There is no mistaking the delivery and fulfilment trends on an Australian retailer’s radar. On one side you have customers who want their orders dispatched quickly with real-time updates, precise delivery times and a simple way to return something. The retailer has to see to it that labour, transport and inventory are kept within budget. The better operators are making headway with more flexible delivery, customer fulfilment centres and the like.
What follows is a guide to the changes in Australian retail fulfilment, why they are of consequence and how to deal with them. I am Simon Bradshaw; my time in hotel operations has shown me that a customer will put a smooth process out of his mind but not a broken promise. In the online world a parcel that does not arrive on time is much the same as a guest being told there is no room for him. It is not a welcome surprise.
What Is Changing In Australian Fulfilment?
The single-warehouse approach is being superseded by a network of locations underpinned by technology. Be it home delivery, store collection or direct-to-boot pickup, retailers are making sure the balance is right between cost, convenience and speed—key to tackling online store challenges.
One could say the most notable change is that delivery has been elevated from a mere transport formality to an integral part of the operating model, the stock strategy and the overall experience for the customer.
Key Trends To Watch
You will find the geography of Australia, urban density and shortages of labour all have a hand in shaping retail delivery. The dispatch plan for an order in Kilburn or regional South Australia will not be the same as one for Melbourne or Western Sydney.
Retailers have five priorities in mind: to shorten dispatch, have accurate windows, improve stock visibility and build a supply chain with some resilience, all while keeping returns costs down. The point is to make a next-day delivery promise that can be honoured.
| Trend | Operational Change | Customer Benefit | Main Cost Pressure |
|---|---|---|---|
| Automation and robotics | Faster sorting, packing and picking | Reliability in dispatch | Capital and maintenance |
| Localised inventory | Demand is met from closer to hand | Delivery windows are tighter | Complexity of replenishment and holding extra stock |
| Customer fulfilment centres | Facilities for online orders | Fewer delays or substitutions | Property, tech and labour |
| Direct-to-boot pickup | Orders made available at convenient points | Saves on fees and waiting | Coordination of the handover and store space |
| Returns management | A structured process for reverse logistics | Less friction once the purchase is made | Repacking, resale and inspection |
If a retailer wants dependable statistics, the official retail turnover releases are to be preferred over what one might read on social media or in a headline. The data from the Australian Bureau of Statistics is a good benchmark for activity in the trade. Turnover figures may not account for every decision in fulfilment but they allow a business to put its own order and basket data in perspective.
How Automation Improves Retail Operations
With automation the warehouse is freed of the tedium of repetitive movement and staff are better informed. When robotic sorting or AI inventory systems are in line with the retailer’s profile of orders, accuracy is enhanced.
But do not mistake it for a magic wand. Put a robot in a disorganised warehouse and it remains so, only with a pricier colleague.
Where Technology Helps Most
In metropolitan fulfilment centres where industrial space comes at a premium, automated storage can accommodate more product. Robotic sorting will see parcels routed by carrier or postcode without the need for manual intervention at the busiest times.
Then there are the AI systems that can predict demand and put a flag up on a shortage. This is necessary when the last of an item has gone but the product page is still live. Real-time information keeps overselling and substitutions to a minimum and gives the service team something concrete to go on.
Often the best course is to address a narrow operational issue first. Whether it is to automate the picking of small goods or get the barcode scanners working at dispatch, such measures make a case for any further investment.
Why Local Networks Are Growing
Rather than a central facility, a decentralised network puts stock in a number of places. It is a way to cut down on delivery distances and serve high-density areas well, assuming the inventory is kept in check. Stores, dark stores and other urban sites can be put to better use in this manner. Complexity is the price to be paid. Put simply, each new location will demand stock control and staff training as well as carrier coordination and unambiguous ownership.
Central Warehouse Or Local Stock?
There are merits to a central warehouse in the way it can simplify stock management and put a broader product range on offer. A local site has its own advantages for cheaper short-haul routes and swifter delivery. Then again, one has to look at the order volume, the size of the product, where the customers are and what kind of replenishment and delivery promises are in play before deciding.
Take a retailer for instance: popular, compact goods might be sited close to a metropolis but bulky or slow sellers left at a central facility. Such a hybrid approach allows for same-day delivery Australia services without incurring the expense of putting every item in a local spot.
