By Matthew Robertson, Co-CEO, NetDespatch.
Now that spring has arrived, for most of us this means that we can start planning for long evenings and hopefully some sunshine in the months ahead.
Christmas is a distant memory and won't be thought about again until after the summer period. However, if you're a retailer or a carrier, now is actually the prime time to start planning for peak. Even though I know it seems like Christmas was only yesterday.
The reality is that the ecommerce market is growing so rapidly retailers and the logistics supply chain need to start preparing for peak now. According to a recent IMRG and Capgemini index UK online retail is expected to grow by 14% in 2017. In 2016 £133bn was spent online with UK retailers. This was £18bn more than the amount spent online in 2015 and meant that the Index registered growth of 16% in 2016. Digging deeper into these figures, a significant proportion (£25bn) was spent online in the run up to Christmas, between 13th November and 24th December.
Here at NetDespatch we see similar patterns in our business. For example, when we measured customer volumes from June to December last year, we found that on average their December volumes were up 98% on their June volumes. How do you prepare for those types of volumes? What do you need to have in place? Staffing and systems is critical, and seamless technology is certainly key to ensuring that those parcels fly out the door and that you maintain a profitable business.
The danger is that those who don't prepare for peak now will undoubtedly leave it too late. They will not be able to handle the volumes expected later in 2017, nor will not be able to handle the volumes profitably!
As case in point, MarketWatch recently reported that both FedEx and UPS are struggling to keep pace with the dramatic growth of ecommerce. While more consumers are doing their shopping online this is bringing added volume into their networks, and both are spending heavily to build out parcel-sorting centres and automate facilities to handle the extra deliveries during peak more profitably, which is costing them as they try to anticipate demand.
Why is this so important?
It's important because the retail and logistics industry is so competitive. Carriers and retailers alike must find ways to reduce the time it takes from picking the parcel to the last mile of the delivery, automating as many aspects of this process as possible. Every aspect of the delivery process needs to go under the microscope in order for carriers and retailers to remain ahead of their peers. A large element of this is around correctly planning for the last mile of delivery. With all the new technologies that we see, from Amazon's drone deliveries to more and more automated warehouses, we see an ever-increasing demand for technology engineered logistics in an effort to help reduce traditional shipping times and costs and diminish the amount of manual labour involved. For example, just last week, Hermes, announced a trial of self-driving robots in the London borough of Southwark. Robots developed by Starship Technologies will be used to collect parcels rather than deliver them. The project follows a pilot scheme in Germany in which the robots successfully delivered parcels to several suburbs in the city of Hamburg.
So how can technology help?
At NetDespatch we are working with retailers all of shapes and sizes to help them automate processes and minimise errors. Our integration solutions allow retailers to automate bookings into their chosen carrier, produce the correct barcoded labels, manifests and pre-advice. When it comes to the peak period, our solutions allow businesses to scale up seamlessly in order to handle the increased volume that peak brings by maximising efficiency. Clothing manufacturer, Weird Fish is a great example, our seamless integration solution enabled them to handle a record sales year, and the business was able to cope with its Black Friday rush without any problem, in actual fact with our help, Weird Fish reduced its order processing and despatch time by 50%.
These are just a few examples of the ways that we are helping retailers prepare for peak by having the right technology in place and thinking through how they will handle the kind of volumes that I have already described above.
It might seem a long way off but it is important that retailers and carriers put in place all the logistics, test all the methods, and establish robust customer best practice techniques in advance. The technology is relatively quick to implement but it's important to have everything in place as soon as possible so that everyone is comfortable as we start to ramp up – and we often see volumes start to creep for peak as early as September.
While technology continues to help reduce the costs and time involved in the delivery process the critical question that remains: how much preparation for peak can retailers anticipate in advance knowing that online shopping is increasing significantly every year? My advice if you want to get ahead of the pack is start early.