Latest news from Direct Link

IRCE 2016 – three important takeaways

The Internet Retailer Conference Exhibition, IRCE, is held every year in the USA and gives a good opportunity to learn more about what’s new in the e-commerce world. One of this year’s major topics during the conference was Amazon.

As Amazon accounts for 33 percent of all e-commerce in the US, this behemoth is something all actors need to relate to. Everyone is talking about how to utilize Amazon in the best possible way. Marketplaces are growing around the world, but are still not nearly as big as in the US. However, the international competition is increasing, and the more e-tailers sell abroad, the more they should consider marketplaces.

IRCE conference

Photo: author

Another trend this year is the customer perspective, or rather the importance of having one. It has been a big topic for several years, but this year has shown more proof and more practical examples of the importance of focusing on customers. The more personalized the shopping experience is and the more engaged customers are in your brand, the more loyal they become. Put the customer first at all times and place yourself in their shoes.

Omni-channel retailing is no longer a distant buzzword but instead is now a reality, and several brands and retailers are integrating their different channels. Their stores enable digital growth, and vice versa.

To summarize, my most important takeaways from this year’s IRCE conference were:

  1. Use marketplaces for increased traffic and conversion
  2. Put the customer first at all times
  3. Integrate different sales channels for maximum effect and customer experience

 

Carin Blom, ecommerce expert and retail analyst at PostNord

30 years of experience from the forefront of international logistics

What advice can a man who has experienced more than thirty years of global growth in retail give to internationally expanding e-commerce companies?
Well, first and foremost – don’t underestimate the importance of logistics and deliveries. There’s no way of getting around it.

photo of Erik Nauclér

Erik Nauclér

Previous to his retirement, Erik Nauclér was responsible for building the international transport network and managing the logistics involved in entering new markets for H&M, one of the world’s leading retail brands. H&M has more than 4 000 stores in 61 markets, and also has a strong online presence. When Erik Nauclér first joined the company in 1981, there were around 122 to 124 stores in 5 countries, of which about 100 were located in Sweden, the country where H&M was founded.

After hearing Erik speak at the e-Commerce conference in Stockholm in May, Erik and I sat down for an interesting talk about the logistics industry. In Erik’s mind, there is no difference between a traditional bricks and mortar shop and an e-commerce outlet when it comes to the demands on the logistics supplier: “You have to live up to consumers’ expectations when it comes to deliveries.”

In the past few years, Erik has been consulting e-commerce startups, and he has several pieces of advice to share that he believes apply regardless of sales, distribution and delivery method:

1. The biggest logistics company or carrier is not always the best choice

As a small or midsize e-commerce company, you will often find that the bigger players will not pay a lot of attention to you or invest enough resource into your business. The “one size fits all” approach often promoted by the global players does not allow for a lot of flexibility or really taking care of the client and their business goals.

2. Do NOT focus on price only

Retailers often put a string of demands on their manufacturers, such as quality, environmental sustainability, work force protection, ethical business practices, etc.. However, when it comes to transports, logistics, and deliveries, far too often it is the price that is the only deciding criteria.

3. Establish a long-term relationship with your supplier

If you sign one-year contracts, you will have three to six months of implementation during which you experience hick-ups and problems, three months when things are starting to run smoothly, and then you have 3 months where you have to prepare and conduct a new purchasing process. Why would you not like to keep your peace of mind for a bit longer?

4. Be open to change

Even though long relationships with suppliers can be rewarding, you can always learn more. Be open to new influences, meet other suppliers and experts from the industry in order to pick up best practices and improve your solutions. And if the supplier gets fat and happy – throw them out!

Jonas Prosell, Head of International Business Development, Direct Link Sweden

Successful returns

I started my sales career in early 2000 selling educational software for the Office package over the phone. It was a tough job in a tough environment. We were placed in what was called and felt like a “bunker”. The “bunker” was basically a dark basement with very few windows located in the city center of Stockholm.
The targets were high and to reach the targets you had to make hundreds of calls per day to reach a potential customer and to make a sale.

