Amazon is the largest online retailer in the UK with over £4.4bn of sales recorded last year but for the purposes of what online buyers expect in 2016, it could easily be swapped out for a number of major pure online or very successful omni channel retailer names including ASOS, Tesco, Argos, Ocado and NEXT who are all setting new expectations for customer service, speed and ease.
The British love to shop online with reports suggesting that £1 in every £5 is now being spent via the internet with 59% of these sales being placed from a smartphone or tablet device.
The UK, Germany, China and the USA are the largest online shopping markets globally and as a combined market, this is expected to double by 2018 £645bn according to research from OC&C Strategy Consultants, PayPal and Google.
The experience of shopping online has become very consistent
The experience of shopping online has become very consistent among the major players and in most cases, sets the bar very high for small and medium online businesses and 3PL fulfilment houses acting on behalf of retailers, to compete with. This problem is amplified as they start to scale with rising order volumes.
Selling online and then subsequently fulfilling online orders tends to be a high volume, low margin business model for many retailers with everything geared towards scale. This allows sellers to drive prices down which puts efficiency and accuracy at the heart of their operations to ensure a profit is possible while keeping customer service levels very high.
What does this mean for small and medium businesses?
trying to offer a quality fulfilment service becomes a big challenge
New and existing retailers will often focus a huge amount of investment and effort to create a smooth online buying experience to ensure customer engagement turns into full baskets which complete through to sale.
However, for small and medium businesses who do not have large sums to invest into their fulfilment operations, trying to offer a quality fulfilment service becomes a big challenge. As a spoilt for choice online shopper, few care whether they order from Amazon or JoanneBloggs.com, they expect a similar experience.
What do online buyers expect from order fulfilment?
Our research has shown there are 4 core elements of fulfilling an online order regardless of retailer size;
Modern shoppers want continual acknowledgement and reinforcement. Once an order is placed into a faceless machine, human nature suggests we still aren’t quite sure if anything has happened the other side! Research shows 82% of shoppers will check their emails within 5 minutes of placing an online order to ensure everything is OK. If you miss this first vital step, expect a flurry of emails and calls into your business which cost time and money to reply to!
2. On-going communication
A premium online shopping experience promotes repeat custom and increased basket values by continually communicating with those very valuable clients. Once the order is acknowledged, they expect an update at the point the order has been shipped as a bare minimum so they know it is on the way . This once again reinforces that everything is going to be OK – us mistrusting humans!
82% of shoppers will check their emails within 5 minutes
To communicate with 100’s or 1000’s of clients daily is almost impossible manually without huge amounts of manual effort which ruins profitability in this high volume, low margin business model.
3. Timely delivery
Turnaround time from order to delivery is an ever shrinking window which is being driven by major retailers such as Amazon and NEXT. Very good processes and systems need to be in place to support these high volume businesses which must support unexpected peaks at any given moment due to the volatile nature of trends and events such as being picked up by ‘hot deal’ sites which can send order volumes to record highs without warning. Courier services such as DHL, DPD, Hermes and Royal Mail play a major part in this final stretch of the process so choose carefully! Failure to complete order picks within the agreed time usually results in extra hours for tired, unhappy staff and the associated cost of overtime in many situations impacting the bottom line of any business.
Few things are as detrimental to customer experience as receiving the wrong item or quantity after it has been ordered. Getting it right first time is core to customer service but also fundamental to operate profitability. Having solid systems and processes in place to ensure items go out correctly, 99.9% of the time is how prices can remain affordable for the masses and how businesses can thrive.
So what should small and medium businesses do to compete?
Many business opt to outsource their logistics to 3PL providers for both warehousing and delivery while many go it alone with mixed success. In recent years we’ve seen many bringing warehousing, picking and packing back in-house as a cost saving exercise and to provide competitive advantage when scale permits but can be a gamble without the correct systems and processes in place.
Being able to offer the above 4 elements is a big challenge for both 3PL providers to online sellers and also retailers who choose to run their own fulfilment operations.
For support and guidance around gaining better control of these 4 key areas, please speak to one of our consultants for a free of charge review of your processes and systems.