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Adapt or fail: the importance of delivery and returns

A Drapers roundtable finds businesses without an effective model will suffer in the current competitive retail climate

Drapers 221

Drapers 221

Delivery has been a key online battleground as retailers try to outdo rivals by operating faster and more convenient fulfilment options. Customer expectations of delivery and returns have been raised. They expect to receive speedy, slick service and to pay little, or even nothing, for it. However, retailers cannot afford to give away margin on what is now a sizeable portion of their sales by offering a VIP delivery and return service for free.

Representatives from brands including Ted Baker, Whistles and George gathered at The Covent Garden Hotel in London for Drapers’ Delivery and Returns roundtable – held in association with Citysprint-owned logistics solutions provider On The Dot and delivery management platform provider Electio – to discuss the prevailing trends in fulfilment and where retailers should pitch their service.

 

 

Speedy delivery

Gone are the days of waiting the best part of a week to receive your online order. Now, next-day delivery is commonplace and some etailers, including Net-a-Porter and Farfetch, offer same-day delivery for customers in cities such as London.

Nickyl Raithatha, chief executive of fashion brand Finery London, says next-day delivery, for which it charges £6, accounts for between 15% and 20% of sales: “We have free 48-hour delivery, but people still choose to pay for 24-hour.”

However, Whistles head of ecommerce and customer service Jennie Blythe says there is little demand for its next-day delivery option – also priced at £6 – which accounts for just 3% of sales.

In 10, 15 years, same-day delivery will be the norm

David Drake, national sales manager, CitySprint

David Drake, national sales manager at CitySprint, says delivery is set to get quicker still as younger shoppers are demanding same-day services: “In 10, 15 years, same-day delivery will be the norm because of the ‘I want it now’ generation.”

Libor Hudeček, logistics and product content manager at Czech fashion retailer Zoot, says there are benefits to a higher speed of delivery and returns as it can help retailers to better manage stock: ”The quicker the delivery and return, the more times you can turn the stock. You can sell it within the same campaign two, three times. But if it takes three weeks to come back, you don’t have a chance.”

A dynamic model

Over the past few years, the big battlefield in online delivery has been how late retailers can move the cut-off time for next-day delivery. However, Electio director of client technology Paul Hill believes this will become less important as retailers move towards a dynamic delivery model. Using real-time information about the availability of delivery slots, retailers can tailor the front end of their website and offer specific delivery options based on a customer’s location – inappropriate or unavailable options will not even appear to the customer.

“It’s about being dynamic and saying to the consumer, right here, right now, we can offer you this service,” says Hill.

Dynamic delivery is still in its infancy. However, one retailer in the room says that it is on its development roadmap.

Hill adds that retailers can use dynamic delivery to personalise fulfilment based on each individual customer. “You can identify good customers and make their experience bespoke. It can be tailored to you [the individual customer], not just to a demographic,” he says.

The importance of choice

LK Bennett head of customer service Ben Parsonson believes choice is more important than speed in the eyes of the consumer.

However, Raithatha argues that brands do not need to offer a plethora of delivery options: “If you’re a brand, people want your product, so offering them two options or 10 options shouldn’t massively influence whether they buy. We’re not selling tables or notepads. It’s fashion – it has an emotional connection with the customer. If you’re buying a dress from Whistles, Ted Baker or Finery, you want that dress.”

Nonetheless, On The Dot head of sales Daniel Wright points out that many brands are competing with the partners they wholesale through, from department stores to Asos.

Paul Hill believes all brands will need to embrace fast and convenient delivery options sooner or later. “People may love your brand, but they won’t spend two hours out of their day to wait for it. It’s got to be convenient, otherwise you’ve lost the upper hand,” he says. 

Reducing returns

Returns are a perennial issue for fashion retailers. However, all around the table agreed there are ways to reduce the amount of items that get sent back.

If you get the outbound piece right, it will reduce returns

Ben Parsonson, head of customer service, LK Bennett

“If you get the outbound piece right, it will reduce returns,” says Parsonson. “You need to look at those ’pain points’ of receiving something that is not as described, or comes in a box squashed by the delivery driver.”

Whistles technical and product compliance manager Roz Adams agrees: “If our style descriptions are accurate and we’ve got our sizing right, customers don’t have to buy multiple sizes.”

Chris Clarke, central quality control manager at Asda’s clothing brand George, says getting fit right across your own brand is crucial. 

Making the returns process as easy as possible is important as consumers may opt not to shop with you again if sending items back is arduous, says Parsonson.

Most around the table offered free returns, but some require customers to pay for their own returns. Finery has recently introduced a minimum basket threshold that customers must meet to get both free delivery and return.

Debra Martin, senior technical manager for ladieswear and central quality assurance for George, says her customer would circumvent this: “She’ll buy things she knows full well she’s going to return to secure free delivery.”

Retailers should try to turn returns into an opportunity to sell, says Electio commercial director Andrew Hill. He describes the returns process at present as a “kitchen table experience”, where the shopper repackages the goods at home. He urges retailers to interact more with customers during the process.

“If you bring [returns] into an app, you can bring in content, offer another pair of shoes, and have promotions that turn that return into a sales opportunity,” he says.

Keeping costs in check

The biggest challenge for retailers in the room is maintaining the profitability of online orders. Many retailers have opted to take a hit on margin by offering free delivery and returns to land grab in this fast-growing sales channel.

We want to give customers the best experience, but not at any cost

Nickyl Raithatha, chief executive, Finery London

However, some believe it’s time for a change. “At some point, business needs to kick in. We want to give customers the best experience, but not at any cost,” says Raithatha.

Justin Burzynski, men’s buying and supply chain director at Dune Group, agrees and says the external pressures fashion retailers are facing will exacerbate the need to protect margin: “Anyone who sources from overseas and is hit by exchange rate changes will have to think hard about how they eke out their profitability. We’re going to have to keep our costs under control,” he says.

With pressures mounting, retailers will need to examine their fulfilment model. Giving customers the delivery and return options they want while maximising profitability will be a big challenge in the years ahead. Those that find this winning formula will reap the rewards.

 

ATTENDEES:

Roz Adams, technical and product compliance manager, Whistles

Jennie Blythe, head of ecommerce and customer service, Whistles

Justin Burzynski, mens buying and supply chain director, Dune Group

Chris Clarke, central quality control manager, George

Kieran Donovan, head of supply chain, Mountain Warehouse

David Drake, national sales manager, CitySprint

Suzanne Egleton, head of ecommerce, Ted Baker

Andrew Hill, commercial director, Electio

Paul Hill, director of client technology, Electio

Libor Hudeček, logistics and product content manager, Zoot

Host: James Knowles, head of commercial projects, Drapers

Debra Martin, senior technical manager, ladieswear and central quality assurance, George

Nick Pape, head of customer relationship management, FitFlop

Ben Parsonson, head of customer service, LK Bennett

Nickyl Raithatha, chief executive, Finery London

Daniel Wright, head of sales, CitySprint

 

 

 

Readers' comments (1)

  • From customers points of view, they hate returns as much as (if not more than) the retailer. It's the disappointment as well as the pain of returning.

    Plus the process (and delay) of getting a refund via postal methods often triggers a visit to a local store, where refunds get transacted immediately. However at a further cost to retailers, as this deflects in-store staff from selling. Instead they are fixing flaws of online. Even before complexity of brands being returned direct to solo sites, when purchases were originally via a concession...

    Summary is: it's a mess. Focus needs to be on solutions which minimise returns, not on how to 'better' manage them. HOLM's new recommendation tool does exactly that.

    Unsuitable or offensive? Report this comment

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