Tipping the fulfilment scales

24 October, 2002

Storage Handling Distribution

Tipping the fulfilment scales. by Iain Beveridge Operations Director at MetaPack

"Retailers don't need to be at the mercy of parcel carriers" Iain Beveridge.

Two major players in the parcels market recently announced that they are radically rationalising their capacity and services, with the result that some retailers have been left without support. Multichannel retail is clearly stressing the carrier market in new ways. This is largely because of Internet shoppers' high expectations for speed, convenience and flexibility. These carriers, and others are responding by deciding that the very services, upon which retailers depend to get foods out to customers on time, are no longer deliverable or profitable for them. The situation has become so critical that some parcel carriers have already imposed a moratorium on new business.

As well as retailers, customers are also the losers especially in the run up to Christmas, as they have come to depend on fast delivery. Some retailers have been forced to upgrade to premium services until Christmas, which will in turn force them to pass on higher costs to their customers. Other retailers have been left to juggle with a continuity issue, exposing the business to a potential revenue shortfall. Even worse some operations have been unable to make alternative arrangements necessary to meet their commitments to their customers.

Boots Wellbeing.com uses an alternative solution - multi carrier management, enabling it to switch between carriers according to the requirements of each consignment.

Mark Dearnely, chief operating officer for Boots Wellbeing.com the on-line health and beauty site, comments: "At Boots Wellbeing.com we have built our customer offer around a multi carrier strategy. This allows us to offer a range of delivery options to our customers: including next day, named day and a standard five-day service. These services are optimised based on the delivery postcode and products in the order. During periods when either we, or the carriers have operational challenges we are able to move parcels between services and carriers to ensure that our customers always get what they asked for. This capability is very important to us as we grow our business."

The wisdom of Boots' decision paid off last Christmas during the postal strike as the company was able automatically to switch packages to new routes and carriers to ensure timely delivery.

By providing a single point of integration to multiple carriers, companies have an ongoing contingency that enables back up carriers to be switched on in moments notice with no impact to business process. And of course, costs are kept low by automatically routing product through to the most appropriate carrier.

The solution also provides increased convenience to the end user by providing a wider range of delivery options and management information to improve carrier services, the option to manage services themselves or engage third party skills in support.

Remote shopping is clearly changing the way that goods are ordered, processed and delivered. If the large, established players cannot cope, then there is a growing opportunity for specialist players to provide more flexible services and transform the market.