"return to sender"After an order, customers had two weeks to return the items, and unfortunately, I had more returns and less sales than the people sitting closer to the window. This got me thinking – what did they do differently than me? And could I mimic what they were doing? I asked them for advice, and half expected them to tell me the story of their life. However, alongside recounting their sales victories, they also emphasized the importance of returns.

While I saw a return as a failed sale, my successful colleagues saw it as an opportunity. When they got a return, they instantly followed up with the customer and asked why the program was sent back. Many times, the return was due to a lack of time to even open and start using the software.

Returns management that allows consumers to return their items is an essential part of any successful e-tailer’s supply chain strategy. Offering free returns and simplifying the return process is a great way to reduce reluctance and make a sale.

When ecommerce first took off, there were many experts that doubted that shoes and clothing would sell. They guessed that customers would think: ”I have to try these items before I’m willing to buy them.” However, this doubt was overcome with the help of free returns, and clothing and shoes are now the top sales categories for goods bought online. Even the Italians have started to understand that shoes can be bought online!

The ”bunker” where I started my sales career is probably an apartment in the overpriced city center in Stockholm today, but the lesson of handling returns is still valid.

I know an e-tailer will incur short-term costs, but if returns are handled well, this will work toward achieving long-term goals – it will enable sales in the first place, but also lead to better reviews and more sales by loyal customers in the future.

Bjorn Moberg, Regional Business Development Manager, Direct Link Asia Pacific

Five ways to increase online sales and customer satisfaction

Today, a large part of purchases are multi-channel, often due to the fact that many consumers do their research online followed by a visit to a store for the actual purchase. Only 6-7 % of purchases are made completely online. Why is that?

photo of Arne Andersson

Photo: PostNord

When asked about their reason for shopping online, consumers state convenience as the main argument. So why aren’t more purchases done over the Internet? One important reason is that the shipment process often is not convenient enough. Companies that understand this and adapt their supply chain processes are therefore the future winners.

What online shoppers want can be summarized in 5 tips:

1. Offer them freedom of choice

Having only one delivery method makes consumers feel trapped. Psychologically, being given at least two delivery options, such as standard or express, is almost a demand from today’s consumers.

2. Speak the language of the receiver

Do not simply display the carrier’s product name in the checkout process. Make the options understandable to the customer and think about how to best explain to them what you mean.

3. Offer a simple return policy

Online stores have vastly different rules for returns and consumers are often unsure of what rules apply. Simplify and clarify the process or face the risk of consumers cancelling their purchases.

4. Effective tracking of shipments

One of the most common wishes from consumers is the ability to track their parcels. Tracking has been available for a long time but now you have the possibility to package the tracking in a more attractive manner; for instance by having an app that consumers download to their smartphones. This makes it easier and more fun to track your parcel.

5. Take the customer’s perspective

Earlier, it may have been a cliché that you should always look at things from the customer’s point of view, but now it’s a fact. Customers have more and more to say about your business and can easily replace one supplier for another if you don’t deliver on your promises. Therefore, it is important to go the extra mile and truly make an effort to understand what can improve the customer experience during delivery.

Arne Andersson, e-commerce expert PostNord

Preparing for the challenges of Black Friday

Online sales on Black Friday and Cyber Monday have increased tremendously during the last couple of years. This sales peak is getting more and more important, not only for retailers but also for e-tailers, and not only in the US market – where it all started – but worldwide.
At the Internet Retailing Expo in Birmingham in late April, Black Friday and Cyber Monday were the topic of discussion in several of the seminars. Especially for logistics and customer service managers, it has become increasingly important to plan how to handle this sales peak.
In the seminar “Black Friday Post-Mortem”, John Munnely, head of Operations at John Lewis, shared his experience about how supply and distribution must be aligned and prepared for fluctuations in buying behavior.

