Modern Retail Fulfilment Update January 2024 by Modern Retail

FULFILMENT JAN UPDATE 2024 modernretail.co.uk

CONTENTS 4

NAVIGATING THE LAST MILE

THE RISE OF HYPERLOCAL FULFILMENT: HOW UK RETAILERS ARE ADAPTING

EMBRACING EFFICIENCY: HOW STREAMLINING BUSINESS OPERATIONS CAN DRIVE SUCCESS

11 SIGNS IT’S TIME TO OUTSOURCE FULFILMENT

SUSTAINABLE ECOMMERCE DELIVERY SOLUTIONS

HOW RETAILERS CAN NAVIGATE THE RETURNS DILEMMA IN 2024

Credits Managing Editor - Rob Gamage - rob@modernretail.co.uk Business Development Manager - Emma Mjekiqi - emma@modernretail.co.uk

Thanks Many thanks to all those who provided editorial content or images, helping us to compile what we hope is a useful and informative read! Please send any feedback or comments to editor@modernretail.co.uk. Modern Retail is published by Considered Digital Ltd (Registered Company Number 12684643). Tolpits Lane, Watford, Hertfordshire, United Kingdom, WD18 9SB.

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NAVIGATING THE LAST MILE By Rob Gamage, Managing Editor at Modern Retail For ecommerce retailers, the last mile of delivery has become a battleground for innovation and efficiency. As online shopping continues to flourish, businesses are seeking new ways to streamline this final, crucial stage of the customer's journey. But what exactly makes lastmile delivery so pivotal, and how are UK companies reshaping this landscape? The Critical Last Mile The last mile refers to the final leg of a product's journey, from the distribution centre to the customer's doorstep. While it might seem straightforward, this phase is often the most complex and costly part of the entire supply chain. In a market where customers expect fast, reliable, and often free delivery, optimising the

last mile isn't just an advantage; it's essential for survival. Emerging Trends 1. Drones and Autonomous Vehicles: Some UK businesses are experimenting with drone technology and autonomous vehicles to speed up deliveries and reduce human resource costs. While regulatory hurdles remain, the potential for efficiency gains is substantial. And while it seems futuristic, Amazon has announced that it plans to launch Prime Air drone deliveries in the UK by the end of 2024, with the support of the UK government. They’re not the only player taking this seriously of course. Boots is assessing the potential for using drones for the

delivery of prescription medicines, and completed a test flight from Portsmouth to the Isle of Wight in 2022. 2. Electric Vehicles (EVs): Amid growing environmental concerns, EVs are becoming a popular choice for last-mile deliveries. They offer a quieter, more sustainable alternative to traditional delivery vans, aligning with both corporate sustainability goals and urban clean air policies. Major UK supermarkets are already well on the way to transitioning their delivery fleets to electric vehicles. 3. Local Hub Systems: Another emerging trend is the use of local hubs or micro-fulfilment centres. These smaller, strategically located warehouses enable faster dispatch times and reduce the distance to the customer, thus minimising transportation costs and emissions. The Challenges Ahead Despite these innovations, the path to a fully efficient last-mile is laden with challenges. Regulatory approval, particularly for drone deliveries, is a complex process. The initial investment in new technologies like EVs and automated systems can be steep. Moreover, as

urban areas become increasingly congested, logistics companies must continually adapt to ensure timely deliveries. Summary As the UK's ecommerce sector grows, so too does the importance of efficient last-mile delivery solutions. By embracing innovative technologies and models such as drone deliveries, electric vehicles and local hubs, businesses can stay ahead in a highly competitive market. These advancements are not just about keeping up with customer expectations; they're about setting new standards in efficiency, sustainability, and customer satisfaction. As we look to the future, it's clear that those who innovate in the last mile will lead the way in the ever-evolving world of ecommerce.

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THE RISE OF HYPERLOCAL FULFILMENT: HOW UK RETAILERS ARE ADAPTING By Rob Gamage, Managing Editor at Modern Retail Hyperlocal fulfilment is rapidly gaining traction as a game-changing delivery strategy. This approach, focusing on localised storage and delivery solutions, is reshaping how retailers meet the ever-increasing demands for speed and convenience in online shopping. But what does hyperlocal fulfilment really entail, and how can it boost success in the UK retail sector?

can offer faster delivery options, including same-day or even withinhour services.

