Dick Stead is executive chairman at parcel delivery company Yodel.
Once seen as just a US fad, Black Friday became a huge event in the UK retail calendar in 2014. Advance notification of promotions, coupled with a mild winter, meant shoppers waited before they started buying presents and investing in winter wardrobes, resulting in low parcel volumes in November. Flash Sales then triggered an unprecedented spike in demand.
Customers were enticed by bargain deals, often with a promise of next-day delivery.
The scale of orders exceeded the pick, pack and despatch capacity of many retailers and surpassed the next-day delivery capacity of the UK parcel market. Delivery dates were missed, leading to customer frustration and dissatisfaction.
Despite what was written at the time, we kept our operations going, delivering more than 15.5 million parcels betweenDecember 1 and 24, up 11% year on year. But we built up a backlog and had to implement a two-day suspension ofcollections from retailers, while deliveries to consumers continued. We were back to normal a few days later.
Since then, the industry has dusted itself down, but it’s clear 2015 requires a different strategy - and not just for Yodel. Several practical steps are needed. First, carriers and retailers need to work together to predict volume and better manage expectation. We also need to work with industry analysts to fully understand what 2015 may bring.
Second, there needs to be more transparency about the true costs of delivery. At present many retailers are absorbing all or part of the delivery costs and in turn squeezing the carriers. Consumers expect an ever-shortening delivery window at lower and lower prices. The equation does not balance. The UK’s next- day delivery capacity is finite. At peak periods, 48- and 72-hour services may become standard and, where required, next-day delivery available only at a premium price.
The entire industry has some strategic decisions to make and I for one am determined to do so as far in advance of Christmas 2015 as possible, in what I fully expect to be another record year for Black Friday and Cyber Monday sales.