Something is going to give in home delivery at some point soon. As online sales continue to grow, the home delivery aspect is proving an increasingly important issue. But there are great failings in the current scenario that are becoming increasingly exposed.
On the one hand the value retailers like Primark want to sell goods online but their low margin categories do not sit particularly well with the present costs of fulfilment. And then there is the incessant demands of the consumer for free delivery.
Such is this demand that the logistics firms are complaining of margins being driven down sharply and so they are not investing sufficiently in much-needed new capacity that will be necessary to sate the growing levels of online shopping.
Speaking at the recent Metapack Delivery Conference in London Martin White, supply chain director of Primark, reckoned the real big growth online will come when the likes of the big supermarkets, Wilkinson and Poundland are able to get the online model to work.
Unfortunately this doesn’t look like it is going to happen any time soon judging by the comments at the same event by Dwain McDonald, chief executive of DPD, who suggests the continued growth of sales online will push the delivery model to fall over within three years time.
He reckons there is simply not the volume of carriers to deal with the level of business expected to go through the system in the future. This is because of a lack of investment in the industry as a result of the poor margins.
Against this backdrop it is no great surprise that click & collect – especially when combined with customers bringing returns back to stores – is proving such a popular way for retailers to fulfil online sales.
Maybe a clever play by Primark would be to initially only offer a click & collect service and to then add home delivery when the suitable (financially viable) logistics infrastructure is in place.