Analysis

M&S distribution woes: industry expects others will follow

Was Black Friday behind failures at M&S’s Castle Donington distribution centre, and will other retailers be hit by a wave of orders and returns this Christmas that could see them struggle too?

Yesterday, news broke that Marks & Spencer’s Castle Donington distribution centre was struggling to cope with orders.

The centre, which handles all of M&S.com’s fulfillment, opened last year with claims it would be able to handle more than 1 million items per day. What now appears to be in question is the speed with which it can process very high volumes – a question being asked at what is inarguably the worst time in the retail calendar for problems like this.

Standard delivery, which would normally be 3-to-5 days, has been changed to 10 days, and although at one point next-day delivery had to be removed as an option, it has now come back on stream.

A spokesperson for Marks & Spencer told eDelivery the situation was being reviewed constantly, but he was unable to give any indication of when things would be back to normal.

“We’ve had to extend our delivery options, in order to make sure we can keep the promises we make to our customers, and we are reviewing things on an hourly basis,” he said. Adding that a new facility, such as Castle Donington “always comes with challenges.”

M&S has laid the blame for this failure in its logistics set-up on its ‘Four Magical Days’ promotion, which ran from Black Friday to Cyber Monday, causing a significant increase in demand that its systems couldn’t cope with.

Although unwilling to discuss the nature of the failure in detail, the M&S spokesperson was keen to point out that its systems had been built to allow the flexibility required to dynamically revise delivery options as a situation such as this was unfolding.

Whether M&S is an unlucky victim of circumstance, or the first of a crop of retailers that will struggle to handle high volumes of orders and returns over the Christmas peak, remains to be seen. Certainly there is an expectation among some in the industry who told eDelivery this will not be a one-off and that by the time the dust has settled on the seasonal shopping boom, M&S will merely be the first among many.

Jeremy Vernon, director, Core Fulfilment, said the situation was “not surprising.”

“Black Friday problems may have arisen from a combination of staffing, an inability to turn orders around quickly enough or issues with third party delivery partners. Given the increase in sales, the subsequent hike in returns is also likely to be causing a back-log.

“Either way, this hold up in the M&S fulfilment chain is a big problem for a retailer desperate to win back the nation’s affections.”

Ian Tomlinson, CEO of cloud computing firm Cybertill, agreed that M&S won’t be the only retailer to struggle.

“M&S will not be an isolated case; these peaks will continue to cause retailers headaches, especially those that run disparate systems in-store, online and across their supply chain, as this hinders real time data and transparency throughout an organisation.

“The most critical aspect of successful fulfilment is having live information, so you can pass on up to the minute data to delivery partners and vice versa and of course customers. Most customers do understand that sometimes deliveries can be missed and delayed, especially at this time of year. These peaks aren’t unexpected but how we shop is changing.”

Greg LeTocq, founder of digital gift card website and app, Giftcloud, was less conciliatory, believing retailers could and should do better.

“We are starting off December with many stores unable to deliver within a month’s timeframe; it’s simply not good enough.

“If stores don’t have the facility to manage the promotions, they shouldn’t run them; it’s a case of greed and carelessness when things spiral so drastically out of control. Christmas comes round every year, so they should be prepared that come snow, rain or shine, measures are in place to ensure their customers get what they pay for and these items are delivered on time.”

Paul Galpin, Managing Director, P2P Mailing, quoted research warning how flimsy customer loyalty becomes when trust is under duress.

“Christmas is the make-or-break period for many retailers; analysts predict that nearly 13% of all retail sales will be online in December, reaching £4.7 billion. As the demand increases, added pressure is inevitably placed on maintaining high delivery standards.  Our research revealed that 87% of respondents would switch to another supplier if they experienced delivery problems twice or more.  The internet age, more than ever before, has placed power in the hands of the consumer. Switching suppliers can be as easy as a click of the mouse.”

Gavin Masters, Head of eCommerce Consulting at eCommerce firm Maginus, sees the transition to multi-channel as a source of problems for many.

“It’s very likely we will see other big name retailers struggling with demands over peak periods. Those businesses who have not yet been through the transformation process to become truly multi-channel will find themselves reaching a plateau where no amount of extra staff or money will increase throughput, caused by using dated processes and systems not optimised for modern customer requirements around speed of delivery.

“Additionally, delivery carriers need to modernise to offer alternative methods for getting retailers’ packages to the customer and to keep the customer informed throughout the entire process.”

Jonathan Bellwood, CEO and Founder of Peoplevox, thinks M&S needs to focus on getting things right to win back customers’ trust.

“The delivery issues that M&S (and its customers) are experiencing are troubling at such a busy time of year. Considering Amazon recently introduced a same day collection service for its customers but M&S customers are experiencing such long delays, M&S must change something in order to regain consumer confidence in its eCommerce operations.

“M&S need to optimise their picking methods in speed and accuracy in order to capitalise on faster delivery options. This may require some back-end tweaking with a system which guarantees you know what stock you have and where. The ability to prioritise which orders are picked and when will be critical if M&S is to recover its eCommerce fortunes.

This is an issue we expect to return to on eDelivery, and if you have opinions or insight on this subject please get in touch.

 

 

 

 

 

 

2 comments on “M&S distribution woes: industry expects others will follow

  1. ian gregory said:

    In my opinion Its good to see that m&s are investing in their ebusiness and logistics whilst many businesses arent. We are all on a journey with ecommerce and experiencing these issues for the first time. They will no doubt learn from this and improve. It is good to see they are aware of their customer expectations and attempting to update expected delivery times on the front end. I don’t know about anyone else but I’ve experienced a real mixed bag of delivery fulfilments this year. Some retailers providing windows with up to three weeks in which the delivery could be made. For me that’s not a great experience.

  2. Pingback: The Long Black Friday: smoking gun or smoke-screen | eDelivery.net

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