The continuing trend towards direct consumer sales is forcing big retail groups to restructure their logistics operations, both during this year’s lockdown restrictions and as part of long-term strategies, the DELIVER 2020 online conference heard on Friday.
In an all-female ‘retail masterclass’ session, the supply chain and logistics heads of two well-known European brands presented their responses to the COVID-19 crisis and future strategies while an entrepreneur spoke on the challenges of e-commerce.
Lockdown forces big logistics changes at FNAC Darty
In France, retail group FNAC Darty, which already operates the country’s third-largest online marketplace, successfully transformed itself from an omnichannel retailer into a pure online player within two months following the government’s closure of shops in mid-March.
The company’s total revenues dropped 10% between January and June due to a two-month closure of nearly all its physical stores (mid-March to mid-May). But online sales soared dramatically, partly compensating for €400 million worth of lost revenues from the store closures. They now represent about a third of turnover.
“The products delivered by our group were in great demand during lockdown,” Karine Damour, FNAC Darty’s logistics and transport director, told DELIVER participants. Online sales volumes tripled compared to last year and the number of home deliveries quadrupled, she said.
Damour explained how the group reacted quickly to the drastic lockdown by reorganising its logistics, including warehouse operations. In addition, products were procured very flexibly based on when they were expected to be needed in which locations.
Notably, the company sourced ‘tens of thousands of items’ from its own closed stores and set up a ‘store returns to warehouse’ system, thus making more products available for online sales, she pointed out.
More carriers for additional delivery capacity
FNAC Darty also reorganised its transportation and delivery activities in France, Damour emphasised.
“Meeting the increased demand was our first challenge. Then we had the problem of delivery. Unlike the Netherlands, Belgium, Spain or Portugal, our postal parcel service in France had trouble keeping up. So, we had to find new solutions,” she said.
In response, the company signed up two new express delivery contractors (who she did not name) and brought them online within just three weeks, compared to the normal three months to integrate a new carrier. “Because of that we significantly increased our home delivery capability,” she emphasised.
Another vital move was to take advantage of Darty’s own internal fleet of trucks, which normally only delivers bulky and heavy goods, when express carriers could not provide greater capacity. “We decided to use the fleet to deliver hundreds of thousands of small products,” she explained. “It was a brilliant idea. We were less dependent on external services.”
This overall capacity expansion meant the company was able to deliver orders within three days on average, she added.
Philips wants multiple delivery options
Meanwhile, Dutch consumer products giant Philips is transforming its Direct-to-Consumer healthcare business by switching its focus from product sales to meeting consumer needs, explained Victoria Cantemir, eCommerce Operations Lead in the company’s Integrated Supply Chain.
This will have a ‘big impact’ on its supply chain, including ensuring 98% stock availability so that online shoppers have products available when they want to buy them. At the online checkout there will be more choice of delivery and payment options. Orders should be delivered reliably on time but delivery speed “is not the full story”, she made clear.
Above all, consumers need multiple delivery options, a reliable estimation of the arrival time, and clear order status communications, Cantemir said.
In addition, Philips has a clear focus on sustainability, using recycled packaging material, avoiding plastics and offering ‘green’ deliveries. “We are partnering with carriers that offer green last-mile deliveries,” she underlined.
As a result of this focus, “supply chain has increasingly gained importance in the consumer experience,” she emphasised. “We are moving away from a transactional supply chain … and towards a supply chain that is driving the business,” she declared.
In the third masterclass presentation, Zorana Milidrag, Global eCommerce Director of Sport Vision and also president of Serbian e-commerce association, spoke on the topic of ‘how did ecommerce become the oxygen of the economy?!’ She presented a lively range of advice and trips based on her experience in marketing and then starting up a community-based e-commerce business in the region.