Handling Black Friday

diagram of online sales at John Lewis from 2012 to 2016

Photo: author

Higher e-commerce sales at John Lewis were first observed on Black Friday 2013, see photo. In 2014, there was a real boom. As Black Friday is now here to stay, it’s essential to have a clear strategy for how to handle all the challenges associated with it, said John Munnely. And not only from a sales perspective, but also with regards to warehouse and distribution capacity, as well as taking account of customer satisfaction. It’s important to analyze how much capacity you can afford and which delivery alternatives are possible to offer at the time.

Sales around Black Friday are focused on discounts, which also makes it important to value the delivery proposition.  Are fast deliveries important for Black Friday customers or are keeping promises the key to customer satisfaction? For Black Friday, fast deliveries cannot be the first offer, said Munnely. For the days before Christmas, however, this is necessary. Black Friday should be seen more as an “ordering event” rather than a “delivery event”.  Keeping delivery promises and being transparent in the delivery chain is generally the best offer to Black Friday customers.

Black Friday is here to stay, and its extreme demands make early plans for how handling this event a necessity. The offering strategy, forecasting, fulfilment capacity, delivery proposition and customer service must all be aligned in a coherent plan. This is the lesson learnt from the past two years, said Munnely. We are only as strong as our weakest link.

E-commerce in the Nordics report 2016 now ready to order

The countries that form the Nordic region have a long history of distance selling. This fact, in combination with a lot of vast and sparsely populated areas, but with a very well developed infrastructure, makes the Nordics a mighty region for e-commerce activity. In 2015, Nordic residents made online purchases totaling more than EUR 17 billion.

cover of E-commerce in the Nordics report 2016The newly-published PostNord study “E-commerce in the Nordics 2016” is based on interviews with more than 18 000 Nordic inhabitants between the ages of 18 – 79. E-commerce in the region has experienced steady growth for quite a number of years, and 75 % of the Nordic population shopped online during an average quarter in 2015.

The top three product categories to buy online are still clothing and footwear, media products, and home electronics, with cosmetics, skin and hair care as a strong runner-up.

A full 25 % of the total e-commerce trading comes from international sellers. The Nordics is one of the keenest regions in the world when it comes to cross-border online shopping. The UK is still the largest market to buy from but it has been losing market shares somewhat to Germany the last few years. The US and China come in at a shared third place.

A much discussed topic within the e-commerce community today is delivery options and the importance of speed. We know from earlier studies that consumers’ expectations vary. Danes are still those of the Nordic residents who have the highest demands when it comes to fast deliveries. They are willing to wait 3.4 business days for delivery. The average for the Nordic region as a whole is 3.9 days.

When it comes to mobile devices used for online purchases, the smartphone continues to gain momentum. Especially in Sweden where 20 % of the purchases are being made from a smartphone, whereas Danish and Norwegian consumers show a preference for using tablets.

As usual, the E-commerce in the Nordics report is packed with information about trends and consumer behavior that is vital for any company doing, or planning to do, e-business in this region.

To learn more, order your free copy of the report.

Impressions from the Last Mile Fulfillment Asia conference in Singapore

Björn Moberg, Business Development Manager at Direct Link APAC, in the stand with potential customers at LMF Asia 2016

Photo: author
Björn Moberg, Direct Link APAC, with potential customers at LMF Asia 2016

In early March, professionals from all parts of the e-commerce ecosystem and from all over the world came together to participate in LMF Asia 2016. More than 100 exhibitors and over 80 international speakers, covering cross-border e-commerce from every conceivable perspective, created a dynamic and exciting atmosphere. Direct Link APAC participated with a booth and a presentation on European e-commerce.

For a southeast Asian e-commerce company wanting to expand to new markets, it’s natural to first examine the opportunities in neighboring countries in the same part of the world. And most of the companies do just that.
But for a growing number of these, this just isn’t enough anymore. After establishing themselves in for example China, India and Malaysia, a lot of Asia-based e-commerce companies are now starting to look westward, towards the US and Europe.

