Expert Column: Why e-Grocers Need Customer-facing Supply Chains
Technology has been helping to enable online grocery supply chains for more than 10 years. However, the original model relegated the supply chain to a background operation. With an increasingly saturated online market, offering differentiated services and making money have become critical success factors. To better compete, leading grocers and other retailers are making their supply chains, and in particular supply chain technology, part of the total customer experience, starting at the order and ending after the goods are delivered.
Interestingly, this approach not only benefits the consumer, it also helps the retailer drive down its own costs and improve productivity. The strategies and technologies for better leveraging home delivery are rapidly advancing across the globe. Following are three great examples of how retailers are using technology to make their supply chains customer-facing.
Dynamic Delivery Options
One of the biggest challenges for retailers is creating delivery density that helps drive down delivery costs by lowering the number of miles driven to serve each consumer. The best place to increase delivery density is when the consumer is ordering. Rather than using static delivery slots, dynamic delivery appointment-scheduling technology provides consumers with delivery windows that take into account orders already in the system and the costs of the delivery options unique to that customer. The retailer can choose which options to present to the customer to help increase delivery density, improving productivity and reducing costs.
Ocado, an online grocer in the United Kingdom, takes this a step further by highlighting potential delivery times already planned in that area. These times are positioned as ecologically friendly, since they're close to other deliveries and consume less fuel. A significant number of customers choose them to help the environment, but they're also helping to lower Ocado's delivery costs.
Dynamic delivery scheduling also provides an opportunity to drive incremental revenue through premium delivery windows and value-added services. Retailers such as John Lewis in the United Kingdom offer multiple delivery widow options (e.g., seven-hour, four-hour and two-hour) to their customers during the buying process and price them accordingly. In addition, installations for items such as large-screen TVs are "one-click" options that consumers can easily choose before they check out. The result is that John Lewis has added millions of dollars to its top line as consumers select premium delivery windows and incremental services.
Fulfilling Orders – and Beyond
Woolworths, the Australian retail giant, out out a 30-second commercial that sums up its entire proposition for online grocery and home delivery. In the commercial, Woolworths does a phenomenally simple job of demonstrating how easy and seamless it is to order and deliver groceries. Delivery appointment booking and real-time delivery tracking are all part of its customer-facing apps.
However, most interesting is how the company engages the customer post-ordering. When customers book an order, they have three-hour delivery slots, but when the orders are to be delivered, the slot narrows to 30 minutes and the customer is notified of the tighter time window. In addition, Woolworths has a simple real-time "ETA" button that the customers can use to determine exactly when their delivery will arrive. The company's results are an interesting mix that shows how it has dramatically improved its customer satisfaction rates. Online revenue is up more than 50 percent, yet the number of customer calls to the call center has been cut in half! Woolworths customers no longer wonder where their deliveries are.
Home delivery strategies and technologies are still rapidly evolving. However, it’s clear that leading retailers across the globe are using technology to make their supply chains part of the "front office" to unlock value for their customers and their own companies.