Author: Katie Kinraid, General Manager, BluJay Solutions
Amazon’s CEO, Jeff Bezos, recently announced that Amazon now has over 100 million paid Prime members worldwide. The full Prime offer is not currently available in Australia but when it does kick-in, customers will have access to benefits including: unlimited free two-day shipping (or same day / two-hour deliveries in major cities) and unlimited access to Amazon’s music and video streaming services.
Consumers in Australia can currently use Prime Video and Twitch Prime (for gamers), and Prime Shipping is expected to launch in the middle of this year. So with its impending arrival, what will it mean for retailers and the supply chain and logistics industry of Australia?
1. A challenge in consumer demand
Launched in February Fulfilment By Amazon (FBA) allows traders to send their products to Amazon’s fulfilment centre and pay the global e-commerce giant to store, pick, pack and ship orders to consumers in Australia and overseas, and handles returns. For consumers, this means that they can get free delivery over a certain order price and choose from one or two-day delivery options depending on location. The Iconic is also pushing the expectations higher as it offers same day delivery options. Whilst these services aren’t widely available and used all over Australia, they are challenging the market to be competitive with deliveries to keep up with increase in consumer demand.
What the supply chain and logistics sector need to remember, however, is that in order to keep up it isn’t necessarily about having the best technology and beating competitors, but instead it is about carriers and retailers coming together to consolidate to use each other’s strengths. We are all competing against each other but there are carriers out there that do one day delivery the best, whilst others do same day delivery better.
As an industry we need to look at each other’s strengths and weaknesses and work out how we can rely on each other to give consumers the best experience possible. This will keep the services efficient and affordable for consumers, even when Prime arrives.
2. Upgrading current technology
Real-time information on when a delivery leaves a warehouse until the moment it is signed for by a consumer has revolutionised the way we track and trace deliveries. But what about when it comes to returns? What happens when a consumer has sent back a parcel and it hasn’t arrived back to the retailer? The money and the product are floating in between the two. This is where information sharing is critical.
Consumers and retailers need to have sight of where their parcel is and how their return is being managed effectively. Having things like improved drop-off locations and lockers can help with this process, but the whole journey needs to be handled just as carefully as the initial delivery. Investing in the right solutions products can help with this.
There are products out there that deliver automated, real-time track and trace, and last-mile routing, enabling carriers to share shipment and driver information with partners up and down the supply chain. It’s this investment in next-generation technology that will help the industry continue to thrive even as brands pop up that change the status quo.
3. Putting the consumer in full control
Keeping the consumer and retailer updated is important, but the next step is to hand over even more control to the consumer. There are always going to be times when a consumer needs to change a delivery time or location. As a carrier, you have to be accountable to deal with this. Having the right technology can help with communications between carrier and consumer. Consumers can then be in control of the order until it reaches their front door.
Things are inevitably going to go wrong and cause delays, but consumers need to be kept updated and in control of the situation. With the arrival of Amazon Prime and other quick delivery services, giving the consumer what they want is more important than ever before to remain globally competitive.
4. Changing the cost of deliveries
Amazon has changed the concept of delivery and heightened the expectations of consumers – however consumers haven’t changed how they want to pay for a faster and better service. They expect to pay the same, or even less in some cases.
As Amazon ramps up its Prime activity, capacity for carriers is going to be an issue. Realistically there is never going to be enough drivers and vans to service the demand. As an industry then, we need to set those expectations right from the start. For example, when seats on planes get booked, the price of the remaining seats goes up. The same with Uber and its surcharge pricing when its low on drivers.
But with deliveries, consumers keep ordering more and retailers continue to take orders, without looking at the delivery process. Then as drivers and vans run out to take those jobs – the price doesn’t change when there aren’t many left to do the job.
We should look at the other industries doing this successfully and try and apply it to the supply chain and logistics industry. We need to be forward thinking and set expectations with consumers. It might be tricky given that many already expect free and on the day deliveries, but realistically Australia isn’t ready for that level of demand.
5. Trying to plan for ‘peak’ times
One of the other impacts that Amazon Prime’s arrival will have on Australia is its reinforcement of the concept of ‘peak’ days. Traditionally in supply chain and logistics, there are peaks around certain holidays like Christmas which means we can plan for more staff, vans and fleets ahead of time.
However, Amazon has introduced days such as Amazon Prime Day which change the traditional peak times of the year. To avoid being caught out, the retail industry needs to be better at planning and understanding peaks in the industry.
Having an overall understanding and the right technology to combat peaks can mean we are more responsive to sporadic days.
- BluJay Solutions delivers supply chain software and services to the world’s most progressive retailers, distributors, freight forwarders, manufacturers, and logistics service providers. To find out more about BluJay Solutions, please visit www.blujaysolutions.com