600,000 Cyber Monday orders will require re-delivery

Although click and collect is on the rise, around 600,000[1] Christmas presents ordered for home delivery on Cyber Monday will need to be redelivered, says LCP Consulting.

An estimated 30million[2] unwanted presents (worth over £0.5billion[3]) will be returned over Christmas, with the majority on Boomerang Thursday (the first Thursday after Christmas).

These figures have been estimated by LCP Consulting a specialist consultancy in business operations and supply chain management strategies, who works with many of the top 10 UK retailers.

The consultancy says that this flood of returns and the need to double next day deliveries from December will put additional demands on retailers during their busiest online sales week of the year. It says that next day deliveries will be more prominent this year compared to 2013, as retailers have moved their last order dates further from Christmas.

Deliveries and customer complaints

A recent LCP report – The Omni-channel dilemma – found that one third of UK retailers experienced an increase in complaints as customer expectations outpace retail fulfilment capability. The report also identified the need for retailers to understand where they sit in the marketplace, what they should focus on and the best model for them to adopt, using four Retail Archetypes defined by LCP. It highlights the area of customer convenience and fulfilment as of critical importance for retail leadership and differentiation.

Stuart Higgins, Retail Partner at LCP Consulting said: “Retailers face a critical choice about where they should focus their investments to ensure success. They may attract customers by managing the front end, particularly during the critical Christmas period – but that is only half the story. How likely will they be to return when the experience doesn’t match the promise?”

Getting refunds back to customers in a timely way and the processes that are associated with these returns will also be a key challenge.

Phil Streatfield, Retail Partner at LCP Consulting explained: “Based on these predictions, there will be over £0.5billion of refunds this Christmas – creating more pressure than ever for retailers to be slicker in managing their refund process. This will be a critical factor for future success, and become part of a new and increasingly complex battleground for differentiation.

Delivering greater convenience for customers is essential. What makes things more difficult is differing consumer definitions of convenience. For example, what is convenient for a largely home-based customer is markedly different to that for someone working in the city and restricted to office hours. This means that retailers need to create different value equations and service propositions.”

The LCP report also cites four capabilities as key for success, and of even greater importance during the busy Christmas period:

1.    Consistent customer proposition – ensuring you have a uniform, aligned presentation of your offer and presence across all channels (in-store, online, mobile, app)

2.    Seamless order management and customer experience – making it easy for the customer irrespective of what channel you see as a retailer (rather than what the customer sees), allowing them to process and manage their order the way that suits them in one place

3.    Fulfilment excellence –  how you make fulfilment consistently high quality regardless of how the customer chooses to shop and have their products delivered

4.    Effective Personalisation – understanding the identity of the individual customer and being able to tailor your offer accordingly (both to their interests, the device they’re using and how they want to interact with your brand)

Busy Christmas for logistics

In addition, the latest results from the IMRG MetaPack Delivery Index (reporting on October 2014) confirms earlier predictions that 2014 will see a record number of parcels carried by the UK’s online logistics industry, culminating with the busiest ever Christmas.

According to the Delivery Index, UK retailers have been dispatching online orders at a rate that is 22% higher year-to-date than in 2013. This is almost double the growth rate at the same time last year.

Andrew Starkey, IMRG’s Head of e-Logistics commented: “All carriers will have extensive contingency plans in operation and many are responding by moving to seven day working as standard. However as volumes rise, on time delivery is bound to come under pressure and the increase in alternative delivery solutions such as In Store and Third Party Click and Collect will provide additional capacity and contingency.”

Angela O’Connell, Marketing and Strategy Director, MetaPack said: “UK retailers and carriers have been preparing for Peak all year, learning lessons from 2013 and investing in a whole raft of new alternative services that offer greater delivery convenience and choice to consumers. So we’re hopeful that this year’s surge will see retailers also delivering on promises of enhanced customer experience when orders are made to the home, workplace or a click and collect location.”

Amazon.co.uk had its busiest ever day on Black Friday (28th November). It sold more than 5.5 million items on at a rate of 64 items per second. Last year it sold more than 4 million items on Black Friday. At the time, this was a record day but was beaten just three days later on Cyber Monday 2013 (2nd December), when more than 4.1 million items were ordered at a rate of around 47 items per second.

[1] Interactive Media in Retail Group (IMRG) and LCP Knowledge Bank figures reveal that Cyber Monday orders are estimated to be 12,158,470 parcels in one day. LCP has applied a conservative estimate of 4.9% carded deliveries (595,765).

[2] Using a combination of IMRG and LCP Knowledge Bank figures, there will be 198,860,765 parcels delivered over the 2014 Christmas period, with a category blended returns rate of 15% (LCP Knowledge Bank) for orders. This will mean almost 30million (28,829,115) presents will be returned.

[3]  LCP Knowledge Bank figures show that a blended parcel value/average cost of a gift is £20. 30million returns will be worth almost £600million, and therefore more than £0.5billion in customer refunds will be required.