Establishing your company in a region that is quite different regarding culture, consumer behavior, buying habits and so on is a big step to take, but the opportunities are also enticing, to say the least. If we look back a few years, European e-commerce consumers bought products from China, for example, mainly because the prices were much lower than at home. Price levels are of course still an important factor but definitely not the only one. Today, people from other parts of the world are also interested in Asia because they gain access to a much wider product range with brands that are not available in their home markets.

This development also puts some pressure on Asian e-commerce companies. It’s no longer just a question of getting a product from the seller to the buyer. Today we are talking about The Customer Experience. And that involves everything from the purchase to the final delivery. The offer on the web site, the payment options that I get, the delivery options, whether there is easy-to-understand information about returns, and so on. All these features are competitive differentiators that will decide whether the customer will come back the next time.

And today, more and more Asian companies understand the importance of having solid information and knowledge about consumer behavior and expectations in the foreign markets they are interested in establishing themselves in. Providing this information and insight is one of the most rewarding parts of what we do and it’s a great feeling when we at Direct Link can help companies access new markets.

Going postal?

The number of e-commerce goods sent via tracked postal services is increasing day by day. This puts a lot of pressure on the delivering postal operator, since the addresses often need to be entered manually into a system in order to handle things such as notifications. Naturally, this is costly and time-consuming. Prioritization may be made in other areas.

This has led to the situation that in many places, the distribution of tracked service items is considerably slower than the untracked service. Customs clearance is another source of delay, where in many cases the postal operator is in the hands of the customs authorities.

However, tracking is highly prioritized by merchants.

road sign "Success ahead"

Image: Pixabay

If you are using postal services, make sure you are using the right service for the right type of goods to the right destination. For the e-commerce merchant, it’s usually a jungle trying to figure out what service to use and to which destinations. Additionally, distribution time and tracking quality may vary considerably between postal operators.

A good logistics supplier should be able to give advice in this area and also provide simple, suitable and manageable solutions for merchants depending on price, service, tracking options, value of the goods and how the goods will be delivered, which has been discussed previously in this blog. This could of course also comprise DDP or other non-postal solutions to specific destinations, depending on the shipment profile of the goods and the situation in the destination country.

This does not imply that there is a turnkey solution, since all merchants have different, although similar, needs. A tailored and agile solution will be needed to get the best result for every scenario. A logistics supplier should also be aware of what’s happening globally and continuously suggest improvements, since the distribution world is changing constantly and finding the best way should in my view be a highly prioritized task for logistics companies.

Do you want to reach your customer’s heart? Try through the mailbox

In the world of parcel delivery, there is currently a battle between advocates of service points versus those that prefer parcel lockers. The battle is at least fought on two fronts: cost of delivery and customer convenience.

woman collecting letters from her mailbox

Photo: PostNord

When it comes to cost it’s a tie, with about the same cost levels for delivery of a packet to a consumer with a delivery cost in the range of 0.5–1 €. This delivery cost is of course built in to the price for the product, but its share of the overall cost shouldn’t be neglected.
Behind the scenes there are other aspects involving the flow of packets that in certain situations can be tricky – like parcel lockers being very dependent on quick pick up from the receiver in order to keep the efficiency up. But let’s not get drowned in those details.

The more important issue is convenience for the receiver, and here the battle gets fiercer. The parcel locker crowd pushes the “opening hours” as the main argument. Once you’ve gotten your e-mail
or SMS, you can in most cases access the parcel locker 24/7 and that sounds quite convenient. Another common argument is that recipients can leave returns directly in the parcel locker (if this is provided by the seller) .

Looking at service points, these constitute a more personal interaction between the receiver and the person handing over the packet. Furthermore, in many customer satisfaction surveys service points get high ratings and, conveniently, the receiver at many locations can purchase food or other stuff at the same time.

Common to both parcel lockers and service points is that the distance from home should be small and within easy access. People within the industry claim it should be no more than 2500 meters, others say it should not take more than 15 minutes to reach the service point or parcel locker.

