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Record online spending will create the ‘Mount Everest of Christmas peaks’

879 586 Stuart O'Brien

Online retailers and couriers are experiencing record peak volumes and many are stretched to full capacity.

That’s according to ParcelHero, which says the worst is yet to come as Christmas 2020 could be 50% busier than last year – the firm is urging retailers to work closely with their delivery partners, otherwise a looming driver shortage and strained supply chains will mean Christmas chaos.

The company says this year’s boom in online sales, fuelled by the impact of the coronavirus pandemic, has already created unprecedented demand for home deliveries.

ParcelHero’s Head of Consumer Research, David Jinks MILT, says the double-whammy of families, separated by Covid restrictions, mailing their gifts, plus a shortage of skilled drivers created by Brexit, could prove a mountain too high to climb. He is urging retailers and couriers to start escalating their Christmas planning immediately to conquer the ‘Mount Everest’ of Christmas peaks.

Jinks said: “The huge demand for deliveries is being compounded by the reported loss of a quarter of a million EU nationals from the UK economy this year, which will lead to a 30% shortfall in drivers and warehouse workers.

“Even though many retailers and delivery companies are attempting to hire thousands more staff in preparation for this year’s Christmas peak, this might be difficult to do in practice. Retailers may need to radically shake up their Christmas distribution plans.

“Despite a partial pick-up of High Street store sales in recent months, online sales are still over 50% higher compared to a year ago. ParcelHero had its busiest day ever just last week and online pure-play Ocado has overtaken Tesco to become the UK’s most valuable retailer. This year’s home delivery growth is unprecedented for both parcels and groceries.

“With capacity already stretched, the impact of Christmas can’t be underestimated. For many retailers, Christmas at least doubles their usual sales. Indeed, there are some companies that run at a loss for the rest of the year and make almost all their profits at Christmas. With many families unable to get together this Christmas, more people than usual will be sending presents to loved ones and ordering their gifts online. We anticipate Christmas volumes could be 50% higher than last year.

“Christmas success is always balanced on a knife edge. As a dreadful warning, it only took an increase in the popularity of online Black Friday shopping in 2014 to cause Christmas chaos across the retail and delivery industry. Nearly one in three (31%) online shoppers experienced problems with their orders that Christmas, 49% suffered from missed deliveries due to overstretched companies’ erratic delivery patterns, while 45% experienced late deliveries or never received their goods.

“The spike in online orders caught many of the UK’s most respected brands off-guard. The likes of AO.com, M&S, River Island, Currys-PC World, Shop Direct and Debenhams all admitted to disruption to their delivery networks in fulfilling the record amount of orders. Even the e-commerce leader Amazon found itself overstretched, while Yodel was forced to stop picking up parcels from retailers as it struggled under the weight of demand.

“There’s no doubt the problems of Christmas 2014 could be repeated this year if retailers underestimate the scale of the challenge. Berry Recruitment, one of the largest temporary worker suppliers in the country, says demand for delivery drivers is running at 30% above supply. It believes a combination of a huge increase in online ordering and fewer European workers has created a perfect storm. This view is supported by findings from the business news service Quartz, which analysed data from the Government’s Office of National Statistics (ONS) and found around a quarter of a million people from the EU have left the UK economy since the start of the year, because of the impact of both Covid and Brexit.

“Can the crisis be averted? This year, Yodel seems determined not to repeat the experience of 2014 and has announced it will create 2,950 new jobs to handle volumes during the Christmas peak. Similarly, many other delivery companies have been gearing up for some time to cope with the rise in demand. Amazon is planning to create more than 20,000 seasonal and permanent positions ahead of the festive period.

“However, with supply chains stretched to breaking point, we advise online shoppers to buy their presents in good time and that everyone sends their presents with time to spare, as Britain’s couriers battle with potentially record volumes.”

Top five trends influencing ecommerce fulfilment

960 640 Stuart O'Brien

Johannes Panzer, Head of Industry Solutions, Ecommerce, Descartes

As ecommerce evolves, customer expectations to get what they want — when, where, and how they want it — will only continue to intensify and further challenge organisations in 2020 and beyond. The times when search and price were the only criteria for purchasing decisions are gone, and retailers today need airtight ecommerce strategies that promote and sustain domestic and international growth to drive positive results.

Part of the challenge is having effective processes in place to ensure products are seamlessly, quickly and accurately delivered after consumers click to purchase, and the value of order fulfilment optimisation has become one of the most important factors in achieving this.  For those retailers that aren’t leveraging fulfilment as a competitive weapon and enhancing their workflows with automation technologies, the risk of losing out to the competition is a growing reality.

As companies continue to identify fulfilment operations as a differentiator to both the customer experience and the bottom line, here are the top 5 trends that retailers should keep front of mind to remain competitive:

1. The rise of marketplaces: The growth in ecommerce marketplace platforms has given way to new opportunities for both domestic as well as international sales, and more companies are looking to join in — with the overall market predicted to reach $40.1 billion in revenue by 2022. The UK online marketplace alone is forecast to rise by €15.2 billion over the next five years, with Amazon and eBay set to account for over 90 per cent of these transactions. Collaboration between bricks and mortar retail outlets and online players for delivery collections and returns drop-offs directly at stores is the best approach.

