Many brand owners and retailers still have a P&L for each distribution channel: one P&L for their retail channel, one for e-commerce and one for the wholesale channel. Logistics is also organized per channel (‘silo’). But if you put the customer in the center, you need an omni channel strategy to accommodate buy everywhere – shop from everywhere - return to everywhere.
That e-commerce is growing is not new. Internet sales in the UK topped 112 bln euro already. But also online sales in Germany, Sweden, France and the Netherlands are in the range of 7.5% – 12% of total retail sales (UK 15%).
“In order to create one brand and shopping experience, brand owners and retailers cannot make a distinction anymore between the online world and the brick and mortar world. Omni channel is the way forward”, explains Patrick Haex, managing partner at Buck Consultants International. Research shows that 70% of the customers expect to view in-store inventory online, but only less than 1/3 of the retailers is able to fulfill this expectation. Interesting fact: only 1 out of 3 customers are likely to visit a store if they do not have visibility to the item’s in-stock status.
Buck Consultants International recognizes various fulfillment models: drop ship from the vendor to the customer (Lenovo, Apple, KidKraft); dedicated distribution centers for e-fulfilment (Urban outfitters, Tesco, Esprit); combination centers with stores and on-line costumers serviced from the same distribution facility (Mango, GAP); distribution via stores (Ikea, Staples). Patrick Haex: “Hybrid fulfillment networks are emerging to unlock the inventory in the chain and sell products at full price rather than mark down the inventory”. Regarding locations of fulfillment Patrick Haex comments: “Companies migrate closer to the end consumer. You have to be fast when it needs to be fast to win the sale. For same or next day delivery we advise for larger metropolitan areas such as London, Paris, Moscow and Shanghai, rapid fulfilment centers”.
Buck Consultants International has made a tool to assess transport & delivery to define best in class e-commerce networks. “Given the fragmented European carrier landscape and the high costs of integrated parcel shipping, brand owners or retailers need to be able to connect with many carriers. We have an excellent understanding of which carrier in all geographies of the world can deliver and perform according to the specific requirements of a client.”
For more information about e-fulfilment, from network design to transportation management and warehouse design, contact: