Pimp the Retail Industry #2 🚀
How to optimise logistics in the context of an Omnichannel Strategy.
Let’s talk about our corporate breakfast. 🥐 ☕️
The idea of this monthly event is to share the challenges retailers, fashion companies and eCommerce companies face with respect to a specific topic, and present some startups successfully innovating in this area. 🤝
This corporate breakfast at Lafayette Plug and Play’s Paris headquarters brought together the Etam Group (Undiz, 123, Etam), La Poste, Leroy Merlin and the Galeries Lafayette to discuss the transformation of Logisitcs with respect to their Omnichannel strategies. The group was joined by Emmanuel Kowalski, Director of Operations at ShopRunBack, for a presentation about best practices and trends, as well as two startups from the Lafayette Plug and Play network disrupting in this space.
We tackled subjects such as in-house management versus outsourcing, the challenge of loyalty and how to optimize last-mile delivery and tried to figure out the best responses to these.
Tom Self from What3words
“what3words enables retailers to easily, accurately, and quickly deliver to their customers. Integrated via a simple API or ecommerce plugin, it streamlines the checkout experience and dramatically increases logistical efficiency.”
Guillaume L’Hostis, cofounder of Kronos Care.
“From customer standpoint, logistics in the context of e-commerce retail must is moving from a necessary and anxiety-generating experience requirement to an engaging and reassuring brand experience. By enhancing delivery tracking and making it proactive and adapted to new communication means, Kronos helps retailers in being part of this deep change of the sector.”
Here you will find the Wrap Up of the Introduction of Emmanuel. 🙌🏽
Emmanuel worked in Logistics for ecommerce since 15 years , for Mistergooddeal.com, then as a service provider and now at SHOPRUNBACK, startup specialized in the management of returns.
The context 🤓
The omnichannel strategies operated by the brands are“customer centric” — by multiplying the number of points of contact it allows the brands to reach a larger audience.
The omnichannel strategy is a crucial and differentiating tool for brands. Studies show that an omni-channel customer spends 2 to 3 times more than a single-channel client. But above all, the omnichannel is a differentiating tool against pure players such as Amazon or AliBaba, because they are unable to leverage on a physical retail network unlike the traditional brands and retailers. Another big impact of omnichannel logistics is the redefinition of the roles of each stakeholder in the value chain, with the stores not just becoming points of sale but also for fulfillment, pick up, returns etc.
Logistics : A competitive Advantage 😎
To be competitive with Amazon, you have to be able to match them on their strength, which is primarily logistics. For years, these pure players have invested heavily in logistics and are at the forefront of logistics innovation …
Ali Baba announced investments of 15 billion in the next 5 years in logistics and their logistics network to bring their logistics centers closer to customers.
In many companies, logistics is considered as a cost center, while for these pure players, logistics is perceived as a commercial weapon. In fact, unlike traditional retailers, they assume the costs of delivery rather than passing it on to their customers; a quite unusual practice when compared to the rest of the industry.
However, competing with pure players on this front is more complicated for traditional retailers, due to the necessity of employing an omnichannel strategy
The Challenges retailers have to face concerning Logistics 🔛
Logistics is digitalizing like all other industries, and must be able to communicate in real time the availability of stock, the ability to distribute a product as well as delivery times. Logistics today must be transparent and taken into account as part of the promise to customers and customer experience.
🎯 Challenge #1 : Stock Management
The first challenge for an omnichannel organization is the Management of inventory. Stock status in an omnichannel strategy must take into account the distribution capabilities of each point of sale. The question is no longer “Is my product available?” but rather “Is my product available where I am and when I want it?”
So, the stock inventory is the sum of all the stocks (in shops and online without forgetting the returns) in order to define the distribution capacity of each point of sale.
Information must be transparent. How can a retailer justify that if the customer lives in Manhattan, they can have their product in click and collect in 2 hours whereas the customer asking for the same product in New Jersey is told it is not available? This means that a product can be available for sale and out of stock at the same time in different locations, so inventory management must incorporate a new dimension to ensure uniformity with respect to the ability to distribute a product.
=> The stock shortage does not mean the same thing, it is not necessarily a stock break but an inability to distribute.
