Big Interview: IMRG's head of e-logistics Andrew Starkey

Delivery and fulfilment are fast becoming the most important aspects of a retailer's offering as the eCommerce market continues to grow year on year.

Andrew Starkey, who is retained by e-tail trade body IMRG as its head of e-logistics and runs the association's e-retail delivery and logistics programme, believes that after his more than 30 years in the sector, this development is not before time.

With more investment and strategic focus on the final stage of the supply chain – and if recent innovations in data management continue to develop – he suggests there is no reason why retailers shouldn't be striving for "utopian" delivery service levels where consumer demands are always met. So should it be aiming for 100% success rates?

"Every other part of the e-tail process doesn't accept anything less than that," argues Starkey

"If a retail website hangs or the checkout fails, will you use that retailer again? The same questions can revolve around delivery – if a customer's delivery fails they'll stop using that retailer.

"With consumer expectations now being driven by mobile devices in a digital environment, delivery will become every bit as crucial as the checkout working, payment processing or the product being right – delivery is that important."

And Starkey has figures to back up these views. The IMRG UK Consumer Home Delivery Survey 2013, which he developed on behalf of the e-tail group, indicated that 74% of consumers cite a bad delivery experience as having stopped them from using a particular retailer.

A total of 500 UK households containing 900 adult consumers were questioned for the research, with one of the more intriguing findings being that 80% of respondents named online tracking as the tool they thought would make deliveries more convenient. This was highest score of all the options presented.

The good news for the British public is that technology is at such an advanced stage now that retailers are able to provide these services. Companies such as MetaPack, Global Freight Solutions and Scurri have developed systems that join up the data from the moment a shopper makes an online purchase, all the way through the warehousing process and right up until the carrier arrives at a consumer's door.

Customers requesting to know where their delivery has got to in the supply chain and when they should expect it to arrive at their home or designated drop-off point can be informed accurately and promptly.

"The technology enables dynamic, service-led carrier selection, which means the consumer is getting a more tailored service," Starkey explains. "Gone are the days when you get to the checkout and you are told it is one service or nothing."

It is a combination of technological advancement and the organic growth of the online retail industry that has helped drive an improvement in fulfilment efficiency.

Four to five years ago, the value of the UK e-tail market was growing at a rate of around 20% a year and in 2013 it is still expected to jump up by around 12% compared to 2012's levels. In short, retailers are continuing to focus their investment in eCommerce operations, so this has naturally led to upgraded systems.

Wider realisation among retailers about the importance of delivery arguably arrived in Christmas 2010, when snow and freezing weather had a hugely negative impact on the number of parcels reaching consumers' homes.

Starkey adds: "Carriers got a roasting and retailers demanded more. Carriers said they weren't being paid enough, but in April 2012 Royal Mail got commercial freedom and started putting its prices up, which then allowed the whole industry to raise its prices.

"Some of the carriers are taking the higher margins they can now achieve and investing this in better delivery performance. Retailers are paying more but the quality is improving."

There are exceptions, of course, but widely speaking carriers are failing less, fewer delivery attempts are required – and for retailers that can get this right, it should result in a reduction in lost custom.

According to the MetaPack Delivery Index, which is produced in conjunction with the IMRG, things are moving in the right direction. Starkey suggests that around 18 months ago carriers were reporting approximately a 10% failure rate, although this excludes situations where cards were left in a customer's absence as this is viewed by the delivery industry as a successful attempt.

By adding the 4% of carriers that turned up on time but were unable to leave a parcel because the customer was not present, this equated to a broken delivery rate of 14%. But these figures are reportedly coming down, with carriers now viewing failed delivery at around 8.5% and total missed deliveries standing at around 12%.

Research undertaken by Starkey and IMRG in April 2012 showed that the cost of delivery failure for retailers, carriers and consumers was around £850 million a year, but an update to this study is due next spring and it is expected that service improvements and technological advancements will have driven down the cost.

So if fulfilment is improving what will the next battle lines in delivery be? The likes of Asos and Dixons Retail have put a strong focus on next- and same-day delivery, with the former now offering midnight cut-offs for next-day orders and the latter becoming the first UK electrical business deliver to customers on the day of an online order.

John Lewis and Waitrose, meanwhile, are examples of companies that have invested significantly in click & collect, while Amazon's locker system is a relatively new innovation in retail and still trying to find its place in the overall fulfilment process.

"I would imagine the next battlefield is the improved use of order and in-transit data to give the customer the perfect experience," argues Starkey.

"Consumers want regular updates on every delivery they order. Retailers need to be able to say 'No matter where you are or what you are doing, I will inform you where your delivery is'.

"If that delivery does not fit your schedule you will have the option to defer delivery or have it dropped off at a different place."

Lockers and collection points, he added, will never be the mainstream solution – and his research shows that 80% of consumers prefer delivery to home and will only look for an alternative when this isn't possible.

"The two market leaders on delivery have always been Amazon and Asos as both organisations recognised early on that delivery was a differentiator for their retail proposition," Starkey states.

"Amazon was the first to come up with prime [a service which sees customer pay a set annual fee to receive free deliveries], while Asos is leading the way in terms of responding to customers' needs. If the consumer wants it, Asos will find a way to make it happen.

"Both anticipate what the consumer wants and understand that delivery is an integral part – and they will innovate to make this part of the retail process work."

It appears that a retail component which may in the past have simply been viewed as the unfashionable process of getting goods from A to B has now been transported onto the priority list of any major retailer wanting to operate successfully in today's fast-paced market.

If companies of the calibre of Amazon and Asos are making it such an essential part of their growth strategies, one would argue that logistics – and in particular e-logistics – is now very much on trend.