Understanding Hyperlocal Fulfilment

3. Enhanced Customer Experience

Hyperlocal fulfilment refers to the practice of storing goods in small, localised distribution centres situated close to the end consumer. This model contrasts with traditional centralised warehouses, often situated on the outskirts of major cities or even further afield. By bringing products closer to customers, retailers can dramatically reduce delivery times and respond in a more agile fashion to local market demands. Benefits of Hyperlocal Fulfilment 1. Speedy Deliveries By reducing the distance between products and consumers, retailers 6

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2. Reduced Carbon Footprint Shorter delivery routes mean fewer emissions, aligning with the growing consumer demand for sustainable business practices.

Hyperlocal fulfilment allows for greater flexibility in delivery options and easier return processes, improving the overall customer experience. 4. Local Economic Support Hyperlocal fulfilment can stimulate

local economies by utilising local storage facilities and delivery services. Potential Pitfalls Despite its advantages, hyperlocal fulfilment isn't without challenges. Implementing this model requires significant logistical planning and investment. Retailers must carefully balance stock levels at each location to avoid overstocking or stockouts. Moreover, managing multiple small centres can be more complex than overseeing a few large warehouses. Conclusion The rise of hyperlocal fulfilment in the UK is a testament to the evolving

landscape of ecommerce. By using more localised fulfilment models, retailers can not only meet but exceed customer expectations in delivery speed and convenience. While there are challenges to consider, the benefits - ranging from enhanced customer satisfaction to reduced environmental impact - make hyperlocal fulfilment a compelling strategy for UK ecommerce businesses. As consumer preferences continue to shift towards quicker, more convenient shopping experiences, the adoption of hyperlocal fulfilment is poised to become a significant option for successful ecommerce delivery. A MODERN RETAIL PUBLICATION

EMBRACING EFFICIENCY: HOW STREAMLINING BUSINESS OPERATIONS CAN DRIVE SUCCESS By Debra Wilkins, Regional Director MarCom for Northern Europe at Kardex Remstar The world of intralogistics is undergoing a major change, and staying ahead of the game is a constant challenge. An aspect that sets successful logistic processes apart is their ability to streamline operations. By optimising picking, packing and storage and eliminating unnecessary strains on staff, companies can benefit from achieving new levels of efficiency. When looking at your logistic processes a well-optimised operation can significantly boost productivity. When processes are streamlined, staff can focus on other tasks rather than getting bogged down by searching for stock across a busy warehouse. By automating workflows, and leveraging technology, you can empower your staff to perform at their best, ensuring optimal output and customer satisfaction. Cost reduction comes into play here, by identifying and eliminating inefficiencies, you can minimise wastage of resources saving both 10

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time and money. For example, automating manual processes can reduce human errors and cut down on costly mistakes. Additionally, streamlining supply chains leads to better inventory management, lowering carrying costs and minimising stockouts. Let’s not forget the customer as in today’s competitive landscape, providing exceptional customer experience is paramount. Streamlining operations can directly impact the quality of service delivered to your customers. By optimising order fulfilment processes, reducing lead times, and improving responsiveness, you can ensure that your customers receive their products or services promptly and efficiently. Which in the end delivers a competitive edge. When intralogistics operations are streamlined, your teams have more time and resources to dedicate to innovation. By fostering a culture of continuous improvement and

empowering staff, you give time to drive innovation within your organisation. This can result in new product ideas, cost-saving initiatives, and a competitive advantage in the market. Data-driven solutions are becoming more important and streamlining operations allows for better data collection and analysis. With streamlined processes in place, businesses can generate accurate and timely reports, providing insights into key metrics and performance indicators. These insights help management make strategic decisions, identify areas for improvement, and ultimately steer the organisation towards achieving its goals. In conclusion: Streamlining intralogistics operations is available now; it’s a strategic move that can transform your business’s performance and drive success. By increasing productivity, reducing costs, enhancing customer experience, boosting innovation,

and improving decision-making, you can position your business for sustainable growth and a competitive edge in the market. So, why not take a closer look at your operations today and start making incremental changes that will have a significant impact on your business tomorrow? Embrace efficiency and unlock your full potential! Learn more about how automation is key in streamlining your intralogistics processes.

11 SIGNS IT’S TIME TO OUTSOURCE FULFILMENT By Ian Hart, Head of Supply Chain Products at The Access Group For ecommerce businesses selling direct-to-consumer, the process of fulfilment can begin to become overwhelming as they grow in scale. While self-fulfilment of orders is a sensible option for retailers just starting out, there reaches a point where it can drain your business of both time and resources, take your focus away from core business objectives and lead to falling standards or mistakes.

leading the way in fulfilment, customers have high expectations regarding convenience and speed, making it crucial for any ecommerce business to get its order fulfilment process right.

