Tag Archives: customer satisfaction

Order Fulfillment in Omni-Channel Retail – the “Last Mile Delivery” most Retailers Fail to Complete

Shoppers expect a seamless shopping experience — no matter where they are, what device they are using, or how they choose to shop. Order Fulfillment in Omni-Channel Retail – taking the right product, putting it in the right box, shipping it, and gaining the customer’s approval – is a demanding task.

It is a demanding task, because customers in the retail omni-channel demand near perfect delivery of their products. Kirby Prickett speaks of the “last mile delivery” of eCommerce: “The last mile delivery is a metaphor used to describe the movement of goods from a fulfillment center to their final destination.”

The last mile delivery is the place where business success or failure for omni-channel retailers is mostly decided. Thirumalai and Sinha 1, (2005) suggest that “it is here – in the down-and-dirty details of consumer direct order fulfillment – that the epic battles for domination of the e-commerce marketplace will ultimately be won or lost.”

Success with order fulfillment in omni-channel retail may give a retailer a sustainable competitive advantage – take the dominance of Amazon.com as an example. However, to compete with Amazon, the average retailer needs bags of money and the greatest employees in the industry.

A more realistic approach for retailers is to have a critical look at their own order fulfillment processes, the last mile delivery, and fix what is not working.

The challenge of Order Fulfillment in Omni-Channel Retail

Indeed, Order Fulfillment in Omni-Channel Retail is a huge challenge for retailers. Results from a recent survey done by Radial with the help of EKN Research showed that 37 percent of CEOs questioned cited that their inventory order and supply chain operations are not properly aligned.

Retailers with physical shops or “Bricks and Mortar” (BM) retailers that added the online channel to their business becoming “Bricks and Clicks” (BC) retailers, have additional challenges. One of the challenges is to align their traditional store-based distribution processes with the requirements of the online channel 2.

Tony Evans from GLOMACS Training & Consulting highlighted the differences in logistic processes between Bricks and Mortar retailers and online retailers (OR):

  • Order size – BM retailer’s orders are counted in cases, picking is run per shipment and picked goods are ready for dispatch without additional handling. In contrast, OR’s orders are rather small including just a few items per line.
  • Warehousing operations – the picking system suitable for BM is not efficient for OR. A common characteristic for both channels is the high labor costs.  Therefore companies need to decide whether to keep the stock for all channels in one regional distribution center (RDC) or to keep them separated to avoid confusions and inefficiencies.
  • Technology – modern retail companies (e.g. BC retailers) are investing in new technologies to optimize logistics operations to give them a competitive advantage. Warehouse Management Systems integrated with Enterprise Resource Planning Systems and Transport Management System are essential for e-commerce operations. These systems provide real time information about the inventory level and estimated delivery time that may help customers during their purchase process.
  • Order fulfillment – BM shopping gives customers the opportunity to verify the products that they have purchase before they put them into a shopping basket. In OR operations any error in order fulfillment results in returns and problems in customer retention.  Potential errors are related to wrong item picked and packed, quality issue or late delivery.
  • Transport planning – orders that OR receive are mostly small in size. Therefore one truck typically delivers parcels in a wide area to various customers. These fragmented deliveries require retailers to plan their dispatching and delivery scheduling efficiently.
  • Network design – BM retailers choose the location of regional distribution centers (RDCs) to serve as a ‘center of gravity’ for the region and for heavy vehicles to have easy access. Hence the RDCs are usually located outside urban areas.  On the other hand, having picking centers close to urban areas work better for OR retailers. That is to do timely next-day or even same-day order fulfillment.

What cause the problems in the last mile of Order Fulfillment in Omni-Channel Retail?

Arsh Sing posting on the TOOKEN site, list a number of possible causes for problems in the last mile of Order Fulfillment in Omni-Channel Retail:

  • Poor infrastructure – especially in developing countries, poor transportation infrastructure inevitably means long journeys, inefficient routes, inefficient transportation technology, etc. All of these compound and translate into woeful costs and time lags, which may be otherwise circumscribed.
  • B2B vs B2C deliveries – now if you’re transporting a huge B2B delivery, the extra costs and wasted time may still be worth it. However, as is often the case in urban areas, especially with B2C deliveries, the costs of fuel and time wastage must be borne for just one package.
  • Types of goods – occasionally, even the type of goods can make add to the challenges of last mile delivery. For instance, toxic, fragile, perishable or flammable items call for more planning.
  • Customer nuances – phenomena like incorrect address, remote locations, cramped locations, absence of the customer to receive the package, whimsical cancellations of orders, returning orders, etc. These nuances ensure that the factors affecting potential costs of the last-mile cannot be accurately anticipated.

How can retailers improve the last mile of Order Fulfillment?

According to Jim Tompkins, Chief Executive Officer, Tompkins International, the correct approach for retailers to get the last mile of delivery right is to focus first on strategy, then on structure, followed up by implementing the systems you need. However, Melicia Morris and Dan Rottenberg writing for Retail Law Advisor have a pragmatic approach to help solve challenges in last mile of delivery:

  1. Creating a fulfillment center – a fulfillment center allows customers, who place online orders, the ability to pick up their items at a nearby physical location. Along with decreasing the shipping costs, the benefits include faster delivery of merchandise and the leveraging of existing store personnel.
  2. Constructing brick-and-mortar buildings – where customers familiar with their products and service can both shop and receive their deliveries.
  3. Implement automated locker systems – to address customer deliveries.
  4. Using drones – to deliver packages via parachute, though the method presents issues of both safety and efficiency.

