Big Interview: Asda's push to be a 'world-leading' PUDO player

It is approaching one year since Asda launched its ToYou pick-up, drop-off (PUDO) service, and Paul Anastasiou, senior director for development within the supermarket's logistics division, is confident the technology and operational sophistication underpinning it means the initiative will become a core part of UK retailing in the years ahead.

The service allows customers shopping at a variety of partner retail brands to choose Asda as a destination to pick up or return their online orders. The thinking behind it is to provide convenience to shoppers and attract new customers into store, while at the same time giving other retailers an opportunity to increase choice in their fulfilment options.

Anastasiou, who is leading the roll-out, says ToYou has the potential to become a "world-leading" PUDO service. He argues there is "a sweet spot" gap in the market for this type of platform, and Asda – with a sizable store estate in the UK as the country's second largest supermarket – is well positioned to lead the industry in this field.

Essential Retail caught up with Anastasiou at Manhattan Associates' Exchange event in Paris this month. He told us that solutions from a number of third-party tech providers have been combined with the retailer's in-house IT architectural expertise to bring the platform to market.

Tech, logistics and retail combine

"We can't underscore enough the extraordinary job our information systems development (ISD) team have done for us," explained Anastasiou.

"This is a comprehensive programme of capabilities that touched depots in our logistics network and sortation, right into retail, trucks, kiosk technology and drive-thru technology. We even developed a wireless smartphone in our stores to be able to retrieve parcels quickly.

"Our ISD team have been the consistent conduits throughout all that helping us get this delivered in 18 months."

The backbone to the system is provided by Manhattan Associates, a company Asda has been working with since 2011 when it implemented a warehouse management system for its George clothing and general merchandising regional distribution centre. Asda has developed some of its own technology on top of using the vendor's off-the-shelf distributed order management capability for ToYou, as well as combining software and solutions built in-house and sourced from various other partners.

Manhattan's toolkit allows ToYou to choose the most optimised delivery and distribution route within its logistics network. Speaking to delegates at the Exchange event, Anastasiou used aviation terms when he said the distribution network can be monitored and adapted "in flight" before describing the service as "the first truly monitored air traffic control proposition in the industry" as the journey of a parcel can be tracked from initial order at a third-party partner's website to when it arrives in a customer's hands.

The ToYou website is built on Walmart technology, while Tata Consultancy Services created the store apps and API technologies. Metapack's Delivery Manager platform is also utilised, while Asda's longstanding partnership with Oracle Retail led to some components from the tech giant appearing in the ToYou solution.

"The tech and the way we use it gives us that edge and gives us real-time visibility of what's going on," noted Anastasiou.

"We can be proactive about what we see and what we do to drive the quality of service for clients. Essentially the tech has been built to address some of the pain points we experienced and what customers were talking about in terms of receiving their products post checkout."

Customer research by Asda found shoppers wanted certainty that their delivery was going to arrive and they also wanted to receive goods quickly. The market research indicated they would like to easily track where their order is in the supply chain and have access to a simplified returns process. This knowledge of customer requirements helped form ToYou, with senior logisticians within Asda looking to build a concept around the parcel waiting for the customer as opposed to the other way around.

Operating seven days a week, Asda's ToYou can process orders from third parties made before midnight in time for next-day or 48-hour delivery to store. It comes with a mobile-optimised tracking service for consumers, and typically retail partners start their relationship with ToYou by investing in the returns channel.

There are some plans under way to use mobile technology to understand when customers are arriving to pick up the parcel, which will give Asda a chance to prepare the item before people enter the shop.

"That's the direction of travel we want to go down," said Anastasiou.

Fashionable service?

To date, the majority of third-party retail partners to sign up to the ToYou service are in the fashion sector.

Asda launched the initiative with Missguided, added Asos to the mix soon afterwards and it now works with 11 brands in total including Fat Face, M&Co and PrettyLIttleThing.

So far this year, the service has handled around four million consignments – the vast majority of which have been orders for Asda's own general merchandise and fashion range. But Anastasiou is expecting the fourth quarter of 2016 – retail's golden quarter, as it is known – to provide "a good springboard" for the platform, and he says conversations are ongoing with potential partner brands from an array of sectors.

The cage network adopted by Asda means it is not heavily restricted in terms of the parcels it handles, according to Anastasiou, who says this enables the business "to handle a broad spectrum of commodities – from fast fashion, to general merchandise to small furniture". The newly created is the most recent partner to sign up, highlighting the potential of the service outside of fashion.

"Our dimensions as a PUDO supplier are probably the most generous in the marketplace. We can take 90-60-60 up to 25kg. My knowledge suggests that it's probably the biggest and heaviest at this stage. We'd like to have a good blend of retailers across different commodities."

The service allows Asda to utilise its 618-strong store estate for something other than the big weekly shop and provide additional services for the 18 million customers it serves on average every week. By using existing Asda property ToYou is able to offer what it views as a "commercially competitive" pricing model.

"The technology is very different and clearly this is an enterprise class technology project as well as being a brand new parcel service," Anastasiou added.

Supermarket sweep

New collection points and parcel drop-off points have been cropping up in UK supermarkets for a number of years now, with the various examples showing the grocers' creativity when it comes to driving store traffic, working with third parties and looking at ways to enhance customer service.

Waitrose and John Lewis, which are part of the John Lewis Partnership, have leveraged their relationship to allow the supermarket's shoppers to pick up their online orders from the department store. Meanwhile, Sainsbury's and Argos's recent merger is fundamentally built on its potential to create a vast, nationwide network of destinations to pick up products from multiple brands, Sainsbury's, Argos, Habitat and eBay.

Morrisons has stores from PUDO service provider Doddle within some of its shops and, like a number of other retail establishments, also provides a home to Amazon lockers allowing consumers to collect online orders from the e-tail giant. There are numerous other examples of in-house click & collect and third-party delivery partnerships in evidence throughout UK supermarket store estates.

So, why does Anastasiou think Asda is set to be "world leading" in the PUDO space? What is it that fundamentally makes the grocer stand out from the crowd when it comes to its ToYou service?

"We're seeing supermarkets emerge now as parcel collection and return destinations but ours is the only solution out there that is owned and operated by one business," he said.

"It's our logistics, it's our retail, it's our colleagues, it's our technology and it's our service, whereas in the other examples that are emerging it's maybe a parcel carrier handing over to an independent retailer or retail chain. In some instances it's someone else's technology. We're completely owned and operated by one business."

He added: "People can go and put parcel formats in shops and supermarkets but ToYou is end-to-end controlled by one business, be it the wheels of the trucks or the technology, and this gives us, we think, a USP."