The word omnichannel almost feels like yesterday’s news. A buzzword in a retail industry that continues to evolve at a vigorous rate. So much has been written, deliberated, and scrutinised it would be easy to think that we have already reached a stage of omnichannel maturity. The truth is that very few retailers have invested and optimised their solutions beyond the initial ‘we need to do something quick’ stage.
Click & Collect was for many retailers their first foray into omnichannel, connecting online customers with their physical store networks at a time when the high-street was at its most vulnerable. Our recent survey of European retail leaders (available here) highlighted just how popular such programs have become, with 100% of the UK multi-channel retailers, and 94% of French retailers surveyed offering Click & Collect among their delivery options.
It is unfair to say that the industry is standing still.
We are seeing moves by retailers looking to optimise both the efficiency and profitability of existing solutions. Click & Collect was traditionally associated as a free-cost delivery option, however 19% of those UK retailers surveyed in our report now charge a minimum spend threshold to avoid delivery charges. Just this week we have seen Debenhams and Mothercare introduce low value minimum spend thresholds to qualify for free Click & Collect delivery. With an average qualifying-spend of £26.66, retailers are not looking to punish customers, but instead recoup some of the expenses on the lowest of order values.
Only a small number of retailers have really leveraged the potential for large scale cost savings, coupled with the positive impact on customer satisfaction. The majority of Click & Collect offerings today rely on online orders being fulfilled from a central warehouse (much in the same way as orders delivered to the customer’s home address), which are either fulfilled through store replenishment processes or delivered via carriers straight to stores. The most successful retailers are utilising a combination of store and warehouse stock for Click & Collect orders. Thereby greatly reducing delivery costs and waiting time for the customer before their orders can be collected in-store. Additionally, such tools readily support super-fast same day delivery services to customers located in close proximity to participating stores.
Narrowing the gap.
Despite the noticeable trend in retailers using their stores as alternative delivery destinations, there is a clear gap when it comes to those same retailers enabling those locations for in-store returns. On average one quarter of Click & Collect retailers in our survey did not support in-store returns of online orders. While surprising for some, it does highlight the fact that many retailer’s current systems struggle to put in place cost efficient and accurate processes to re-enable returned items for resale. However, just as with Click & Collect providing additional purchase opportunities with each collection, in-store returns provide opportunities to convert refunds into exchanges. With returns being such a costly part of online shopping, any opportunity to reduce these levels directly benefits both bottom line profits and customer satisfaction.
The German retail market in particular has been a relatively slow omnichannel adopter. In our survey only 74% of German multi-channel retailers offer Click & Collect delivery and 42% in-store returns. Although local options such as DHL PackStation and Hermes Paketshops offer alternative drop-off and collection points for customers, they provide little to no incremental benefit for the retailer. Many German retailers are clearly missing out on the benefits of omnichannel fulfilment for fear of changing in store processes and driving organisational changes.
Accelerate your omnichannel journey.
Omnichannel late comers and early adopters alike need to raise their games if they want to remain competitive in today’s retail environment. With increasing pressure from competitors, rising customer expectations, and falling product margins, retailers must look to optimise all advantages available to them.