment too, which further complicates matters. Fulfilment firm Prolog has its own transport fleet but also uses a number of carriers to ensure that it can provide the most appropriate service for each order it handles. "Some of our clients require home delivery and some carriers are better at that than others," says sales director Ian Dignum. "Others are good for pallet or multi-carton deliveries, or B2B, but it's important to have that mix."

With carriers sometimes loath to take on home delivery, MM Group's business development manager Rachel McGowan-Kemp also believes service agreements are imperative to ensure best service. "You've got to be honest about your requirements and penalise carriers if they don't meet the service delivery targets," she says. With clients including JD Williams, Littlewoods, Readers Digest and Sainsbury's to You, MM Group works with carrier firm Lynx because of its home delivery expertise. "Lynx does specialist home delivery whereas many carriers have pulled out of it. It's used to the discipline behind it, and will get specific delivery instructions from customers in case they're not in."

Of course, it's not purely a carrier issue. To be able to offer a top-notch delivery service, a retailer has to have the systems in place to ensure all parts of the process run together smoothly.

System transparency

Steve Dole, solutions development manager at Dataforce, would like to see more retailers offering a service like Amazon's where the customer is kept informed from beginning to end. "The fulfilment operation has to support the website and have visibility of all data - so before you order, you should be told if the product is available," he says. "You should get a range of options for delivery and whether you want it all in one parcel, or to the same address. And you have to give people information - with Amazon you get an email confirming order placement, then when it has been dispatched, and another with an indication of when it will be delivered."

He believes achieving this has become easier in the last 12 months as people begin to understand how to use their customer data better and integrate it with technology. "Amazon is popular because it invested in service," he says. "Now there are cost-effective ways of replicating its service."

And when it comes to actually delivering the goods, there are alternatives to the long delivery windows many retailers still offer. One answer is to leave goods in a safe, previously agreed-upon location, and put a card through the door informing the customer. Like MM Group's partner Lynx, Zendor's own courier network is practiced at this. "With our courier service, the couriers get to know the customers on their rounds so make alternative arrangements for if someone isn't in, such as leaving it in the garage," says Jordan.

Partnerships

This is not the only alternative. In June, TNT Mail partnered with Express Dairies to make its B2C delivery service more customer-friendly. Express Dairies has been delivering parcels with its milk for the last three years, handling small parcels including Specsavers' contact lenses and solutions, books, DVDs, and flat but heavy items, like catalogues and holiday brochures.

"It's about giving consumers more choice and providing an alternative to Royal Mail," says Matthew Robertson, director at TNT Mail. "Milkmen will be in the area the next day so if they can't deliver, they will card the address, and make two non-requested attempts and a third requested one. Consumers can give alternate delivery times or pick up the item from the depot."

Royal Mail itself has an alternative to home delivery. It provides LocalCollect, which enables consumers to arrange with retailers to have their parcels delivered to their local post office. This costs the consumer nothing, while retailers using this service pay an annual license fee of £300. While Post Office opening hours may put some people off, it's proved popular. "We researched a number of options alongside delivery to a post office when setting this up and by a massive majority, this won out," says Richard Roche, Royal Mail head of media markets. "It's safe and convenient - most people go near a post office most days."

Lock-up boxes

But for those who don't, other solutions to the delivery issue are springing up. Firms such as Homeport, Giraffe Marketing and Bearbox provide consumers with lock-up boxes accessed via a pincode, enabling deliveries in the customer's absence. While these have yet to gain mass appeal, a service that may do better is Collectpoint.

Built on the premise of offering consumers both convenient pick-up alternatives to their home address and convenient times to collect their deliveries, it currently offers a network of 1,500 collection points across the UK with the option of opening up to 8,000. Its Collectpoints are carefully chosen to ensure they are open seven days a week with long opening hours, and offer other services. These include Q8 and Shell petrol stations, Spar, Londis and One Stop shops.

Currently rolling out in the B2C space, it is already popular in the B2B world, where it serves service engineers - home- based professionals such as IBM engineers who have parts delivered to Collectpoint locations rather than their home address. It has a number of e-retailers onboard including the Gadget Shop and Maplin. It also enables consumers to pick their own Collectpoint for their online purchases from any retailer.

All the consumer has to do is put in his town or postcode and choose a Collectpoint from the selection offered. This then uploads as the delivery address for that particular order, with consumers free to choose a different one each time they use the service. The service costs consumers £2.50 per delivery and customers have three days to pick up their goods. Items are covered by Collectpoint up to a value of £400, can measure up to 1m x .75m x .75m in any one box, weigh up to 20 kilos but must fit in a car boot.

"We built the network on the backbone of service engineers but now the market is right for us to focus on consumers," says Starkey. "The reason we think we've got something to add is that we're carrier-neutral, and although it's not coming to your door, you are getting your product when you want it."

Although it has yet to prove itself in the B2C space, it's an idea that is being welcomed for giving consumers more control. "Delivery services that drop off goods at garages and shops offer an extremely strong service," says MM Group's McGowan-Kemp.

"It's a growing area." What services like this give the customer is choice and convenience, and this is what both retailers and customers are striving for.

OCADO

Waitrose trumped the competition when it partnered with Ocado in January 2002 to provide one-hour home delivery slots for online orders. The service is now available to more than seven million households across the South East and the Midlands with further expansion planned.

Unlike many supermarket chains that pack and deliver from local stores, Ocado has its own warehouse in Hatfield, full of Waitrose products, with regional depots at Rugby and Weybridge. It also has a fleet of 230 vans.

To ensure customers get their groceries on time, Ocado uses a customised yield management software solution, as Jason Gissing, its chief financial officer and co-founder explains. "In the background, while a customer waits for the checkout page to come up, our system works out - based on where they live, what they've bought, and its volume and weight - where our vehicles will be and which will be nearest and have enough space to take that order. This happens every time someone places an order - and we take 4,000-5,000 orders a day. The consumer just sees a number of different slots and when they pick one, if our system knows it can get to them then, it will accept it.

"The beauty of doing it on a dynamic basis is that we're only promising a delivery slot we know we can get to, because we're checking everything behind the scenes - along with the weight and volume of each order, the system factors in things like road speeds, the time of year and day, and traffic speed."

Gissing doesn't deny that providing a service like this is expensive but says Ocado can do it because it is able to concentrate purely on the delivery side of things: "We choose to run a warehouse and delivery fleet so we don't spend the money associated with creating and running supermarkets. But it does need critical mass to make it work - if you make one delivery, it's expensive; if you make 15, you can share cost across all 15."

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