When a business starts to experience struggles with fulfilling orders, it may be time to consider outsourcing fulfilment by using a 3PL provider. In this post we’re going to look at 11 signs it’s time to outsource fulfilment and get back to focusing on other business objectives such as growing a loyal customer base.

Signs You Should Consider Outsourcing Order Fulfilment

What Is Fulfilment? Fulfilment is the process coordinated by either an ecommerce business or 3PL partner to deliver orders to the end customer. The process includes: Receiving and storing inventory Order processing Picking and packing orders Shipping and delivery Return management With large retailers like Amazon 12

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Businesses that outsource order fulfilment to a 3PL partner can achieve more streamlined and costeffective fulfilment that yields a competitive edge.

Nearly all ecommerce businesses begin with an in-house fulfilment process, with most outsourcing it once they have scaled to a certain point. But where is the point when businesses should make the switch to outsourcing fulfilment operations? 1. Delivery Standards Are Slipping Slipping delivery standards are probably the best indication that it’s time to outsource fulfilment. A large number of customers will not return to your store following a poor delivery experience, so if building a loyal customer base is the goal, you should consider your outsourcing options before standards are drastically affected and customers experience late or incorrect deliveries.

Outsourced order fulfilment partners such as 3PLs providers will have the knowledge, staff, and crucially space to deal with an increase in order volume as you grow or seasonal trends kick in. You are much more likely to have correct and timely deliveries, keeping customers happy and, crucially, loyal. 2. High Basket Abandonment Rates Logistics are one of the most common factors in basket abandonment. Customers who face slow delivery speeds and costly shipping options are likely to think twice about completing purchases. Small businesses can overcome this and bring down basket abandonment rates by streamlining fulfilment processes through outsourcing. Efficiency in outsourcing will generate shipping cost savings that can be used to offset a free shipping option.

3. Low Seller Ratings Low feedback ratings are a telltale sign of unhappy customers. If you are unable to meet shipping deadlines and falling standards lead to errors, it’s time to outsource your fulfilment to a company that is able to maintain high standards before irreparable reputational damage is caused. 4. Low Conversion Rate If your conversion rate is low despite reducing your prices, offering free delivery and sending basket abandonment emails, you may be missing the impact of logistics on your success. If you are only able to offer slow shipping times, customers are much less likely to convert. Avoid this by outsourcing to a provider who can enable your customers to receive fast, economical shipping A MODERN RETAIL PUBLICATION

5. Costs Too High

7. Already Expanding

The main goal of any ecommerce business is to make a profit, so any way to reduce costs should be investigated. As your business grows, so do the overall warehousing, staffing, shipping and packaging costs. Outsourcing fulfilment will save your business money which can be reinvested into free shipping and marketing or simply added to profits. Providers such as 3PLs have the expertise and geographical locations to deliver your items as quickly and cheaply as possible, as well as saving you money on warehousing space, staffing and packaging materials.

Growth is one of the most common reasons that small businesses make the switch to outsourcing fulfilment, but why? As a business grows, you can no longer get by being a jack of all trades and controlling every aspect of the order process with all the various competing demands on your time.

6. Looking To Expand If your online business is primed for expansion, you should ensure that your fulfilment processes are too. Managing several sales channels, increasing order numbers, and ramping up marketing activities is time-consuming. Trying to manage fulfilment as well can distract you from these important tasks, especially when fulfilling more orders. Outsourcing fulfilment takes the stress and more importantly, time off your plate, allowing you to focus on your expansion plans. It also means that you don’t have to worry about the capabilities of your technology, warehouse and staff in the face of growth – your fulfilment provider will handle all of that for you. Learn more about the benefits of partnering with a tech-enabled 3PL. 14

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Another aspect is capacity; as orders mount up, handling them becomes trickier resulting in missed deadlines, overworked staff and poor standards. Having enough space to hold more stock that comes with an increase in orders is another common problem with growing ecommerce retailers yet to outsource fulfilment. Another benefit of outsourcing is fulfilment providers will have multiple warehouses in locations all across the country, allowing you to expand your delivery locations without incurring additional warehouse costs. Finally, growth generally requires the employment of additional temporary and permanent employees. You can avoid the cost and hassle of additional staff through outsourcing. 8. Lack Of Expertise You have an eye for identifying gaps in the market and selling, but you may not know much about the fulfilment process. A fulfilment partner will know the most costeffective way possible to store, pick and ship items, leading to higher profit margins and a better service for your customers.

