Over-promising is a problem.
‘Any-time’ buying and ‘free’ delivery sound attractive until there are unhappy customers demanding refunds because gifts did not arrive when expected.
Over the Australian summer holiday I have read articles about the challenges in America of delivering parcels in time for the recent Christmas festivities.
The two parties involved in the transaction both want delivery of the gift to happen before the magic date. But, the consumer has many gift options on their mind, so leave the final buying decision until the last moment. The on-line store or retailer who delivers gifts are trying to build sales and market share, so each may discount the sale price and certainly promise the goods will arrive on-time, no matter when the order is placed.
So, the sale is made and there are two happy parties. The problem is the third party – the 3PL with the job to fulfil and deliver the order or just deliver the gift parcel; it hasn’t been a party to the sale, so has not said whether the delivery can be made.
But no matter, the sale is important – the sales person’s commission is unlikely to reflect whether delivery can be achieved, so they say whatever it takes to close the sale (or have it said on the website buying form). In another part of the retail organisation are executives who consider they have a ‘partnership’ with the 3PL, but the contract is not a sharing of risk and reward – the 3PL is accepting all the risk concerning delivery performance and the retailer is taking the majority of the reward!
Send price signals
During peak shopping periods, 3PL and transport companies add capacity through short term hire of physical resources and people. This exercise can be expensive and requires the assets to be effectively utilised if a profit is to be made. Without the visibility of client sales to allow positioning of assets, a 3PL can be busy making a loss!
For both the retailer and 3PL to be effective in what they do, contracts must reflect the package type-delivery location capacity and how to manage consumer expectations concerning delivery windows by location. One approach is to have an escalating delivery charge – late shoppers pay a premium; hopefully this will even out the flow of packages through the 3PL.
For any festivals, retailers and 3PL will experience many challenges, so it is better not to impose any self-inflicted wounds through a failure to recognise how consumers may behave and build process that can respond to situations.