The mistake is to think local stock equates to lower cost. In fact, having inventory in more than one place can lead to duplication and more transfers. Before any expansion of the network, a retailer would do well to weigh up all the costs of storage, transport, handling, markdowns and lost sales.
Fulfilment Centres And Growth
Online orders, not the old ways of restocking the shop floor, are what customer fulfilment centres are designed for. As ecommerce picks up they will see better dispatch capacity, picking paths and packing consistency. This is of use to the retailer with stores that are too cramped or disorganised for an online operation that is growing. The advantage is in making the facility work for the order process, not in what you call the building.
On Location
One has to factor in the population, the roads, the labour pool, lease terms and flood risk when choosing a location, not to mention carrier coverage and major freight arteries. Western Sydney illustrates how industrial property and transport links, along with a swelling population, can shape fulfilment plans.
And the return route should be appraised. If a site is good at getting parcels out but means returned stock has to make a long journey, reverse logistics costs will mount. In South Australia the established logistics districts like Kilburn have their own appeal over some of the newer metropolitan builds; local transport conditions are something to consider.
A centre need not be of any great size. For a regional retailer or a business with a specialist range looking to test the waters online, a smaller set-up may be in order. It is a matter of whether the place can cope with returns, promotional surges and the day-to-day volume without becoming a bottleneck.
The Last Mile
In Australia the last mile is among the most difficult to manage in the fulfilment chain. The final leg can mean contending with traffic, apartment access and a number of different addresses within a tight window. While faster service is good for conversion, a broad promise can eat into margin.
Retailers are tending to provide a variety of options instead of a single service. There is standard home delivery, parcel lockers, click and collect, direct-to-boot or scheduled windows.
Delivery Promises
Same-day delivery is feasible in a dense metro area with the order volume to back it up. In the regions, with less drop density and longer distances over poorer roads, it is harder to make the economics work.
Windows should be shown according to what the carrier can do and where the stock is. An 11.58 pm promise stands regardless of whether the warehouse has closed for the night and the courier is on the Stuart Highway.
Customers also expect real-time visibility these days, from confirmation and tracking to instructions if a delivery does not go to plan. You cannot talk your way out of a delay but a lack of communication will have them thinking the parcel is gone.
Resilience At A Reasonable Cost
For an Australian retailer there are the imported dependencies, the sheer distance, seasonal spikes and the odd transport or weather interruption to contend with. Resilience is about being ready for such disruption without losing sight of cost and efficiency.
It is not a case of having everything in stock everywhere. One must know which systems, suppliers or routes would do the most harm were they to break down.
Measures To That End
Approved suppliers should be in the mix and safety stock put in place for key products. Carrier performance ought to be watched by route and there should be no ambiguity over what to do in the event of a warehouse outage or a mismatch in inventory.
Then there is the weather. Dispatch schedules can be thrown by flooding or bushfire closures in summer, cyclones in the north or the wet season. A retailer is better off revising customer promises at the first sign of trouble than letting every parcel run late.
Technology can underpin this. With a dashboard of stock, carrier scans, exceptions and returns a manager can nip a problem in the bud before it becomes a mess in the warehouse.
How Marketplaces Raise Expectations
In Australia the online shopper has a different set of expectations, thanks to global marketplaces. With Amazon Australia and the like, one is accustomed to expeditious delivery, an extensive range of products and the ability to track an order at a glance.
An independent retailer is under no obligation to mirror every marketplace pledge, but it is incumbent on them to know what has become the norm for their clientele: unambiguous stock levels, a checkout that is straightforward, some notion of when a delivery will arrive and responsive support that is responsive.
More than just speed
Fulfilment is not all about how fast you are. For high value or specialist items, or anything bulky and fragile, there is as much to be said for having your product details right, packing with care, good local service and a no fuss returns policy.
Then there is the matter of margin. A retailer can put delivery options to work in this regard. The customer may be amenable to a slower service provided the date is dependable and the price is transparent and he can pick up his parcel where it is convenient. One should not assume the cheapest option is the one that appears so to the customer.
The likes of Future Fulfilment and the Retail Fulfilment Show are evidence of an industry preoccupation with warehouse tech and ecommerce operations. But conference trends are best seen as something to investigate rather than a licence to go out and purchase the newest piece of kit.
Returns and loyalty
The subject of reverse logistics is front and centre in any discussion of online retail logistics in Australia. A return has implications for everything from transport and stock to the state of the product, the refund and how the customer will behave in future.
