20 May 2014 | Bhavisha Mistry
Online shopping has become big business in the UK, with more and more customers opting to shop online. But what was once a preference for a home delivery service has changed to a click and collect service (CCS) whereby consumers purchase items online then collect them from the store themselves.
One consultant forecasts that the use of CCS will overtake home deliveries this year. Consumers find this a more convenient way of shopping, avoiding queues but not necessarily waiting around at home for deliveries.
And the CCS is not just used for non-food items. Asda became the first supermarket in the UK to introduce CCS for food whereby customers can pick up their groceries from temperature-controlled lockers.
With the proliferation of internet sales and CCS, and a reduction in the number of home deliveries what is the future for the logistics sector?
Retailers are going to want to get goods to stores quicker and logistics providers (LPs) are going to have to work harder to accommodate this.
A whole range of factors will need to be considered. LPs may consider setting up smaller warehouses located nearer to retail outlets to reduce travel times and have more employees on flexible working contracts.
It is likely that the contract between the LP and the retailer will contain more stringent service levels and KPIs to incentivise on-time deliveries and there will be a rise in the use of tracking and other software to prove that deliveries have been made on time and goods have been delivered in the correct condition.
Above all, in order to remain competitive it will be key to keep prices down. One solution may be to propose a collaborative approach whereby multiple retailer customers share truck fleets, drivers and warehouses.
What LPs will need to keep in mind is that the online market is still uncertain. After all it was once thought that online shopping was going to lead to demise of traditional bricks and mortar outlets but CCS proves this is not the case.
Ultimately cost will be a major factor. The LPs are going to have to make a thorough assessment of how much they wants to invest and act fast as the rise in online shopping will also see a rise in new and innovative LPs.
☛ Bhavisha Mistry is a solicitor at law firm Weightmans.