Concluding

Online shoppers want to receive their goods as soon as possible. Parcel delivery has become a very powerful marketing leverage for your e-commerce. According to Mélanie Vaast from ECN about 37% of online shoppers who face a poor delivery experience blame the online seller itself and never shop again on its website. The concept of last kilometer represents a daily challenge for online stores owner in a very competitive market.

Notes

1 Thirumalai, S. and Sinha, K.K. 2005. Customer satisfaction with order fulfillment in retail supply chains: implications of product type in electronic B2C transactions, Journal of Operations Management, 23(3):291-303.

2 Ishfaq, R. and Raja, U. 2017. Evaluation of Order Fulfillment Options in Retail Supply Chains, Decision Sciences.

Image

Pixabay

 

Some Reasons Why Retailers Battle To Move Online In Africa

Despite being the continent with the highest growth potential and a growing middle class population, retailers  find it difficult to move online in Africa.

BiztechAfrica has identified 5 reasons why  retailers find it difficult to move online in Africa.

1 The right resources

Africa’s retailers need to have the following resources/processes in place:

  • The sourcing of products – finding the right products for your target markets at the right price may prove a challenge;
  • The retailers must hire or build a warehouse to receive, pack and dispatch the products for their online customers;
  • An online marketing strategy to target and interact with customers;
  • A well designed e-commerce website;
  • A third-party logistic service provider to get the products delivered on the doorstep of the retailer’s customers.

If one or more of these resources or processes are not in place, the retailer’s online business will fail.

2 Strategy gaps

Once the resources and processes are in place, they should be aligned with the retailer’s business strategy.  Many of the challenges for retailers getting their business online had to do with strategies that are not implemented or wrongly implemented.

3 Customers that abandon the website

The abandoning of a retailer’s website is just one click away for the visitor or customer.  The main reason why online customers leave a retailer’s website is because the website is not meeting their expectations.

4 Inability to monitor and use data

Many online retailers do not how to monitor and interpret the data available on their website that track the behaviour of their customers. The retailers therefore lose the opportunity to match their products or services with that of the customers visiting their websites.

5 Lack of competition

Retailers in Africa are sometimes not bothered to venture their business online because they experience little or no competition with their physical business.  Africa’s infrastructure, income and broadband/mobile connectivity are however improving, which may change the situation.

Visit eBizplan’s website for more on business solutions for your physical as well as online businesses.

Offering Value to Your Customers

Many companies still believe that their customers exchange money for products that they offer. You rather should offer value to your customers…

What value means to your customers

Customers want value before they spend their money on your products or services. The common definition of value relies on the price-quality ratio of a product or the difference between perceived benefits and perceived costs.

To put it practically – if your competitor can offer the same value for a product or service as you do, but at a lower price, you’re going to lose customers.

What do customers perceive as value?

Perceived value comprises two complementary concepts, namely perceived benefits and perceived costs.

In today’s digital market place, there are numerous identical products on offer (e.g. cosmetics), with many at the same price. What will make a customer to buy from you instead of the others? Your products or services should provide superior benefits to the customers.

Customers may perceive benefits in the following ways:

  • Product features,
  • Product design,
  • Timing,
  • Location,
  • Reputation, and
  • Service and support.

Value is created when the perceived benefits that a company offers meets the needs of its customers.

Planning to deliver superior value to your customers

Companies that strive to survive and grow should know what the value offer of their competitors are to customers in the market as well as what the customer’s needs are.

A differentiation strategy with a customer focus will go long way to ensure that the company enjoy a competitive advantage in the marketplace.

Visit www.ebizplan.co.za for more information as well as help with business plans and marketing plans.

Image: eBizplan

It Pays For Retailers To Please Their Customers

Retailers need to be outstanding in order to please their customers.

Overall, retailers succeed to please their customers

The Wise Marketer reports that the overall satisfaction of retail customers has grown 23% over the past six years.  They ascribed this growth to the increasing use of digital technology by Brick and Mortar retailers.

The onset of digital technology and the internet has given retailers the opportunity  they want. Retailers can now satisfy the need of each individual customer in a personalize manner.

Why are retail customers more satisfied?

Retail customers are nowadays more satisfied because:

  • They have more choices how to buy their products – in the store, online or both.
  • They have a larger variety of products to choose from, and can easily compare product prices on the internet.
  • Customers can either visit a retail store to touch, feel and try the product, If they are not sure about a product. However, they can get more information online about the product.
  • They are eager to join social websites such as Facebook and are not afraid to share their experience with a retail store or products with their virtual communities.
  • The outstanding retailers will be complimented and even may even enjoy positive reviews by their satisfied customers on social media sites.

Why should retail customers be satisfied?

Customer satisfaction refers to the degree a customer is happy about a retailer’s products and service.  As customers satisfaction increase, they become more loyal to the retailer and also advocate its brands.

The retailers are making more successful use of the internet and the interactivity that it offers to get more of their customers satisfied and eventually loyal to them…

Image: flickr.com