02/10/2013 | Expert opinion - Florent Boizard, Logistics Solutions Product Manager, Hardis Group
Cross-channel marketing has proved commercially effective, but it has also made logistical flows more numerous and complex. Three stages for designing a transport strategy that will provide impeccable quality of service, contain transport costs so as to keep delivery costs at an acceptable level, while at the same time preserving margins.
The complexity of cross-channel transport
Commerce is undergoing (r)evolution, with a proliferation of sales channels: dedicated stores, distributors, e-commerce and m-commerce (direct or indirect), etc. Until very recently, these sales channels were mutually "watertight". But their boundaries are tending to crumble under pressure from customers, who want to be able to order, receive or return their purchases where, when and how they choose: for example, to be able to change a product purchased on the Internet in a store, or to place an order in a store and have it delivered to their home.
So multi-channel is gradually changing into cross-channel or omni-channel, to the benefit of customer satisfaction and sales growth. A corollary of this is the proliferation and increasing complexity of the delivery and return flows among the physical points of sale, tens of thousands of pick-up points, twelve million doors to deliver to, not to mention the intermediary warehouses for cross-border deliveries.
Point to watch: e-commerce delivery costs
Despite these developments, e-commerce delivery costs still sometimes constitute a brake on purchasing, because the charges are felt to be too high. And sometimes with good reason: shipping costs can represent more than 50% of the price paid, particularly with very low-cost goods. At the same time these costs represent a very important part of merchants' operating costs, sometimes even affecting their margins.
For retail distribution professionals, the challenge of cross-channel is going to be in reconciling quality of service (deliveries, returns, etc.) in order to improve customer satisfaction still further, with optimization of transport costs and preservation of margins.
Stage 1 - Bring transport costs under control
In the great majority of cases, brands and distributors rely on outside providers to make deliveries and take back merchandise: the first stage, of an operational nature, consists in systematically controlling the services invoiced by the transporters. According to estimates commonly accepted by the market players, systematic checking of invoices (order canceled but transport paid, change of mode delivery, etc.) enables transport costs to be reduced by as much as 5%.
More broadly, a cross-channel transport strategy should not try to save by omitting an in-depth analysis of the real costs of transport: average cost by merchandise, region, order, etc. Once defined, these metrics also enable the merchant to regularly compare providers' tariffs by means of simulated transport contracts.
Stage 2 - Ensure quality of service
The second stage aims to measure customer satisfaction. Because it's not enough to just deliver - you have to do so within the timeframes that apply to the mode of delivery chosen by the client, while at the same time ensuring impeccable quality of service: product in good condition, package opened in the deliverer's presence, etc., the ideal being to be able to anticipate any anomalies so as to be able to warn the client, or to systematize the treatment of disputes with transporters.
In order to attain these objectives, the best solution by far is interconnection of the merchant's information system with those of these providers: reports of non-delivery or rejection of packages can then be forwarded in real time to the merchant's customer service department, which can then contact the client to try to resolve the problem as quickly as possible. In the longer term, the interface of the information systems will enable the measurement of the quality of service of each of them to be automated: rates of conformity for deliveries, delays, damage, etc.
Stage 3 - Finalize your cross-channel transport strategy
The preceding stages constitute the indispensable prelude to the decision on cross-channel transport. We start by reexamining the delivery modes (pick-up points, delivery to stores, homes, etc.) by reference to their profitability: certain delivery modes may be eliminated or, on the contrary, intensified depending on the type of products sold, the time of year, etc. And more generally, all the indicators will enable merchants continuously to adjust their transport strategy: delivery charges, not so high as to put customers off, not so low as to risk eating into their own margins. Or renegotiating contracts with transport providers, or even changing providers, in order to improve the quality of service delivered to clients.
Only by doing so will merchants be in a position to find and maintain a balance between the real costs of transport, the expenses billed to the client, the brand image and, ultimately, the growth of the company's sales.
Three stages for designing an effective cross-channel transport strategy