2. Data, data, and more data: Ecommerce ecosystems are complex, and with heightened consumer expectations around delivery options and experience, the interchange of data and the required connectivity is increasing exponentially between the different players involved, such as marketplaces, payments, logistics providers, and carriers. This has and will only continue to require more real-time data than ever before, including the analytics that can help companies make meaningful sense of the data and inform decision-making to drive ongoing success

3. The opportunity for new technology like AR in warehouses: This isn’t just relevant for a marketplace front-end with image searches and virtual dressing and fitting rooms. In fact, augmented reality (AR) is growing in the warehouse and helping to support intra-logistics workflows and make work processes more productive and decision-making more intelligent. Examples of this include “cycle counting,” or finding bin-locations to count quicker and identify those that are in use, “put away” that helps determine empty bin-locations faster, and “picking” for visual guidance that reveals opportunities to reduce search times and improve accuracy for picking the right item in the warehouse.

4. Automation and robotics: While some may fear that automation and robotics will replace humans altogether, this is not the case — at least for the near future. Rather, the application of these types of technologies in the supply chain will increasingly help companies enhance synergies and improve productivity. Even at Amazon’s fulfilment centres where robots have been introduced, the technology is meant to assist associates, drive faster shipping times, and maximise available inventory – not completely eliminate the need for human effort. In fact, the company says that fully automated, “lights-out warehouses” are a decade away.

While the upfront cost of some types of these technologies might deter early adoption, the potential cost savings can benefit the bottom line. This can also be treated as an incremental journey, starting with automating single processes like packing machines and conveyor belts, and gradually moving up to more automated picking process with robotics systems.

5. Rising costs: Between increased minimum wages for employees and rising shipping, carrier, property, and marketplace costs, the concern around margins will not disappear. Many will be hard-pressed to find ways to manage these expenses effectively and lower the risk of bleeding money. By focusing on two major fulfilment components — streamlining and improving logistics processes — ecommerce companies will be better positioned to mitigate extra spend. They may also find new opportunities to sell additional value-added services including more shipping options, such as time-specified or next-day delivery windows, additional set up service for bulky products, free shipping if a customer is willing to wait a few days longer, or an additional fee for two-day delivery. This cultivates greater competitive differentiation plus generates greater revenue down the line.

According to eMarketer, global ecommerce sales are projected to reach $6.5 trillion by 2023 and the potential for companies to capitalise on this burgeoning market is high. That said, it’s imperative that companies consider the trends that will continue to influence the industry and the technologies that will help address them. With the right technology and approach, retailers can stay ahead of the competition, win consumer loyalty, and drive ongoing business success in 2020 and in years to come.

Image by Free stock photos from www.rupixen.com from Pixabay

Millennials move Magway over the £1 million crowdfunding mark

960 640 Stuart O'Brien

Magway a British engineering start-up which plans to revolutionise the UK’s freight delivery market with its sustainable network of underground pipes, has exceeded its initial £750,000 crowdfunding target.

Magway has smashed through the £1 million mark and has to date attracted over 1,700 investors willing to back the UK’s first underground ecommerce delivery network.

Almost 45% of Magway’s Crowdcube investors are aged between 18-30-years-old, an indication perhaps of how younger generations of GenZ and millennials have become more environmentally aware and, despite being under greater financial pressure than previous generations, are willing to invest their money into big ideas that involve innovative, ground-breaking clean technologies to safeguard the planet.

Recent research from Kantar supports this trend and reveals that almost 90% of consumers agree that companies need to take more responsibility for the impact they have on the environment, while those most concerned about pollution and the issue of global warming are aged 16-24-years.

Magway will initially provide short delivery routes for airports such as Heathrow and Stansted, helping to alleviate freight traffic. Construction of a wider UK network of pipes, spanning hundreds of kilometres is expected to start in 2023.

Magway’s technology is being marketed at forward-looking online retailers and logistics firms that are planning for a more sustainable, reliable and ultimately affordable means of distribution.

Anna Daroy, Managing Director of Magway, said: “We’ve been overwhelmed by the response to our crowdfunding campaign. It shows that people, particularly younger generations, are prepared to back innovative businesses, such as Magway, in their drive to change existing, out-dated modes of transportation, and in doing so, help improve air quality and the wider environment.

“Without a significant step change in managing how billions of parcels and goods reach our doors, delivery traffic will continue to increase along with the levels of toxic air we breathe.

“As the first major economy in the world to legally commit to zero emissions by 2050, the UK Government has taken positive steps towards reducing global warming, but more can be done and ‘business as usual’ won’t cut it. Therefore, we need big ideas, such as Magway, which represents a step-change in the way we currently deliver goods. We believe that built at scale, Magway could help reduce the UK’s C02 emissions by 6 million tonnes per annum. That’s the equivalent to a third of the delivery vehicle emissions in the UK.”