Logistics best practices, challenges and solutions in the Australian market

Today at the Online Retail Forum in Sydney , participants will discuss logistics and online retail in Australia.

We will post to this blog after the event, with videos and summaries of what is discussed. But we thought it might be useful to get things started with some observations from what we’ve been reading and talking to people about logistics and online retail in Australia.

The Australian online retail market is growing rapidly. More businesses are selling online and more consumers are shopping online. For the online retail sector to reach its full potential, however, will require continued innovation to improve the range, reliability and cost effectiveness of logistics solutions available to online retailers.

Getting physical products that are bought online to customers should be an area in which Australians retailers have a natural advantage over overseas suppliers. Given the more advanced state of online retail markets in some key overseas markets, some overseas online competitors have had considerable time to finetune their shipping, delivery and returns policies. One example is the US-based Zappos, which offers free shipping and returns and 24/7 customer service.

Certainly, there is evidence that fast and efficient order fulfilment is a contributing reason as to why Australian consumers are shop online. A recent ACMA report [pdf] three-quarters of respondents who made online purchases cited convenience as the most common reason for purchasing online. The next most common driver for purchasing online was lower cost, but this was only 38 per cent of respondents.

Australian retailers have also recognised that this is an avenue that is ripe for improvement. In the recent PayPal eCommerce Report, one of the key findings was that there was deep dissatisfaction with existing delivery methods and this was one challenge that Australian retailers were committed to invest in to defeat.

Also, in last year’s eBay Online Business Index , one of the three top wishes of leading Australian eBay sellers was for improved postal services. Forty-one per cent of survey respondents said improved postal and delivery services would support the growth of online entrepreneurialism in Australia.

Retailers and logistics companies are working together on new initiatives to improve delivery services for online retailers. Australia Post’s recent Flat Rate Satchel offer in conjunction with eBay.com.au was so popular that it quickly sold out. Australia Post’s Click and Send  service has also proved popular.

Based on anecdotal industry feedback, we have identified several potential areas that online retailers and logistics companies may wish to explore further, depending on their individual circumstances.

  • Multipoint to multipoint models. Under this approach (also known as drop shipping), online retailers arrange for suppliers located in different areas to send their items directly to customers. This allows retailers to offer a more extensive range while minimising overheads and inventory. Coordination of logistics for drop shipping from many different locations can in some cases be tricky with present Australian market offerings however.
  • Large item delivery service. Some businesses have encountered difficulties in shipping larger items, particularly to regional areas. As online shopping continues to become more popular, it may become increasingly attractive to logistics companies to offer these services.
  • Buy online, pick up in store. Retailers with existing networks of bricks and mortar stores may be able to offer no shipping costs, immediate pick-up or other special incentives for customers to buy online and pick items up themselves.
  • Flat rate pricing. Offering flat rate or ‘free’ shipping options to customers can suit some retailers by reducing the complexity that shoppers have to deal with in calculating total costs of online purchases.
  • Integrating technological solutions. Online retailers can use software services that integrate their online stores, inventory and logistics systems, making it easier to find the lowest delivery prices, manage stock and track delivery progress.

What do you think of the ideas above? What are your ideas for how retailers, e-commerce services companies, logistics companies and government can improve the way goods purchased online are delivered to customers? Tell us in the comments below.

by Reid, DBCDE

5 comments

  1. I think the above ideas are good, but its the general awareness of the emerging digital economy among Australian retailers.

    I think there needs to be a long term education program targeting retailers to explain the new digital world dynamics, opportunities and potential risks.

    If anyone is interested and in Newcastle next week, our local digital and social media society is putting on a free event titled ‘Online Retail: making a big splash in Australia’s $24 billion online retail economy.’

    To register go to http://lunaticks.eventbrite.com/ or http://www.thelunatickssociety.com.au

  2. I think the Australian transport is not quite ready for the challenge that the rapid increase in online retail presents. This is mostly noticeable on large items. Sheds and garden sheds are the best example. There is no transport company in Australia who could handle a large volume of these products that the large online shed retailers produce. Cheap Sheds (http://www.cheapsheds.com.au/) is famous for providing outstanding service on every aspect of their service but once it comes to delivery and the goods are handed over to transport, it often means that the level of service drops in transport hands. The only transport company who can deliver on such a scale is offering 7 – 21 days terms, that makes the whole service very poor. The transport company’s provide quite low level of customer service that makes a huge contrast to dealing with the supplier with top service and transport with very poor service. On large items like garden sheds, another delivery option that you did not list is “depot delivery” when the goods are delivered to a list of depots and customers can pick the closest one to them, get the item delivered there and they can collect it from their local transport depot. A good example of this transport option is here: http://www.cheapsheds.com.au/delivery/

  3. Logistic services can be provided by large multinational companies who have the personnel and deep pockets to support it. Small to medium sized companies rely on third party providers who provide quality services at cheaper rates.

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