Analysis

Doddle CEO: Click and collect success is about convenience, not proximity

Doddle

Click and collect providers such as Doddle were “drunk on proximity” before the latter dramatically reoriented its business model, its CEO claims.

Tim Robinson, who founded the parcel pick-up service in 2014, tells eDelivery that things have fundamentally changed since then – not least with the addition of competition from the likes of DPD and Hermes. Consumers now have an “awful lot of choice” in what Robinson describes as a relatively narrow space.

But Robinson says the shift goes beyond the delivery and pick-up sector. Whether it is due to supply chain costs and the prices which retailers need to sell at to be convenient, Robinson identifies a certain malaise in the retail business model generally. While turnover growth is relatively strong, he says, this doesn’t generally seem to be followed by growth in profits or market capitalisation.

In this context, Doddle was forced to make a fairly major change to its own business model. At launch it had focused on installing physical locations in major cities, usually within train stations. It had also operated primarily as a direct-to-consumer subscription service, which charged customers £5 per month and let them make an unlimited number of collections and free returns and gave discounted prices on sending.

But after its business came under strain from 2015 to 2016, the company cut staff and store locations. At the pick-up end, it has focused on establishing concessions in retailers rather than standalone bricks and mortar locations. In terms of the interaction with consumers, it has been integrating the Doddle option at checkout rather than as a subscription service – notable retailers using it include ASOS and recently, the Entertainer.

The reasoning behind this change dates back to the first year of trading, says Robinson.

“Convenience, which underpins click and collect, is about much more than proximity.”

He explains that earlier thinking had been that if you put a parcel shop near a station people would use it. But at a station with multiple exits, it is not actually especially convenient for customers to divert their journey to a different exit, even if it is in relative terms quite close.

“[The question is] can I provide these services in a manner that means consumers don’t have to step off their beaten track.”

In this sense, the company still “live[s] and die[s] on the consumer relationship, both acquisition and retention.”

But the proportion of revenue coming through the checkout channel dramatically increased compared to through the subscription service. In 2016, the proportions were 60% through checkout and 40% through subscription, whereas now it is 95% through checkout.

There are signs that the pivot is paying off – after this interview took place Doddle saw a 115% uplift in Black Friday parcel volumes, with volumes on 24 and 25 November up 216% on the week before as a result of the Black Friday effect, compared to 101% last year.

But one might question what value the Doddle name is bringing to the retailer and whether they might rather have their own branding on the transaction. Interestingly, Robinson is open to the idea.

“We’re far less brand sensitive than when we were trying to build our own networks. I question whether it should mention Doddle.”

He says that testing with different formats has not produced significantly different results. While he says the presence of the brand is subtle, it is seen as valuable and retailers are happy to sit alongside it.

One thing is clear though – Robinson’s pitch is very much directed at retailers now rather than at consumers.

The essential argument is as follows: no retailer has cracked the right customer journey post-purchase. Up to the purchase, there are different ways to pay and receive items, filters that direct people to the perfect product for their requirements.

When it comes to delivery, he says that the experience is far less clear for customers. There are different price points for delivery options but less effort goes into serving up options to allow consumers to make quick decisions on the best option.

Do retailers actually care about this, if they have already made the sale?

“All analysis tells you that retailers that provide the greatest choice around delivery, returns, that converts into sales not costs.”

He cites ASOS as a classic example of a retailer that has embraced different delivery models.

Is click and collect here to stay rather than simply a short term consolation offering for poor delivery experiences? As one would expect, Robinson answers firmly in the affirmative.

“What would be the tech advances that would put role of click and collect under the greatest strain?” He identifies these as smart locks and carriers being able to walk into a home. Others would be nominated hour or day delivery.

But he says there are limits to what can be done.

“There are only so many vehicles you can run out of the distribution centre, only so many doors, only so many vehicles, only so much growth.”

He says that other innovations, such as smart locks would be costly to roll out, meaning that the pace of adoption will be slow. Home or direct delivery will still be lumbered by the unpredictability of transport networks.

On the other side of the equation, Robinson says he “[doesn’t] see consumers being more willing to pay for delivery than they are now.

Therefore “carriers and retailers will push more consumers towards click and collect,” he says, to the extent that he claims some retailers will incentivise it through vouchers in the way that Sports Direct does.

All of this, of course, emphasising the essential argument: that Doddle and its counterparts will still be needed in the retail space for the foreseeable future.

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