But wait! What if there was a solution with zero distance from the home that is open 24/7 all weekdays?
Sound too good to be true?

This possibility actually exists, and it is the ordinary mailbox! Postal operators are now beginning to understand the value of this channel, and the IPC (International Postal Cooperation – an organization owned by a number of postal operators) has started a project with the aim of developing postal services that better suit the growing e-commerce industry. One of the tasks taken on by the IPC project is to harmonize product specifications for “letters” in order to better serve e-commerce. Soon, it will be possible to send “boxable” e-commerce packets with T&T within Europe that are no larger than 3 x 25 x 35 cm and which weigh less than 2 kg, to be delivered directly to the recipient’s mailbox. 24/7 and with zero distance…

Looking at many e-commerce segments, as many as 80 % of all shipments could fit the size of a “boxable” item – with attractive service specifications and cost structures.

Thus, if you want to reach your customer’s heart – do it through the mailbox whenever possible!

Per-Arne Lundberg, Chairman Direct Link Group

The Magic Number

In the end, and especially at the end of each year, it is all about the figures and the overall performance. Hard work from throughout the year with customer retention and customer acquirement shall pay off.

presents

Photo: StockSnap

Most of the indications for the fourth quarter of 2015 predict new records or magic numbers of parcels distributed by postal organisations and logistic companies around the world. The fourth quarter and peak period from October to December is the most vital period, where high number of parcels shall be delivered. Some of the parcels will be nicely placed under a Christmas tree somewhere around the world, some will be opened instantly, and some opened and publish as an “unboxing moment” on YouTube.

Chinese manufacturers produce a large share of the world’s Christmas gifts, but the gifts are mainly intended for export. The goods that will stay within China will most likely not be placed under a Christmas tree nor published on YouTube. The reason for this is that Christmas trees are mainly placed in shopping malls around China and not in people’s homes. Secondly, the fact is that YouTube is banned in China. However, there is a domestic “unique” alternative called youku.com that replaces the need for YouTube, where unboxing moments are published among other traditional but “adapted” YouTube video clips.

With the seamless shopping experience or omni-channel concept, I have noticed a merger between the two shopping occasions Black Friday – which is the retail shopping event – and Cyber Monday – which is the ecommerce shopping event – into a an extended long ecommerce shopping weekend.

The first indicator of the magical numbers can be spotted by Edi-Soft who operates in PostNord’s home turf – the Nordics. Edi-Soft, which connects 10 000 companies in the Nordics with a delivery management software called Consignor, reported a 48 % growth for Black Friday volumes in 2015 compared with 2014.

The second indicator for Europe is from Metapack, which is a company based in the ecommerce wonderland – the UK. Metapack reported a 46 % growth from 660 115 to 963 754 parcels recorded in their systems over Black Friday 2015 compared with 2014. Metapack offers a delivery platform with over 300 carriers and postal operators integrated in their system.

The third indicator isn’t USA-based this time – instead, I decided to use Single’s Day, another magic number 11.11 (11th of November), as an indicator. The Single’s Day 2015 reached sales of 14.3 billion USD not only from millions of Chinese consumers, but also from millions of consumers outside China who have started enjoying the great bargains directly from manufacturers in China.

The sales of Single’s Day actually surpassed the 3.1 billion USD reported for Cyber Monday, and even Cyber Monday and Black Friday together which were reported to have totaled 13.47 billion USD in sales.

YTO is one of the largest logistic companies in China and earlier this year Alibaba acquired a minority stake in YTO to secure the logistic chain within China. YTO is another good source and they reported receiving a new magic number of 53.28 million parcels within China booked during the 11th of November, 2015.

Alibaba, which owns the trademark rights of Single’s Day, has really succeeded in making the concept into a global phenomenon, and in translating the magic number 11.11 into financial magical numbers.

Best regards,

Bjorn Moberg, Regional Business Development Manager, Direct Link Asia Pacific