In which logistics areas retailers should be innovative

European retailers face challenges in adapting their operations to the digital consumer. This is shown by new research findings in a study commissioned by UPS. This study, titled "UPS Pulse of the Omni-Channel Retailer," shows the importance of innovation to maintain a stable or growing market share in the retail market, which is becoming increasingly globalized, and dominated by those who sell across borders. "Consumers are exploring multiple sales channels - online as well as traditional - and using them depending on which one best meets their needs," said Carrie Royle, retail marketing manager, UPS Europe. "They also use social networks to compare and assess what retailers offer." UPS shipping solutions help retailers grow and increase satisfaction with online purchases.

Omni-channel challenge

Earlier this year, more than 700 logistics experts from European retailers shared their experiences as part of this study. Retailers in Europe have specific investment and restructuring plans to keep pace with leading retail competitors. Over 30% of the executives said they see major challenges in moving to omni-channel, such as the level of investment in IT, organizing logistics processes, understanding consumer behavior, and aligning management to omni-channel commerce.

Three core logistics areas

As retailers adapt their supply chain to those consumers who frequently shop online - also known as 'flex shoppers' - they should focus on three key areas: physical store locations, turning inventory woes into sales, and cross-border returns.

1. Making better use of branches: If European retailers want to remain competitive, they should note that customer visits to brick-and-mortar stores are declining while online purchases are growing. This trend means they need to go beyond the traditional purpose of a retail store and use it as part of their inventory and distribution network. Nearly one-third (27%) of European retailers already use stores as a service center for online purchases. UPS data also shows that 31% of retailers in Europe plan to use the store network or alternative pickup locations in the next 12 to 24 months to offer those customers who order online more convenience in picking up their ordered goods. "The study results confirm our experience with flex shoppers. Busy customers pick up their packages at one of our 24,000 UPS Access Point™ locations across Europe and North America when they have the time," Royle points to a related UPS service.
2. Turn inventory difficulties into sales: According to previous UPS consumer research, 41% of European consumers said they go to a competitor's website or app when a product they are looking for is in stock at the retailer they originally selected. 20% said they go to a competitor's retail store. Only 17% were willing to buy the product in advance and wait for the (re)order. The omni-channel research results show that online companies in particular are very responsive when they do not have products in stock; 68% of the internet retailers offer tracking and delivery to a preferred address as soon as the product is available. 59% track orders and proactively inform customers of product availability, while brick-and-mortar stores lag behind in this. Nearly half of retail stores (45%) simply suggest their customers wait without offering them an alternative.
3. Handling cross-border returns: It is widely recognized that returns handling is a key success factor for all retailers, including online retailers. Customer trust as well as brand integrity depend significantly on efficient returns handling. Retailers stated that their main challenges in this area are managing defective merchandise (64%) as well as performing quality checks on returned merchandise (50%). The study further shows that retailers need the support of third-party logistics providers. More than 60% of respondents say they use multiple third-party logistics partners to handle returns. More than 70% said logistics partners contributed to profitability. "Managing cross-border customer orders and returns can be challenging," Royle said. "UPS, for example, provides retailers with a variety of options for handling returns. Consumers can drop off their prepaid and pre-labeled return packages at any of the 15,000 UPS Access Point™ locations in Europe."

Source: UPS