Australians are shopping more and more online, spending over $16.6 billion in the year to January 2015; a 9% year-on-year increase according to NAB. Domestic ‘e-tailers’ account for 75% of online spending, making this an attractive growth market for Australian businesses.
The power of internet shopping means that consumers can research extensively during the pre-purchase phase. Purchasing can be made easy through clever interfaces, visible stock levels and safe payment methods. Critically, post-purchasing must also satisfy customer’s needs, with quick and convenient delivery of purchased goods.
But convenient delivery to the online customer continues to elude e-tailers. In 2014, half of the 63 million deliveries to Australians were missed deliveries leading to a ‘sorry we missed you card’ . Many outbound logistics providers only deliver during business hours, when most customers are at work. Customers are then required to collect the goods from a post office or depot (also only open during business hours or during a customer’s busy Saturday morning) or the customer is required to schedule a time for delivery at a later date, also typically during business hours.
The convenience of online shopping rapidly becomes inconvenient for the customer.
Outbound logistics is a key part of the value chain for e-Businesses.
Porter (2001) advises that e-tailers can strategically position themselves to gain competitive advantage by creating distinctive parts of the value chain. Meng et al (2014) comments that a key driver of customer satisfaction in e-commerce is fulfillment of goods ordered, including shipping fees and delivery.
More convenient delivery solutions must be offered to the customer. Australia Post are trying to do this, offering parcel lockers at locations that are open 24 hours a day, but the current format of this service has severe limitations. Customers have only 48 hours to pick up the goods once delivered to the parcel locker (hopefully they are not on holidays or away on business) and the 200 locations across Australia are primarily in metropolitan areas. Australia Post parcel lockers also won’t allow for alcohol deliveries, so a case of wine is not eligible for the service.
Parcelpoint seem to be doing a better job, offering over 1500 locations, in shops such as pharmacies, which are open outside of normal business hours. They also don’t impose a narrow window for pickups like the Australia Post parcel lockers. Parcelpoint add more value by organising easy returns for your online purchase if desired.
The future may be brighter for online customers. One day your parcel may be delivered to you via drone, perhaps by linking with the GPS on your smartphone. Wouldn’t that be convenient?
In addition to convenient delivery options, e-tailers should look beyond low fees or fast delivery when selecting an outbound logistics partner. Nguyen (2013) advocates that clever logistics providers incorporate information and communication technology into their offerings, adding value to e-business partners by integrating with their supply chain, giving customers transparency of their order via track and trace (T&T), and providing more efficient routing and scheduling of deliveries.
E-tailers should also maintain adequate stock at strategically located warehouses to facilitate speedy order fulfillment. They should also ensure that a pain-free returns (reverse logistics) process is in place for customers, a key requirement for online shoppers. Offering enticements such as free shipping for orders over a certain amount can also attract and retain existing customers, whist pushing up sales and aggregating orders.
Meanwhile, I look forward to the drones.
– Jill Allen (ajildeakin)
Bretthauer K M, Mahar S and Venakataramanan M A, 2010 ‘Inventory and distribution strategies for retail/e-tail organizations’ Computers and Industrial Engineering, vol. 58, pp. 119-132.
Dissanayake D and Singh M 2007 ‘Managing Returns in E-Business’ Journal of Internet Commerce, vol. 6(2), pp. 35-49.
Meng Q-C, Zhang T, Li M and Rong X-X 2014 ‘Optimal Order Strategy in Uncertain Demands with Free Shipping Option’ Discrete Dynamics in Nature and Society, vol. 2014, pp 1-6.
Nguyen H-O 2013 ‘Critical factors in e-business adoption: Evidence from Australian transport and logistics companies’ International Journal of Production Economics, vol. 146, pp 300-312.
Porter M, 2001 ‘Strategy and the Internet’ Harvard Business Review, vol. March, pp. 62-78.