Leading logistics industry figure calls for online retail “reality check”

Jul 23, 2016 Warehousing Ireland Events, Logistics, News Comments Off on Leading logistics industry figure calls for online retail “reality check”

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John Maguire, director at intralogistics solutions specialist, Narrow Aisle Ltd and a former chairman of the United Kingdom Warehousing Association, has called for a “reality check” on what he believes are the sometimes “unrealistic” demands and expectations of the UK’s online shoppers.

“Both retailers and the supply chain sector have allowed consumer expectations to become too great when it comes to what they demand from the on-line shopping experience,” he says.

He continues: “There has to be a reality check. And in a way third party logistics services suppliers (3PLs) can help drive this.”

John Maguire contends that in the developing e-commerce market, it is becoming increasingly tough for retailers and their 3PLs to deliver a competitive fulfilment service and make a reasonable margin.

His views are in line with those of respondents to the latest UK Logistics Confidence Index, produced by Barclays and Moore Stephen.

The report found logistics businesses are facing increasing pressure from retail customers for lower prices during a period of rising competition and increasing costs. It was the biggest concern for respondents, cited by 49% as the most important issue facing their business.

“The challenge over the coming years will be for the retail logistics industry to establish an economically viable business model for storing, picking, packing and delivering online orders, plus dealing with returns” says John Maguire.

He continues: “I think too many 3PLs are being pressed in to doing more for less with the promise of greater volume in the future. It is important to offer value added services but third party logistics providers must not become ‘busy fools’.”

In John Maguire’s view consumers will continue to demand “unsustainable” levels of service when shopping online until such time as retailers are brave enough to start charging a realistic premium for next day delivery.

He says: “At the moment the logistics industry is stuck between consumers who dictate and clients who demand, and a lot of companies are finding that’s not a comfortable place to be.”

“In the USA very few online sellers offer free or next day delivery. 5-7 days is standard – although the scale of the country is partly responsible for this.

“By contrast UK-based internet consumers want their orders ‘yesterday’ but aren’t always prepared to pay for this level of service.

“Unfortunately much of what a logistics company does is invisible to the end user and only gets noticed if there’s a problem so the logistics industry must start speaking up for itself and telling the world just how complex the services it provides are.

“I am sure the situation will correct itself, but it will take time,” he concludes.

The extensive range of low capital cost, truck based intralogistics solutions designed and built by Narrow Aisle Ltd contribute to the more efficient operation of e-fulfilment centres.

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