Getting the goods home

The speed and accuracy of delivery has become a battleground as retail businesses modernise their offerings to meet customers’ growing demand for convenience.

This, in turn, has led to a proliferation of delivery companies. In an industry where a select few providers once reigned, new players have arrived with new ways of getting products into the hands of customers more quickly.

While this is generally good for the consumer, pushing the price of delivery down due to competition, the same cannot necessarily be said for retailers.

“With a flood of new delivery services, retailers may find it overwhelming to accommodate all of them,” IBISWorld senior industry analyst Bao Vuong tells IRW.

Where some delivery services focus on a single product type, others create a platform that allows gig-economy-style work arrangements, with “workers” taking on delivery jobs as they are processed and posted to the platform.

For example, while GoFetch considers itself a technology company before anything else, it has created a platform that allows its 5000 “fetchers” to take on as many, or as few, jobs as they like, allowing the business to offer delivery services 24 hours a day.

“In effect, we’re an on-demand courier service,” GoFetch founder and chief executive Blair Smith says.

The business was started as customer-to-customer solution, but after noticing that law firms, florists and coffee-bean roasters were using the service to get last-minute items, Smith created a B2B offering.

“[The retailer] might already have had an existing arrangement with a traditional courier company, but they weren’t working at random hours or within a 90-minute time frame,” Smith says, noting the demand for such delivery hours is a problem for major
delivery providers.

Specialising in one product: alcohol

In contrast to GoFetch’s category agnosticity, Tipple has made a name for itself by doing one thing and doing it well: delivering alcohol to customers as soon as possible.

“There are definitely scenarios in which a trip to the bottle shop is inconvenient, impractical or just not feasible,” Tipple founder and chief executive Ryan Barrington says.

“We see ourselves more akin to a Deliveroo or UberEats, and can see that segment of on-demand delivery being the sweet spot for online alcohol delivery.”

Like GoFetch, Tipple started small, but in August, 7-Eleven acquired a majority stake in the business to deliver alcohol from its stores. This focus on a single item has allowed Tipple to optimise its approach, and its on-demand nature means it rarely runs into the issue of arriving to deliver an item to find no one present to collect it.

But that is not always the case when using other delivery methods. According to Mark Teperson, chief digital officer of Accent Group, which owns Platypus, The Athlete’s Foot and Hype DC, among other footwear brands, instances when an order cannot be delivered are rare, but it still requires work to ensure that they are as rare as possible.

Earlier this year, to show Platypus customers that the brand was committed to delivering orders to customers “by any means necessary”, the retailer filmed Platypus employees ferrying packages by skateboard, bike and foot.

The short-lived stunt was purely marketing purposes, but Walmart launched a similar initiative last year in its bid to compete with Amazon, and it’s still going strong.

Accent Group has invested more heavily in turning its 450 stores across numerous brands into distribution centres to allow fast and easy delivery to customers across Australia.

To facilitate this, Accent Group had to get couriers on board with heading into stores to pick up the goods for delivery.

“In metropolitan areas, it’s not difficult because these courier services are already in the shopping centres delivering products, so it really just becomes a pick-up point,” Teperson explains.

“In regional areas it is a bit more challenging, but given the volumes that we deal with and the size of our business, we’ve been able to work with our freight partners to provide the level of service we need.”

Even so, facilitating this partnership between multiple delivery services and a single retailer spread out across the country has required Accent Group to invest heavily in its internal supply chain and logistics teams.

“If I look at the types of carriers we have, or the services we provide our consumers, we probably [have] two or three times more complex a business than we did three or five years ago,” Teperson says.

“[We’re] looking to achieve as frictionless an experience as you can [and] when it works it’s brilliant, and when it doesn’t it’s terrible… Fortunately it works in the vast majority of cases.”

How can retailers cope?

IBISWorld’s Vuong notes that, as some retailers have already created issues for themselves by trying to accommodate too many of these services at once, it is in a business’s interest to decide on a distribution plan before getting in too deep.

“It is in the advantage of retailers to focus on a small number of these services that work best for the business to avoid undue stress that it would create by using multiple delivery service providers,” Vuong says.

“This can vary from retailer to retailer. Some may only want to use the one delivery service that is the most cost-efficient, while other retailers may decide that using multiple delivery services is in their best interest.”

As Teperson notes, in order to facilitate a nationwide delivery offering at Accent Group the internal logistics team had to grow substantially in order to cope with the added complexity each freight service brought. And while not all retailers have the focus on delivery that Accent does, all retailers should be considering delivery as a key part of their business.

Comments

Comment Manually

I have read and agree to the Terms and Conditions and Privacy Policy.

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Inside Retail Polls

As FY18 draws to a close, how would you describe your company's full-year results??

Twitter

.@Wesfarmers to purchase @catch_au for $230 million, with @Kmart_Australia and @Targetaus to benefit from the marke… https://t.co/RNsoNC7H0R

1 week ago

Australian brand house #Gazal acquired by @PVHcorp in order to have greater control over its brands, such as… https://t.co/lHAdi7mKmg

2 weeks ago

Two thirds of Aussies are looking for discounts online says @PayPalAU, while retailers seek to slow price markdowns… https://t.co/54hjxgpGax

3 weeks ago
x

SUBSCRIBE
FREE NEWS BRIEFS Get breaking news delivered