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If you're not Big Daddy, forget it... or how online retail is a lot like wrestling

20 November 2015

For me, the most interesting conclusion of the latest LCP Consulting Omni-channel Retail report - The Omni-channel Journey - focuses on the gap opening up between pioneers and followers in Omni-channel Retail, which could make very troubling reading for retail executives who looked at the online investments taken by the likes of John Lewis a few years ago and decided to wait and see what happened.

It may well be too late now for them to make the leap.

Permit me a wrestling analogy, if you will. I like to think of online retail as a big, greasy wrestling ring and every round a wrestler stays in, he gets craftier and, with a huge dose of steroids, gets bigger and stronger.

New retailers approach the ring, fresh-faced and eager, but relatively small and light. They climb through the ropes but slip on the blood and sweat and the next thing they know, their head is trapped between the meaty thighs of Amazon or John Lewis. They get slapped about a bit by investment costs, their departments aren't talking to each other; but the body slam is that their margins have been battered by discounting, fulfilment costs, missed deliveries and returns. Finally, they are helicoptered a few times and hurled back into the crowd, all to a chorus of boos on social media.

The LCP report itself (sadly) steers clear of wrestling talk, but it does say: "The winners are pulling away from the pack. This year, we see real distance opening up between Pioneers/PurePlays and the others. Both groups are highly attuned to customer needs and Pioneers are especially effective at managing customer expectations on delivery commitments and promises. The others are less effective.

"A large majority of Pioneers say the bulk of their online deliveries will be same-day/next day within one to three years. This is in sharp contrast to Challenged Multichannel Retailers where only 17% say this will be the case.

"This underlines a massive challenge this group faces and explains why Pioneers and Optimised Multi-Channel/PurePlays in particular are all prioritising investment in their back-end operations. It underpins their commitment to delivering consistently on the promises made to their customers."

The other way of looking at it of course is that perhaps the stragglers have wised up to the relatively small prize on offer, despite the glitz of online retail. Maybe they are pulling away from the all-singing, all-dancing approach to deliveries because there's very little margin in it, unless you have massive scale (Amazon) and process excellence (John Lewis). Perhaps they are gambling on enough people being satisfied with slow deliveries, as long as it is reliable and product price is low. Perhaps this will work.

But then again, the leaders could do slow and cheap as an option too, so perhaps those who have hesitated are now lost.

I can't recommend the latest LCP Consulting Omni-channel Retail report highly enough (it is the company's third annual report tackling the subject), and you can download it here.