The chief sales and marketing officer at DX, a leading independent mail, parcels and logistics end-to-end network operator, says Cyber Weekend has to deliver
Recent figures from the IMRG Capgemini e-Retail Sales Index show disappointing sales results for retailers during the 2014 festive season. This was despite the popularity of sales days such as Black Friday and Cyber Monday, which saw members of the public thronging stores and retail websites to get the best deals. In reality, these scenes masked the fact that retailers experienced an overall drop in Christmas year-on-year profits and impacted their margins across the board.
Many retailers have been taken by surprise at how fast festive shopping days have taken hold in the UK. These commercial traditions, imported from the US, where they were designed to capitalise on the Thanksgiving holiday, stand out as oddities in the UK calendar. With little relevance to the UK retail market, companies should ask if it is worth over-burdening delivery networks and sacrificing profits in order to cater for them.
One reason for this shift in thinking is that there are doubts about whether events like Black Friday actually increase revenue, or if they are just a focal point around which revenue has accumulated. Results for the Christmas trading period from a number of big names of British retail have suggested the latter. What is certain is that the price cuts and sales promotions which have helped drive the shopping days have put pressure on profit margins. And without a significant rise in turnover across the whole month and a reliable method for consistently getting the deliveries to customers on time, the arguments against the Cyber Weekend mount.
The question is: how can retailers re-direct the seasonal spikes in business so that it is more practical, sustainable and profitable? One solution could be to present targeted offers to loyal customers that encourage them to make their Christmas purchases during quieter times over the festive season, thereby ensuring that the sales peaks are spread out a little more evenly. This would help reduce the strain on the logistics networks, which do not have the same flexibility as online sales platforms to cope with such spikes in business caused by short-term, high-impact sales strategies. This logistical challenge has been made greater by factors such as driver shortages, poor weather and an overburdened road system.
Consequently, it is important to ask if these shopping days are actually a good idea at all. If, after consideration, retailers decide the answer is yes, the next question must be how the planning can be changed in order to safeguard brand reputations and mitigate the negative impacts on retailers at this important time of year.
Spreading the pressure put on the supply chain through bespoke delivery is one answer to easing the strain on bulk orders and (quite literally) delivering on retailers' promises. One option, used by retailers like Debenhams last year, is to promote a wide choice of delivery options throughout the checkout process in order to sell the merits of bespoke deliveries. In doing so, retailers can stagger, simplify and shorten the delivery of their products, often cutting out the most costly 'final mile' deliveries entirely.
Another bespoke option that has to be taken into account, particularly in the DIY industry, is the use of two-man deliveries. Having two couriers is often necessary to deal with heavy or more valuable items and to deliver to the customer's 'room of choice', but the need for this more expensive resource makes planning for these two-man teams especially important in order to ensure they are working efficiently.
There are a number of lessons to be learned from the 2014 Cyber Weekend, among which is the option of simply avoiding it next year. But, if handled carefully, there are undoubtedly some opportunities for gain. To maintain a strong brand reputation through the festive season, however, it is essential for retailers to consider how deliveries can most effectively support peak sales periods.
10 February 2015 | 11:29 |