Evan Puzey, chief marketing officer at Kewill, a leader in supply chain execution software, looks at the implications of new pricing structures, innovation, data security and collaboration in the retail supply chain
Looking at a number of Kewill’s global customers we’ve spotted clear trends and changes emerging in the supply chain. Firstly, we know that the large carriers are changing their pricing structures and beginning to charge by dimensions instead of just by weight. This will potentially have a significant impact on retailers transacting increasing volumes of sales online, who have previously agreed a standard rate per parcel with their carriers, with only bulky or exceptionally heavy items being charged differently.
As a result, we can already see retailers starting to impose a higher minimum spend to qualify for free shipping and we expect this to become more widespread. Consumers will respond by spending more per order but being even less willing to pay for shipping, which will mean that free shipping/premium shipping options (eg next day) will become used more and more as a promotional incentive.
We expect that retailers will seek to increasingly guide customers towards shipping and return options that are lower cost for them as the true costs of operating an online retail channel becomes better understood. Some of our retail customers already provide only the cheapest return option by default by providing pre-printed labels and returns documentation for returns made via that method but making customers call or go online to download labels for more expensive returns options. Returns via store will increasingly become less favoured as retailers continue to dispatch more and more goods direct from the supplier, therefore causing logistical problems when returned through stores (although this option should be offered if customers are to experience a true omni-channel experience).
Customers who order online/especially via tablet/smartphone will demand better visibility and easier returns through the use of apps/dedicated mobile sites that give them the tracking information they need and allow them to action returns with only a few clicks. Carriers will become more innovative and service-led (e.g. sending 1 hour delivery slot by text message and giving option to divert/re-arrange) – this is already happening – and retailers will demand more from their carriers in terms of service offerings. Customers will increasingly expect tracking/returns to be integrated with retailer’s ordering systems rather than having to track via separate, unbranded portals as is often the standard.
Data security is expected to hit the headlines in 2015, with retailers becoming even more security conscious in response to growing consumer concerns about their data being compromised. HTTPS protocol will become more prevalent for online supplier portals and data encryption and the more established retailers will begin to highlight their credentials in this area as a differentiator over some of the start-up sites.
Finally, 2015 will be the year that retailers begin to work more collaboratively with their supply chain partners (be they vendors, carriers or IT providers) to ensure that they offer the very best customer experience. Service is proving to be a key differentiator in omni-channel, with consumers shopping around for quality of fulfilment service as well as price, as whole social media groups are dedicated to complaining about delivery issues experienced with particular carriers and/or retailers.
Omni-channel has fundamentally changed the retail landscape, not least because it has lulled consumers into an often false sense that all retailers can operate the omni-channel model, leading to frustration on both sides when expectations are not met. We expect the pace of change to continue throughout the supply chain, with leading vendors (including Kewill) increasingly moving supply chain execution technology to the Cloud to deliver the flexibility and speed that their retail supply chain customers need to keep pace.