9. Struggling To Offer Fast And Free Shipping It is common knowledge that offering fast and free shipping is one of the best ways to drive ecommerce sales. If you are not able to offer this with inhouse fulfilment, it may be time to look at outsourcing. Fulfilment partners have the technology and knowledge to meet tight delivery turnarounds, regardless of volume. With efficiency, you will also be able to make savings that can be used to offset the cost of free deliveries. 10. You Want To Simplify And Streamline Your Fulfilment Process

one day sit back and watch it run itself – not spend late nights packing orders and visiting distribution centres. If your day is spent performing several tasks in the order fulfilment process, it may be time to consider outsourcing. Get back to managing your business rather than running it. Outsource your order fulfilment to a partner who will handle everything under the shipping process while you can invest time and attention back into growing your business. What To Look For In A Fulfilment Provider

11. It’s Taking Up Too Much Time

If you are looking to outsource your order fulfilment and get back to growing your ecommerce business, partnering with a knowledgeable provider with the latest fulfilment technology is absolutely essential. Look out for providers which utilise a system such as a 3PL management system which allows 3PLs to fulfil orders, send and track invoices with simplified 3PL charging, monitor inventory levels and keep on top of your cash flow – all from a single platform.

When starting up an ecommerce business, it may be your dream to

This article was first published on the Mintsoft website.

If your current fulfilment process is a complicated combination of different services and partners, you may want to consider outsourcing. This will allow you to unify your processes and achieve cost savings, increased efficiency and consistency across marketplaces – especially useful for ecommerce businesses that operate a multi-channel selling model.

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SUSTAINABLE ECOMMERCE DELIVERY SOLUTIONS By Rob Gamage, Managing Editor at Modern Retail In an era where sustainability has moved beyond being a “nice to have” to a key consumer consideration, the UK ecommerce sector is at a pivotal point. With the continual rise in online shopping, the impact of delivery processes on the environment has come under scrutiny. This article explores how UK ecommerce businesses are turning to sustainable delivery solutions to address these concerns, striking a balance between efficiency and environmental responsibility. Eco-Friendly Packaging: A Crucial First Step One of the most immediate changes many ecommerce businesses are implementing is the shift to ecofriendly packaging. Biodegradable

materials, recycled paper, and plasticfree packaging are becoming the norm. This not only reduces waste but also resonates with environmentally conscious consumers. Retailers now have plenty of options when it comes to sourcing ecofriendly packaging. It’s now affordable and viable to completely switch to compostable mailers and recycled cardboard boxes. Such options reduce carbon footprint and also strengthen brand image among ecoaware customers. Carbon-Neutral Delivery Methods Carbon-neutral delivery is another significant stride in this journey. Companies are investing in electric

vehicles (EVs) for last-mile deliveries, offsetting carbon emissions through various environmental projects, and optimising delivery routes to reduce fuel consumption. Challenges and Opportunities While transitioning to sustainable delivery methods presents challenges, such as higher upfront costs and the need for infrastructure development, the long-term benefits are clear. These include cost savings from more efficient operations, compliance with evolving environmental regulations, and a stronger connection with ecoconscious consumers. Conclusion

solutions in UK ecommerce reflects a broader change in business priorities. By adopting eco-friendly packaging and carbon-neutral delivery methods, businesses are not just responding to consumer demand; they're actively contributing to a more sustainable future. This commitment to environmental responsibility is becoming a core aspect of brand identity, resonating deeply with consumers and setting a new standard for the ecommerce industry. As we move forward, sustainable delivery will likely evolve from a competitive advantage to a fundamental expectation, integral to the success and reputation of ecommerce businesses in the UK.

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HOW RETAILERS CAN NAVIGATE THE RETURNS DILEMMA IN 2024 By Andrew Tavener, Head of Marketing at Descartes Systems UK Dealing with returns has always been part of the retail landscape, and a painful frustration. In fact, up until the last few years, this service has traditionally been enjoyed free of charge for the majority of online shoppers. However, due to an increased desire to reduce the cost impact on a retailer’s revenue, many retailers are now charging for returns. For example, since the pandemic began, several fast fashion retailers have taken up the practice. This is mainly due to the increasing popularity of ‘bracketing’ (buying multiple sizes with the intention of returning whatever doesn’t fit) and ‘wardrobing’ (buying clothes, wearing them for an event, then returning them for a full discount). It is for this reason some of the UK’s biggest clothing brands, like H&M, Boohoo and Zara are now leading the way in charging customers for returns. However, charging for returns is by no means limited to the fashion industry with businesses like THG also charging for returns on its luxury goods and dietary supplements. Although, charging for returns may not be the golden ticket retailers think it is heading into 2024, with a recent

