Is Delivery Capping over Black Friday Treating the Symptom or the Disease?

Press release – September 26, 2015

By Paul Murphy, Commercial Director, EMEA, for My Logistics Magazine

In 2014 over £1.46 billion was spent in the UK across the Black Friday and Cyber Monday weekend – a staggering amount considering the rather weak cultural basis for the occasion in this market. This year is set to be even bigger and preparations for retailers and logistics firms are already well underway.

The lure of these events for all parties is clear: retailers are able to stimulate sales; 3PL companies are able to increase delivery volumes (particularly since Cyber Monday); and shoppers are able to seal a bargain. The problem is that Black Friday has become something of a victim of its own success. Those logistics firms who have done so well up to now have started to struggle to meet demand. They are now often the subject of consumer backlash as shoppers were not receiving their deliveries as quickly as expected.

Consequently, companies are taking steps to mitigate the reputational damage that high volumes of failed or late deliveries would incur. Yodel for instance, has stated its intent to put a cap on Black Friday deliveries this year, while FedEx and UPS both decided to limit the number of deliveries they would take on over the holiday season, following their own troubles last year. Taking a slightly different approach, Amazon – the largest and most famous e-retailer –has launched its own ‘Prime Day’ this summer. While not explicitly a means of ‘spreading the load’ of Black Friday and Cyber Monday, there is an argument to be said that this was one of the contributing factors to its inception.

While the course of action has been different, Yodel, FedEx and Amazon, the reasoning is the same and so my question is: are they treating the symptom and not the disease?

On the one hand, the risk of a bad reputation from a disastrous Black Friday could easily be worth more in the long run than cutting revenues that would have come through limiting delivery volumes. There is nothing wrong with limiting losses. However, this is rather short-term thinking. It might make the next sales period a bit more manageable but Black Friday isn’t going anywhere and it won’t help companies better prepare for next year. What’s more, in an industry caught in a cut-throat price war, why would you surrender market share and revenue if you can help it?

The problems that have been faced around these spikes of activities are, in part, to much more fundamental operational issues. If logistics firms and retailers were to look internally at how they operate the logistics supply chain instead, they would be able to identify inefficiencies. In turn, addressing these would make it possible to better meet increases in demand. The key lies in improving communication.

The benefits of SMS and mobile messaging for delivery alerts are well-established, but merit acknowledging once more, given their capability to cut missed deliveries which cost around £6.50 each. That said, the impact which communication technology can have on the running and management of the entire supply chain is much less discussed, but potentially greater. 3PLs can use mobile messaging internally to manage deliveries to and from warehouses and retailers, with key stakeholders and personnel being kept up to date throughout the day. As such, turnaround times could be reduced and exceptions appropriately managed.

In future this might be taken one step further; integrating communications platforms with a big data engine to predict demand and then plan for it accordingly. For instance, if a retailer is receiving a large amount of traffic on certain product pages, a message can be automatically sent to warehouse managers so that they can adequately prepare those items for delivery.  Moreover, staffing levels in warehouses can be increased by using SMS as a recruitment and employee engagement tool, enabling management to pull in staff quickly while allowing them to opt-in for shifts at the touch of a button and even with short notice. Implementing a robust system will allow them to better handle the swells in demand that dictate today’s shopping environment.

The reality is that it isn’t the level of resources which are leaving logistics firms hamstrung around Black Friday; it’s the fact that they aren’t best making use of those resources. Communication – as so often the case – is critical to making the logistics supply chain run more efficiently, whether this is through SMS to customers so that deliveries aren’t missed or to support a greater degree of warehouse automation. With Black Friday firmly at the forefront of their minds now, many 3PL firms would do well to think how they can treat the symptom rather than the disease.