Natalie Frow, VP operations – home delivery at DHL Supply Chain, explores how collaboration is helping small retailers compete in a challenging climate.
The traditionally lucrative Christmas trading period failed to materialise for many retailers in 2019, capping off what the British Retail Consortium called the worst on record. Many reasons have been given for this, from Brexit to Black Friday, but looking at the businesses who have fared best during this time will be important to shed light on how retailers of all sizes can ensure they’re in shape to succeed in the new decade.
The growth of e-commerce is often cast as a problem for high street retailers, but for smaller players it presents an opportunity to reach new customers and create a bigger profile than could ever be achieved through investment in physical stores. While any business nowadays can create an e-commerce website, the key to maximising this opportunity is fulfilment, and offering a comparable level of service to larger competitors while maintaining margins.
Small retailers are united by the challenge of lacking the scale needed to run their own dedicated warehousing and distribution network and have to rely on smaller stockrooms and individual carriers, but collaboration presents a way to grow without heavy investment in infrastructure.
We have for some time now seen an explosion of small retailers entering the market through platforms like eBay and Amazon, with these larger online players able to bring the benefit of scale in logistics operations, like access to warehousing and discounted carrier rates. But collaboration isn’t limited to these online platforms, and we’re also seeing the big high street retailers looking to expand their offering with smaller brands. Modelled on the concessions of department stores, Next, which was one of the few success stories this Christmas, has teamed up with retailers including Joules and Mamas and Papas and is selling and facilitating the distribution of their products alongside its own.
3PLs can also provide a route to large scale infrastructure. Multi-user facilities can be a great way to support smaller retailers with cost effective storage as well as providing access to independent e-commerce expertise and carrier management capability.
Following on from this, taking advantage of a collaborative home delivery network operated by a 3PL also allows retailers to benefit from an established infrastructure, as well as opening up new opportunities for sales.
Working with a logistics provider means that retailers can take advantage of the expertise and the economies of scale through collaboration, but with their own brand identity and customer relationships maintained end-to-end. This is particularly important as the growth of e-commerce and home delivery means that the delivery itself Is often the only ‘in person’ interaction that a brand will have with their customer, and so presents the strongest opportunity to build brand loyalty. In practice this means that retailers working with a 3PL like DHL can have all customer communication channels fully customised and branded, right down to the tone of the language used in SMS or social media updates on delivery. Likewise, the workforce will receive training specific to the brands being managed, with feedback and customer satisfaction surveys conducted on a retailer-by-retailer basis.
Furthermore, sharing a network brings environmental benefits, which consumers are increasingly keen to see from the companies they chose to spend their money with.
Working collaboratively (in some cases directly) with competitors may have previously seemed unthinkable, but as consumer habits continue to evolve and technology advances, it’s imperative for retailers of all sizes to evaluate every aspect of their business to look for ways to improve their operations. Sharing warehousing and home delivery networks doesn’t have to mean a watered-down brand experience for the customer, or a lack of control for the brand. Instead, it can bring the best of both worlds. allowing small retailers to have a big voice and reap even bigger rewards.