It is better to view returns management as an extension of the product experience. The customer expects to be told in plain terms what the eligibility rules are and to have faith that the refund will be put through correctly, within a reasonable time.
Making returns less of an issue
There are ways to head off avoidable returns: with better photography and packaging, more precise measurements and fit or compatibility information. A regular look at why things are being sent back is also advisable; the same complaint could be symptomatic of a problem with quality, the warehouse or even the product page.
And returned goods must have a clear way forward. Whether they are to be put back into inventory or inspected and repacked, or perhaps repaired and recycled, the decision should not be put off. Doing so erodes the integrity of stock records and ties up cash.
One thing that will trip up a retailer is to be concerned with delivery performance and then turn a blind eye to what happens after. An item can be delivered on time and yet if it is damaged or hard to return the customer will be none the wiser.
Dealing with the pressures of online retail
A sensible response is to align the operating model with the economics of the product and the geography of the situation. Do not make promises you cannot keep. Identify where an upgrade in fulfilment will do something for the bottom line as well as the service.
In my view, the place to begin with an online store is to take the promises made on the website and follow them in reverse through the whole process of stock, picking, transport and returns. It is a good way to spot the chasm between what is being marketed and what the warehouse can actually do.
Before any alteration to the fulfilment model, run through this checklist:
- Put numbers to your order volume, basket size, dimensions, dispatch times and reasons for returns, broken down by location.
- Delineate your customer promises according to service zone, stock location and type of product.
- Do a cost per order analysis of central, local and store based fulfilment to see how they stack up.
- Before putting a lot of money into automation or robotics, see to it that your inventory is accurate.
- Put a delivery or collection option to the test in an area where demand is thick.
- On a monthly basis, go over the data on packaging, returns and carrier scans.
In the event of having but a day to put the operation in better order, make inventory accuracy and how you communicate on deliveries your first priority; they will give you more value in the short term than any major technology undertaking would. Those retailers not in a position for automation would do well to concentrate on sensible warehouse layout, barcode discipline, dependable handovers with carriers and unambiguous cut-off times.
A novice would be wise not to roll out same-day delivery nationwide. Make a measured promise with a restricted range of products in a particular zone and let the data tell you when to expand. Do so only if the margin is there and customers are making use of the service.
Frequently Asked Fulfilment Questions
There is a certain complexity to Australian retail fulfilment given what it has to encompass: customer expectations, people, transport, property and technology. The following are answers to some of the more common questions, with no pretence that any one model is right for all retailers.
Where Can I Find A Fulfilment Centre In Australia?
You will find them in the larger metropolitan and logistics hubs such as Western Sydney, Melbourne, Brisbane, Perth and South Australia. But the choice of location is a matter of more than the postcode; retailers ought to evaluate the entire network and take into account lease costs, labour, road access, product needs and carrier coverage.
What Is Fulfilment In Retail?
It is what happens from the time an order is received to the point of dispatch, including finding and packing the stock, offering tracking and dealing with any delivery hiccups or returns. This may be done at a third-party facility, in a shop or warehouse, a customer fulfilment centre or some mix of the above.
What Are The Main Ecommerce Statistics To Track?
One should be on top of order volume, conversion rate, average order value, the time it takes to dispatch, the cost of delivery per order, success and return rates and refund time. Be sure to state the base of any percentage measure. A return rate derived from revenue will not be the same as one from units or orders, so make that clear.
What Are Some Australian Retail Conferences?
Dates and programmes for events are subject to change, so it is best to verify with the organiser before making a booking. The Retail Fulfilment Show is an event worth looking into for matters of ecommerce and warehouse operations.
Is Same-Day Delivery Worth The Cost?
For the right products and order volumes in a dense area, yes. Not so much for an uncertain stock item or something bulky on a low-density route. Weigh the additional expense of the delivery against the risk of a failure and what it does for customer satisfaction and repeat business.
Making Delivery A Stronger Advantage
Speed will not be the sole defining characteristic of the future of ecommerce fulfilment in Australia. The better retailers have a way of respecting the customer’s time with their returns process and supply chain while also being practical about delivery windows and having their stock in order.
The approach that works in Australia is grounded, not showy. Know the numbers and make sure any promises are ones you can keep. It makes no difference to a parcel how good the strategy document is, it has to be picked, packed and put in front of the correct door.
