The last 50 metres - an old problem still unsolved

Over the last few years we’ve got used to Internet retailers reporting stellar growth figures.  40%, 60% even 100% growth has not been uncommon for individual retailers and the market as a whole was growing at close to 40%.  Over the last two or three years that growth has declined and IMRG Capgemeini e-Retail Sales Index recorded a surprisingly low 5% growth for the period January 2009 to January 2010. So is this a trend that is to continue or a blip caused by the recession?  Has the novelty worn off or is it simply a sign of the sector maturing.

One set of figures is not enough to make meaningful predictions against and in reality the future of the sector is still and unknown quantity.  Although some retailers are starting to make money, many are still not with notable names ye to turn a profit.  In part the industry has only itself to blame.  As with so many other cases it has gone for rapid growth on the back of offering lowest prices rather than accepting lower growth but on the basis of offering better service.  And the bit of the service that most influences the customer, but that the e-retailer is rarely in control of, is the delivery.  What most people want is free delivery at a predictable, ideally selectable, time and with plenty of choice at evenings and weekends.  There are very few e-retailers offering this, again preferring the lowest cost delivery option using suppliers that they prefer to keep at arms length to maximise flexibility.

We’ve known from the earliest days of home shopping that the biggest obstacle is the last 50 metres.  Even the catalogue home shopping companies in the pre-internet days knew this which is why many of them established large networks of self-employed local agents who had a relationship with their customers and knew what delivery times suited them.  So whilst the distribution centres and IT systems have become increasingly sophisticated the last 50m has hardly changed.  A further demonstration of this is the popularity of in-store collection.  Many shoppers find it more convenient to do this than hang around at home, possibly having to take a day off work, waiting for a delivery to arrive.

Of course there is an exception - the online grocery retailers.  Here shoppers can choose the day and time when they want their order delivered usually to within a two hour window.  The reason they can do this is that they all use their own fleets of vans managed using their own internal IT systems which are therefore fully integrated.  A far cry from the rest of the sector.

Other options have been tried or at least suggested :-

• the use of petrol stations and similar locations as drop and collect points - the company DX has recently announced developments in this area - but its only really practical for smaller non-perishable items
• drop and lock boxes outside people’s homes - this has never really taken off
• delivery to work addresses - some employers are happy for this to happen but other are not and its not going to be suitable or larger items.

None of these though are good alternatives to what customers would ideally like.

The real answer lies in integrated IT solutions.  Solutions that will allow customers to book delivery slots at the time of placing the order.   This requires delivery companies to develop systems that will enable simple integration with their customers, the e-retailers, and to develop more sophisticated planning systems to cope.

All that is then required is the offer of free delivery.