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Retailers face fulfilment fears

Retailers face fulfilment fears

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The retail channel fired a shot across the bow of Australian distributors last week, voicing concerns over fast fulfilment issues as e-tail and bricks-and-mortar retailers compete for logistics mindshare.

Peter Geer, senior buyer for Myer-Grace Bros and Mega-mart, is one influential industry player critical of the way IT vendors and distributors have failed to adapt to the needs of major retailers. "Whether the sale is made on the shop floor or via the Internet, the retailer owns the relationship with the customer, and this is the most valuable asset."

Geer even called for IT vendors and distributors to establish separate channels for the retailers, including online, claiming that they have not adapted to their need for instant supply. "With a new product, retailers need it on the day it's released. People make decisions while they're standing in the store," Geer said.

According to John Slack-Smith, general manager of Harvey Norman's computers and communications division: "The pressure of seamless and immediate fulfilment is becoming the major issue for IT retailers, bricks and mortar or online.

"We're happy with business being generated via the Web site and fulfilment is being handled by the local Harvey Norman store."

He explained the online business is treated as a separate franchise (one of 96 in Australia) and operates in a way similar to any department store's phone ordering, except that the information is sent via computer. It is not automated in the way other online retailers claim to operate.

"Our online strategy is a chameleon that will change colour and shape . . . and effective fulfilment will be a determining factor. Our core competency is our stores, to where we attract shoppers who want to take their goods with them. Delivery is the exception."

Another consultant, who specialises in the online supply chain and asked not to be named, said the future of online trading in Australia is tied to true drop-ship enablement, not just supplier-direct delivery, but a transparent process that integrates computer systems and physical dispatch.

And changing the way that customers acquire goods, be they PCs, gadgets, games or groceries to direct delivery, is contrary to the interests of those with an investment in bricks-and-mortar retailing. Retailers and e-tailers either do it all themselves or outsource the fulfilment, he said.

"Distributors wanting to operate in fulfilment must be truly drop-ship enabled, with seamless computer systems and dispatch."

Australia's biggest IT distributor, Tech Pacific, provides drop-ship facilities for e-tailers such as E-store, and Dataflow is looking to snare fulfilment for online as well as shopfront retailers, via B2B electronic systems. In talking about the pressure for fulfilment, Dataflow managing director Jeffrey Tobias observed that "customers are comparing the time for delivery to the time it takes to unload the boot of the car".

Michael Glezerson, managing director of ozbuy.com, commented: "I'm from a [traditional] retail environment where being able to supply is everything."

When translated to the e-tail world, fast fulfilment of online orders is critical to the business. He added that very few of ozbuy's nine suppliers have genuine drop-ship ability - transparently taking an electronic order and making the delivery under the banner of the retailer.

"Business on the Internet has grown so much faster than the courier companies. Delivering to private homes can be a nightmare. We're the facilitator of the order, and we're constantly looking at the logistical problems . . . we get around it the best way we can, Glezerson said.

And the man behind the newest e-tail startup, smartbuy.com.au's Tony Gattari, recognises that the best drop-ship fulfilment arrangements behind the best Web-based front end will not be enough. As a result, his e-tailing operation will invest around $4.5 million in a branding campaign (see page 1).

Meanwhile, the battle between e-tailers and retailers is just beginning to stir. Geer explained the Coles-Myer group has been developing systems, policies and standards relating to the delivery of products by suppliers or some other third party for a hundred years. "Anyone aspiring to be the Coles-Myer of e-commerce should know that Coles-Myer is the Coles-Myer of e-commerce."


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