Retailers say getting supply chain right is key to the success of internet shopping

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With strong year-on-year growth in online shopping, retailers are under increasing pressure to develop efficient supply chains and ensure products reach consumers on time, according to a study published today by DHL Exel Supply Chain.

The study polled a range of over 30 leading retailers and subject matter experts (from the electronics, toy and fashion segments through to luxury goods retailers and department stores) to understand how e-commerce is shaping their business models and supply chains.

Mike Mills, General Manager Distribution from Comet, stated: We have only one chance to get it right and we need to make sure that happens every time. Thats why we have been working with supply chain experts at DHL to develop a bespoke solution that consistently delivers the highest quality service.

When surveyed, 80% of respondents said the ability to have maximum flexibility right through the business was their main operational concern when trying to meet the demands of internet shopping.  This included sharing stock between internet and store orders, having a flexible workforce to cope with peak time periods, reacting to uncertain demand and unpredictable volumes without interrupting business, and offering customers a wide range of delivery time windows and lead times.  

A flexible supply chain and having the right warehouse and distribution solution in place was seen as particularly important in coping with the huge quantity of returned goods retail businesses handle, with the majority of them experiencing a returns rate of typically between 20-50%. Retailers are investigating ways to improve processes, for example implementing postal and in-store facilities for customers ordering online and by gaining a greater understanding of customers expectations in the first place in order to reduce returns.

Coupled with flexibility, 70% of retailers cited being able to guarantee high quality customer service levels across their internet channel as a key pressure on their business.  This was seen as particularly core at the point of home delivery because although this is often outsourced to third party carriers, it is seen by customers as an extension of the retailer brand. Retailers are therefore concerned that the experience must be of the same quality across the board. 

Kerry Reynolds, Supply Chain Development Manager for DHL Exel Supply Chain explained: Traditionally some retailers viewed e-commerce logistics as just a commodity.  But really theres much more to it.  Those responsible for delivering online services, which can be marketing or supply chain teams, are seeking a consultative and partnership approach because they have come to recognize that having the correct supply chain in place can be a source of real differentiation amongst their competitors.

At DHL, we work with many retailers to support them on their e-commerce journey, planning for future growth, to deliver consistency and tailor logistics solutions to cope with retailers growing pains.

Figures published in 2007 by the Office for National Statistics (ONS) show that the value of internet sales by UK businesses rose to 130.4bn in 2006, an increase of 29.1 per cent on the 2005 figure of 101bn. 19th August 2008: Figures released from the IMRG Capgemini e-Retail Sales Index in September 2008 show that growth in online spending slowed in August although the market continues to expand and is now 15.1% higher than at the same point last year. The Index reveals that after a strong July, all sectors, except footwear and accessories, experienced negative month on month growth.
 

About DHL

DHL is the global market leader of the international express and logistics industry, specializing in providing innovative and customized solutions from a single source.

DHL offers expertise in express, air and ocean freight, overland transport, contract logistic solutions as well as international mail services, combined with worldwide coverage and an in-depth understanding of local markets. DHL's international network links more than 220 countries and territories worldwide. Some 300,000 employees are dedicated to providing fast and reliable services that exceed customers' expectations.

DHL is a Deutsche Post World Net brand. The group generated revenues of more than 63 bn euros in 2007.

www.dhl.com