A peaky blinder or a peaky nightmare?
29 January 2015
Now the dust has settled on the Christmas fulfillment and delivery peak, Handling & Storage Solutions brings together some insightful quotes as the experts begin to make sense of a particularly ‘peaky’ peak.
This graphic from IMRG and MetaPack is useful when trying to make sense of a very busy Christmas season for retailers and a particularly challenging one for fulfillment and delivery operations.
The graph is taken from the IMRG MetaPack UK Delivery Index and shows a ‘tsunami effect’ on demand caused by exceptional sales activity over the Black Friday weekend.
There was a fall in volume either side of this exceptional spike in demand over the Black Friday (28 November) to Cyber Monday (1 December) weekend. The delivery peak in previous years has tended to occur on the week after Cyber Monday.
The unprecedented demand seen over that weekend was on top of parcel delivery volumes that were already 70% above that of a typical month.
So many orders in a short space of time overwhelmed some retailer and carrier operations, with the result that ‘on time’ delivery performance fell from a record November high of 93% to a record December low of 85.2%.
Adgild Hop, principal, head of Retail Consulting, Capgemini
"2014 has been an important milestone for the online retail sector, with the £100 billion mark being exceeded for the first time. When we consider that almost £1 in every £4 is now spent online, and that a large proportion of the other £3 is influenced by some form of digital interaction, it becomes very clear that retailers need to continue to embrace the opportunity that e-Retail poses.
"Additionally, we need to be cautious about the tendency of retailers to chase sales volumes at the expense of customer intimacy and profitability. Black Friday was unquestionably a success for the value-seeking consumer, but for retailers themselves, its success is not quite as clear. Spending was brought forward a month earlier, at much lower margins for retailers, as a result of the discounts available to customers in November.”
Dick Stead, executive chairman of Yodel
"The model of next day delivery as standard for all orders simply has to change when volumes unexpectedly increase to such an extent, in a capacity constrained business.
"We have seen that the majority of retailers are unable to accurately forecast future demand. The carrier industry cannot be expected to take all the risk, investing in building networks that are capable of handling unspecified peaks.
"Working together, we need to find a method of spreading volatile parcel volumes to match the industry capacity, while delivering a high quality service that meets everyone’s requirements. That may mean that 48 and 72 hour services become the standard during peak periods, and where required, next day deliveries are available for a premium.”
Andrew Starkey, head of e-Logistics at IMRG
"The concentration of demand over the super sales weekend caused a spike in orders on top of already record volumes for the Christmas shopping period. Some retailers could not pick and pack orders fast enough and the change in the demand pattern temporarily overwhelmed some collection and sortation operations. However, after a short disruption in service levels the industry responded heroically and brought Christmas in on time.”
Don’t miss Meta Pack’s Delivery Conference next week. Andrew Starkey will be debating the troublesome peak season and other e-logistics issues at the Delivery Conference on 3rd February.
Angela O’Connell, marketing and strategy director, MetaPack
"The industry experienced unprecedented pressures at the beginning of December due to surges in demand across Black Friday weekend which heavily impacted both retailers and carriers. But overall the story of Christmas 2014 is a positive one and demonstrated the tenacity of the retail industry in recovering from significant challenges. We saw almost all carriers clearing their pre-Christmas deliveries so effectively that many orders scheduled for delivery after Boxing Day were delivered before the 25th. There’s no escaping retailers and carriers need to consider how to manage another Black Friday peak but the data shows final mile deliveries coped very well with Christmas 2014’s record volumes.”
Andy Street, MD of John Lewis
"This year confirmed the new shape of trade for Christmas, with an early peak at the end of November driven by Black Friday and last minute gift buying.
"With Black Friday driving a higher proportion of online sales and customers increasingly wanting more convenience, this has meant a real concentration on fulfillment, making this a truly 'Logistics Christmas'. The investments we have made and the new capabilities we have built in recent years in Distribution and IT have been fundamental in ensuring we successfully navigate this changing shape of trade.”
John Lewis online sales grew 19% year-on-year for the five weeks to 27 December 2014, representing 36% (versus 32% last year) of total John Lewis sales.
Remarkably, Click & Collect dealt with 56% of online orders overtaking home delivery as the most popular option.