poll by Trustpilot of 2,000 online shoppers showing 58 per cent don’t use retailers who charge to return items, with 67 per cent admitting a retailer’s returns policy influences how much trust they place in them. Yet with returns in the US expected to have risen in 2023 by 2%, and experts predicting yet another increase in 2024, it’s fair to assume similar results will follow here in the UK and that this issue isn’t going anywhere soon... So, to help alleviate the strain on retailers, Andrew Tavener, Head of Fleet Marketing in Europe, Descartes Systems Group explains how effective route planning and optimisation can improve returns management for retailers. Improving Your Delivery And Collections Management In the dynamic world of retail, staying ahead requires businesses to constantly evolve. One way to do this is to ensure your supply chain performance and returns management is up to scratch. This can be revolutionised with the use of scalable and advanced route planning and home delivery optimisation software. By integrating this technology into their operations, A MODERN RETAIL PUBLICATION

retailers can transform their supply chain performance and returns management. Adopting certain technology in route planning solutions is also proving to be a game-changer for retailers. Route planning solutions help to optimise demand and collections capacity, along with the capability to improve service and productivity. However, the benefits extend beyond operational efficiency. It also reduces costs and streamlines the end-to-end handling of any returns. Electronic Proof of Delivery, for example, provides the retailer and consumer with a real-time view of assets. This transparency with customers means that returns can be tracked and consumers feel more confident and satisfied with a retailer too. When coupled with a warehouse management system (WMS), retailers are able to unlock more flexibility and agility too. An effective WMS enables retailers to inform customers the moment a returned item has been received, building confidence and rapport. Simultaneously, the system efficiently logs the item back into inventory, accelerating its approval for resale. The result of this is a significant 49% reduction in returns handling time, providing customers with a satisfactory experience and ensuring retailers have an updated inventory with minimal delays. The Sustainability Concerns For Shoppers Enhancing the returns process is not 20

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just a business imperative; it’s a vital step in the right direction for sustainability. As governmental and regulatory bodies consistently apply pressure on retailers to progress sustainability, home delivery and sustainability are coming together in consumers’ minds too – with many shoppers increasingly considering sustainable delivery and returns options. Descartes recent research shows and helps retailers understand not only how this convergence is changing consumers’ buyer behaviour and home delivery preferences; but also how they can take advantage of these developing preferences to help themselves and the environment. The study uncovered that many consumers care about the environment, and what retailers do about it does actually impact buying decisions. To illustrate this point, consider these key research statistics: 45% said that helping the environment is quite/very important in their daily lives 39% said that they always/regularly make purchasing decisions based upon the environmental impact of a company or a product 40% would buy more from grocers who demonstrated that their supply chains were more sustainable than the competition 50% were quite/very interested in environmentally friendly home delivery options. Therefore, it is increasingly important

for retailers to consider prioritising environmental considerations when offering both deliveries and collections. Returns not only have a damaging effect on the environment, it also creates unwanted damaging emissions. Nevertheless, even the slightest adjustments to operations can play a significant impact on the overall eco-friendliness of retail operations. Moreover, while many retailers and delivery companies continue to make commendable investments in Electric Vehicles (EVs) to curb carbon emissions, it is essential to couple these efforts with intelligent route management for deliveries and collections. This ensures the deployment of the right vehicles to match capacity with demand in realtime regardless of the mix of vehicles in the fleet. By continuously optimising routes, retailers can enhance their fleet efficiency, leading to a 5-25% reduction in fuel consumption for petrol and diesel vehicles and extending the delivery capacity for EVs. Conclusion In the ever-evolving landscape of retail, the challenges posed by returns can be met with strategic solutions that not only enhance operational efficiency but also contribute to a sustainable future.

While the prospect of charging for returns is one option to address the financial issues posed by returns, the road less travelled involves a commitment to improving processes and customer experiences. By integrating intelligent route planning and optimisation tools, retailers can not only streamline their supply chain and returns management processes but also offer a robust, sustainability-led customer experience all year round. As consumers increasingly prioritise eco-friendly practices, embracing these innovations ensures that retailers not only meet current expectations and reduce costs but also pave the way for a greener, more efficient future in the world of retail. To find out more, please visit: https://routinguk.descartes.com/

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