Analysis

eDelivery readers speak: Is Yodel right to don the Black Friday cap?

On 13 July we ran a story on eDelivery about Yodel’s decision to cap the amount of next-day deliveries it would take on in relation to Black Friday 2015. The cap would be determined by forecasts from and discussions with retailer that Yodel works with. It was move we described as bold, and it’s easy to praise it as necessary and important.

We have collated some of the comments and opinions we’ve received from readers on this move from Yodel and have published them below. As always, if you want to add your voice to the conversation please get in touch via email or by leaving a comment at the end of the story.

Greg Zontanos, Weengs

Greg Zontanos, Weengs

Greg Zontanos is CEO of mobile shipping app company Weengs. He’s also Greek and draws an analogy that is both current and easy to relate to: “As a Grecian, I think of Black Friday like a bank run – there’s a real sense of urgency, that almost verges on a state of panic, as consumers look to snap up incredible bargains before stock runs out. But if Black Friday is the bank run, then Yodel’s plans to cap the amount of next-day parcels it will accept is the same as the government applying capital controls, and we all know how that’s been received in Athens.”

“It’s no secret that Black Friday puts the retail industry under an enormous amount of pressure, whether that’s shop floor staff, warehouses or couriers – we’re all operating at maximum capacity, if not more. From that perspective, it stands to reason that Yodel would want to hedge its bets and ensure that the deliveries it does accept go smoothly.”

“However, like in Greece where people need the reassurance of physical money in their hands to believe they have been paid, consumers are looking for instant fulfilment to feel the value of their purchases. If Yodel takes that away, there will only be a select few who receive the best delivery experience possible, while the rest will have to make do with second best.”

Phil Streatfield, Partner at supply chain consultancy, LCP Consulting, sees several shades of grey in Yodel’s position, not least of which is how draw-down of the agreed capacity is to be managed in real-time: “This raises a dilemma for retailers in planning. Stock that might have been pre-positioned in fulfilment centres for delivery to customers using carriers may now have to be deployed in stores. How do you get that right? There is a need for some really joined up planning to ensure that customer expectations are managed. Planners and marketeers in retailers really need to land the message with their customers that there is a risk to service.

“There is a need for some really clear in flight management of the situation with Yodel notifying their retail customers as they approach their full capacity limit, so that they can quickly respond by turning off the taps through adjusting their offer to their customers. To not act in this knowledge would mean a retailer is knowingly over-promising.

“In fact, you could argue that by taking this stance, Yodel are protecting irresponsible retailers from themselves! So, will fortune favour the brave, or has Yodel set itself up for a fall?”

Mark Thornton Maginus

Mark Thornton Maginus

Mark Thornton, marketing director at Manchester-based IT services company Maginus, takes a firmly pragmatic view of the situation: “If the first rule of retail is don’t disappoint your customer then make sure you can meet your delivery promises; this is not bold or courageous –  it’s just good business sense.

“Every business, from a manufacturer to a golf course, has capacity constraints and understanding those constraints is critical. Manufacturing companies in the 1980s solved the problems with ERP solutions with MRP (material) and CRP (capacity) functionality core to integrated enterprise wide resource planning.

“I suggest retail logistics operations need to follow the same principles by using technology to solve the problem – not in islands of data across the supply chain – but rather with an end-to-end flow of information. The integrated retail supply chain network must recognise any disruption to the delivery model, such as logistics capacity exceeded (in the case of Yodel), potential impact of bad weather in or click and collect locations over burdened with packages.

“Any issue, (currently recognised by standalone solutions) should have a direct impact on the delivery promise being made to the customer on the retailer’s website.

“The IT solution requires exchanges of data which ultimately creates one ERP solution across the entire retail supply chain.”

Josh Pitman, marketing manager of packaging supplier PrioryDirect concurs, but wonders if one of the unintended consequences of capping is that next-day delivery will become a fought-over scarce commodity that retailers use as a marketing ploy: “It is a bold move on the part of Yodel, but in our opinion it’s a sensible one. Being prepared for peak volume for this very short spike in sales tied the logistics world in knots last year and caused many to seriously consider if the extra overheads were justifiable.

“It’s interesting to see the first member of the supply chain come forward to put a reasonable cap on their next-day delivery numbers, with a view to offering a slower service to those willing to wait for their deliveries. It is a pragmatic solution, with research and the timing of Black Friday suggesting that it could have merit. The concern that this cap creates, particularly if other firms follow suit, is that online retailers will be battling for next day delivery in order to offer this as an additional selling point.

“Yodel’s plan will only work if other logistics firms support them by capping their own services. By uniting on the issue all couriers can agree to conform to this sensible approach to working within their capabilities. However, if firms are divided on the issue then some courier companies will seize the opportunity to differentiate by guaranteeing next-day delivery, regardless of volume. It will be interesting to see which way it goes.”

Siamac Rezaiezadeh, OpenMarket

Siamac Rezaiezadeh, OpenMarket

Siamac Rezaiezadeh, is director of strategic accounts at OpenMarket, a company that develops mobile-based engagement and communication services. Given his perspective, greater investment in alerts and communications is something he considers important, not just for customer-facing activities. But he also stresses the importance of appreciating the differences between cause and effect: “Yodel’s decision to cap the number of next-day deliveries around Black Friday is in many ways no great surprise.

“The struggle to fulfil orders from these ‘sales holidays’ in a timely fashion is well documented and by limiting the amount of express and next-day deliveries, Yodel will reduce some of the stress on its operations. FedEx and UPS made similar moves at the tail end of 2014 with a view to smoothing the kinks in their 2015 holiday seasons. The problem is that this is far too short-term in its thinking; it’s a matter of treating the symptom rather than the disease. The problems which these companies face time and again are actually tied to inefficiencies in the logistics supply chain.

“The use of SMS and mobile messaging for delivery alerts is well-established and can go some way to helping this but in reality the technology has an arguably bigger role to play in the running and management of the entire supply chain. 3PLs can take advantage of SMS to manage deliveries to and from warehouses and retailers, with key stakeholders and personnel being kept up to date throughout the day.

“For instance, SMS can be used to alert key stakeholders when priority orders come in or stock reaches certain levels. This could even be taken one step further, integrating your communications platform with a big data engine to pre-empt demand and plan accordingly: for instance, if a retailer’s website is seeing large amounts of traffic on certain products’ pages, a message might be sent to the warehouse manager so that they can prepare those items.”

Andy Hill

Andy Hill, Electio

Referring to research published by Yodel at the same time as the capping announcement, Andy Hill, commercial director at delivery management company Electio, wants to see more collaboration between retailers and carriers: “Yodel has been brave taking matters into their own hands, and their research is providing terrific insight that can be utilised by carriers and retailers alike. It’s beneficial from everyone’s perspective if retailers have a more flexible approach to delivery promises during these peak periods and they can take it upon themselves to relax their customers’ expectations during peak times when capacity simply isn’t there. It would certainly provide a more positive experience for everyone involved.

“Collaboration between retailers and couriers could make an even bigger impact. For example, one strategy is to allow shoppers to collect their orders easily at local collection points like Collect Plus offer, thus relieving some of the strain as couriers can deliver multiple parcels to single locations. Not enough retailers or couriers are offering these services at the moment but they’re a fantastic solution that will benefit the carrier, retailer and customer alike.”

The broad consensus of opinion is that something must be done. As ever, working out the nature of that something and what ought to be done about it is not so straightforward. But on the whole those readers we’ve heard from think Yodel is right to set limits, even if they are not all in agreement about the way in which those limits are set.

We will be publishing more reader comments in relation to this story shortly. If you want to have your say, be sure to get in touch.