🎯Challenge #2 : Empower the Logistics with a Tech portfolio
The omni-channel strategy involves connecting the points of sale with all elements of the value chain, from the customer reception experience to replenishment of inventory to returns management. To achieve the best results with this, the good tool is the key.
This is because, even if a store is able to prepare a few orders a day per day, it is not organized to handle large volumes. Unlike logistics warehouses, the point of sale is not primarily intended to prepare orders or receive returns, so everything must be connected.
=> The true omnichannel company must set up a real internal distribution plan with the support of the best technologies to connect everything.
🎯Challenge #3: Arbitration
We have to be able to arbitrate: what is the value perceived by the customer? Are the stores able to absorb the additional visits generated through the omnichannel? Is it better to prepare everything in the warehouse or implement a ship from store strategy ?
Economically speaking, what are the costs of preparation and transport from the warehouse versus those from the store.
To make the arbitrations in the context of an omnichannel strategy, it is necessary to know WHO has the best solution to aggregate the data coming from different systems (ERP, CRM, e-commerce, WMS ...), and to calculate in real time the best logistics solution in relation to the constraints, customer location, stock, delivery times, logistics or transport costs. On top of that, the emergence of last-mile services such as Stuart or Deliveroo shows that the development of urban logistics centers is not only a trend, but that it will be an integral part of the logistics of tomorrow. Distribution in urban centers will reduce pollution in cities as well as push more customers towards the shops through the web to store or web in store.
It is necessary to differentiate oneself from the pure players, to bring traffic back into stores and to generate additional sales. However, this should not be at the expense of the primary activity of the shop : the sale.
🎯Challenge #4: Delivery and the choice of delivery time
It is relatively easy to ship anywhere around the world via postal operators or global firms like UPS or DHL. But the omnichannel consumer is always looking for more services, he obviously wants to be delivered but he wants to be able to choose when, how and where he will be delivered; the customer service must continues during the delivery! The success of some delivery solutions like Predict is a good example showing that customers want to be able to control when they receive a delivery. Optimizing the delivery has a dual benefit for retailers: increase customer satisfaction as well as increase number of delivers per day.
The customer associates the delivery with his shopping experience and the brand.
When a customer encounters a delivery problem, he does not turn against the carrier but against the brand, and he can turn away from the brand for a delivery problem because of his disenchantment with the experience.
It is essential to proactively manage any transport issues, to have a real time management of the state of transports and deliveries in order to be able to inform the customer as soon as there is an issue or delay to avoid a backlash.
🎯Challenge #5 : International
Omnichannel means that the customer orders from everywhere to everywhere, the offer is not limited to the national market but must be international. It implies challenges relating to language, currency, payments, regulation, and logistics,…
When it comes to creating true customer transparency, we must be able to calculate the real price for the customer regardless of the country of shipment. This implies having a thorough oversight of where the order came and knowing all the tax and customs regulations as well as exchanges rates of the country of destination.
From an international point of view, the retailer must decide whether to use existing logistics and fulfillment structures or developing in house systems and processes. Using existing solutions means an easier and less costly integration, however the service provided will not necessarily be that expected by the customer or reflect the image the retailer wants to project. On the other hand, building an in house solution will be much more costly and time consuming, but will allow the retailer to better manage the customer service and brand image. As often, the most valuable is the combination of the two functions depending on country sales volumes, country delivery rates, delivery times etc.
🎯Challenge #6 : Return Policy
Whatever the solution of delivery adopted, when the customer wishes to return an article they want to do it in a simple way and receive a refund as soon as possible.
Returns are a risky process for retailers. They include a financial risk due to the uncertainty of being able to resell the returned product, the cost of the return itself, and the the transport cost incurred in the return process. More importantly though, returns present a customer risk, as it is during this phase that the brand has the greatest risk of losing its customer. Should returns be completely free for the customer? How does the retailer manage a free return if there is still costs and time involved with executing the return?
More than 60% of customers say they look at the conditions of return when they buy a product. The customer potentially expect to have the same post-purchase experience as when he or she purchased it, and that is one of his concerns when it comes to buying.
To conclude ➡️
The logistics of retailers must be managed in real time, be interconnected between all the key elements to ensure transparency and efficiency. Logistics must aggregate data, process it and use it.
A good logistics opimization can be a strong commercial argument as well as a marketing differentiation tool.