Sathnam Sanghera: Business Life
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Let’s face it, business can be dull. And one of the dullest aspects of business is logistics – “the management of materials flow through an organisation”, according to the Collins dictionary, but perhaps more simply described as the boring but important way companies get products places.
See, you’re drifting off already. And I’m afraid there’s worse to come. Namely, the undignified spectacle of a media ponce writing about logisticzzzz as a way of having a pop at a business that has let him down – the journalistic equivalent of someone recounting last night’s dreams in detail.
But I’ll persist because what’s good enough for Michael Winner is good enough for me. It’s the right time of year to talk about such things – after all, what is Santa’s system of elves, reindeers and sleighs but a massive global logistics exercise? And my petty dispute actually serves to make some important points about internet retailing.
To minimise your agony, I’ll keep the description of the dispute brief. In short, the screen for my home PC exploded. I ordered a replacement from Comet online. It didn’t arrive within the 5:30-8:30 slot I had chosen. Comet said it would attempt delivery the next day, but couldn’t give an indication of when it might arrive. I stayed in all day, like a 1930s housewife, but it didn’t come. I cancelled the order, and bought an inferior product for a higher price from PC World. On my return home it transpired that Comet had finally delivered the screen after all, to a neighbour. Comet said it would provide a refund if I took the screen to my nearest branch. My nearest branch turned out to be four miles away, and with various taxi fares, something that should have cost £130 ended up costing more than £190.
Of course, such experiences are not uncommon. Online retailing may be booming – the total online spend for 2007 is forecast to be £53.3 billion, 76 per cent higher than in 2006 – but there appears to have been an even steeper growth in botched deliveries. I don’t want to worry anyone but, according to one estimate, last year some 500,000 Christmas presents ordered online didn’t arrive until after December 25.
Indeed, it seems that many online retailers are going through a version of what supermarkets went through a couple of years ago, when ordering groceries on the web was an experience akin to smashing one’s forehead against a hand basin. You’d ask for a single bottle of gin and get an entire crate. You’d order some sprouts and get a copy of Gareth Gates’s album as a “substitute”. All dumped on a kerb outside your apartment block by a driver with the charm of a used razorblade.
But things are different now. I’ve used all three major firms recently - Sainsbury’s, Ocado and Tesco – and they’re all pretty good. They’re good because they’ve learnt several important lessons about online retailing which companies such as Comet have yet to absorb.
The first of these is that the delivery element of online retailing is crucial. Too many internet retailers put all their effort into flash websites and marketing, giddily assuming that the virtual world has liberated them from the need to fret about having contact with customers. But if anything, online retailing has increased the importance of getting things right when you meet your customer. At least, it’s vital to ensure that the person who delivers the product – who, after all, is the only physical contact a customer will have with your company – does a good job. Ocado and Tesco have realised this and it is presumably why they say that drivers will always take groceries all the way to your front door.
This does not necessarily mean that retailers should not use third-party couriers. Virgin Wines is dire now, but it was peerless when it employed a delivery company called Beck & Call. Like so many firms ahead of its time, Beck & Call eventually went under, but it provided a fantastic service while it lasted. Always polite on the phone and by e-mail, it would allow you to name a precise time for delivery, and would always arrive within 15 minutes of it, bringing your order to your door, cheerfully.
Which brings me to the second thing online retailers need to learn from the recent improvement of the supermarkets’ internet operations. People want their stuff delivered at a time that suits them. If you only offer to deliver on a particular day without specifying any time, you’re doomed.
A recent survey by eDigital Research found that the availability of delivery slots is more important than price to customers. This is presumably the reason Tesco now offers two-hour delivery slots and Ocado and Sainsbury’s offer one-hour slots.
The success of Abel & Cole, the online greengrocer, may suggest I’m wrong: the drivers who make its free deliveries don’t offer fixed slots and deliver according to the most fuel-efficient route for environmental reasons. But Abel & Cole is small, its customers are not typical, and online delivery is an area where scale offers greater opportunities for environmental friendliness. Another interesting development on the Ocado website is that it now points out when a van is in your area on another delivery, allowing you to save the company fuel if you want to.
This is the troubling news for online retailers such as Comet: if they want to succeed, they have to offer near Santa levels of service. They’ll have to train their drivers well, deliver products to front doors with a smile and at a time of customers’ choosing, and offer green options too – tasks that will require a great deal of dull but important work to achieve.
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