There has been some debate over the past couple of weeks about how Click & Collect is going to perform long-term in the eCommerce world. Here, we look at John Lewis, the cost of customer satisfaction and what the future holds for this increasingly popular service.
There doesn’t seem to be a day that goes by right now where another major retailer doesn’t announce something to do with Click & Collect. Over the past couple of weeks, the major story has been the conflicting messages that John Lewis and Tesco are sending out to the marketplace. On the one hand, John Lewis announce that due to overwhelming demand for their service, they are now charging for their previously free service, in fear of an “unsustainable” business model.
Just days later on the other side of the retailing spectrum, Tesco announce that they are similarly raising the minimum spend for their Click & Collect service. When there has been so much good press about the wonders that Click & Collect is bringing to eCommerce and the hopes that it could tie together brick and mortar stores with their online counterparts, how should online businesses react to this? And what is the reasoning for these steps being taken?
The “bonkers” business model
It seems like just a few days ago that I was writing about the figures from Christmas about the popularity of Click & Collect, and even referring specifically to the success enjoyed by John Lewis over that period. From the most recent account of events, it is clear that there was a darker background to those incredible figures, where the staff and operations systems completely overwhelmed.
Due to the huge demand for the service on products which were too low in cost to deliver any kind of profit, John Lewis recently announced that they were adding a surcharge of £2 to Click & Collect orders that were below £30. The new charge that came into play at the end of July, has raised a few eyebrows amongst loyal consumers, but John Lewis’ Managing Director, Andy Street, hopes that customers will understand the move they’re making. He added: “There is a huge logistical operation behind this system and quite frankly it’s unsustainable. We consider ourselves to be leaders and we want to take the lead on this.”
It certainly can’t be claimed that John Lewis haven’t invested enough time, thought and money into the decision; this year alone they have
invested £80 million in supply chain function and £100 million in IT
, which is a staggering five times greater figure than that of five years ago. Part of this is due to the huge uptake in their Click & Collect service, with current orders standing at over 6 million, compared with 350,000 in 2008. With a
32% growth in Click & Collect
, you can understand the way it has stretched their current system too far, but is this the right direction?
Is it worth the risk?
Tesco has also taken the move to add a surcharge to their service, with anything less than £40 constituting a £4 charge. True to form, customers took to Twitter to vent their frustration, claiming to switch to competitor’s websites to do their shopping instead. You have to ask whether there is a need to pay an extra 10% for the delivery of goods which would be running anyway, but many retail experts have pointed to the high cost and complexity of operations, all for far too little return on investment, as the reason for the charge.
The retort to this is of course the old adage, customer is king! You might think that a charge will improve your situation, but if the Twittersphere is anything to go by, customers are not happy about the charge and there could well be a drop in order numbers, as well as a loss of loyal customers. John Lewis have invested huge amounts in ensuring a good omni-channel shopping experience, recognising its importance from their total trade data where
online shopping has more than trebled
, jumping from 10% to 33% over the past eight years – but is this enough?
Is this a good idea when you look at the competition who still remain free and can deliver it to an exceptional standard? Just a few days after the announcements by Tesco and John Lewis, the marketplace was left even more confused when M&S stated that they would be expanding their free service. Focussing more on the customer experience, they claim that it is obvious from their sales (where over half of online orders are picked up in-store) that this is a service people want.
David Walmsley, Director of M&S.com, added: “By extending the service to locations such as railways and service stations, which may form part of customer’s daily journeys, we hope to make it even easier and more convenient for them to shop with M&S.” Simply Food, run by M&S franchise partners SSP and Mot, will allow shoppers to order online and collect from their stores. One way it seems they have tried to reach a compromise with the cost factor, is that customers are limited to choose from clothes, accessories and small homeware pieces, justifying the ‘free’ price tag.
What does it mean for me?
People love convenience. At the start of July, Retail Week conducted a survey that revealed that three quarters of consumers believe they should not have to pay for Click & Collect… and why should they think any different when so many already provide it?
But what does this mean for those of you contemplating the service?
Well, you have to make sure that you have a system in place that works for you; use the right delivery methods, offer the customer the most convenient option for them at this stage of the payment process and only offer it if you think you can deliver it to a high standard. For example, having true, real-time data available is absolutely crucial to ensuring that this happens.
If your eCommerce platform is built into SAP, you can have that stored, real-time data available when you need it, and it will enable you to define exactly which products you can and cannot afford to provide the service for free on. From this, you can set up your content management system to only offer certain delivery types for certain products.
If you think short-term, you may end up regretting the decision like John Lewis, but get it right, and you could have added a valuable string to your bow over the competition.
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