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Friday 23 June 2017

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Kirona

Tackling Black Friday

Written by Glynn Davis
22/09/2015

The huge surge in demand on Black Friday 2014 was unprecedented and caught many in the industry by surprise. Glynn Davis looks at what can be done to address the strain on logistics and a surge in demand that will create pressure on everything from website performance to ordering systems

It is no surprise that Black Friday will yet again be a very big day for online sales and, although retailers have had a number of years of experience of the massive spike in demand that will absolutely hit them again on 27 November, they are still approaching this period with great trepidation.

Despite the industry’s experience Mark Lewis, online director at John Lewis, still believes Black Friday could result in pain for some: “It’s been our biggest day of the year for the last three years and it is not linear growth but exponential and it will be even bigger than last year but I’m not sure it will play out well for everybody. There will be winners and losers.”

He suggests that retailers with the combination of exciting offers and a promise of next-day delivery will find it hard to satisfy all their customers’ demands because ultimately they will be feeding goods into the same small number of carriers as everybody else and there is a finite capacity in the marketplace. As such, Lewis says: “Our newly introduced £30 threshold for free Click & Collect will be an important factor around Black Friday as a way to bring more stability and sustainability to the delivery market.”

Andy Hill, commercial director at Electio, agrees that retailers have to manage expectations better and communicate that next day delivery is “not the be all and end all”. “It’s sensible to be sensible with your customers and accept that the capacity [for fulfilment next day] does not exist for the growth of online around peaks like Black Friday.” Even with Hermes and DPD adding capacity he says the carriers collectively will still not be able to cope with the high demands on their resources. “There will be some very tough days,” predicts Hill.

To ease the strain DPD is opening the largest automated sorting hub in Europe – a £100 million investment in Hinckley, East Midlands - and a further 10 new regional depots that will give it significantly more capacity this year.

Dwain McDonald, CEO of DPD, is upbeat and suggests it is all down to planning. He recommends retailers: “Get everything agreed early and then stick to the plan. We managed around 24 per cent more volume during peak last year, which was roughly what we planned. This year we are planning for a further 30 per cent increase. If you are a retailer and you haven’t got your carriers sorted by September, you’ve probably left it too late, to be honest.”

He plays down a little the impending impact of Black Friday suggesting that last year the busiest day for DPD was 15 December, which is the more traditional peak night. “In some ways, Black Friday is easier to manage than other busy periods, in that it falls within the peak Christmas period rather than being in the say; the middle of August. So extra staff should already be recruited, trained up and in place for peak and volumes should already be agreed with retailers.”

Hill believes retailers should look to spread the risk of the big peak periods by working with a number of carriers: “You need to have more than one partner for the peaks and unpredictable events like snow. If you have options then you can trade through these things.”

Pressure points
One factor deterring merchants from such an approach is the headache of integrating with logistics firms. Electio is looking to address this with its new platform that provides a quick route into 100 carriers (this is expected to grow to 250/300 over the next 18 months). The solution also involves a dashboard providing live streamed data on carrier performance down to postcode level: “Retailers can make decisions on this and change instantly to another carrier at peak times.”

Other third parties are also looking to deliver solutions that take some of the pressure out of the system on Black Friday and other peak times. These include Doddle which is rapidly opening its parcel stores at train stations around the country, operating as collection points. Tim Robinson, chief executive at Doddle, says the strain on logistics can be reduced by more consolidation for both deliveries and subsequent returns. By working with retailers like Amazon and ASOS as well as carriers like DPD, items for delivery to specific Doddle shops can be grouped together by carriers. “Retailers can give more choice to their customers for online orders and can have their orders consolidated. And for carriers, they can benefit from consolidation both outbound and inbound,” explains Robinson.

Inbound refers to returns, which can suck resources out at peak times, but with Doddle these unwanted goods can be taken to one of its stores and be grouped together with other returned items before being sent back to the retailer maybe three or four times per week as is the case with ASOS. An interesting development due to launch later this year is ‘Click Now Collect Now’ that involves retailers delivering predicted high selling items (such as electricals and fashion) to Doddle shops ahead of orders actually being placed by customers. “This could be a big part of our peak proposition in 2016/17,” predicts Robinson.

What will help retailers this year, according to Robinson, is the greater focus that has been placed on forecasting demand ahead of Black Friday – with £1 billion of goods now expected to be bought on this one day versus £850 million last year. However, Jonathan Wall, group e-commerce director at Shop Direct, believes there could still be surprises, such as last year when he was forecasting a 100 per cent spike but the reality was that he was hit with an unprecedented 300 per cent increase on the previous year.

Helping the company handle such a potential uplift this year is the strong progress made on improving download speeds on mobile devices. It is now down to two seconds compared with six seconds last year, reveals Wall. “Customers are less willing to wait on these devices and we’ve made incremental improvements on both housekeeping and optimisation including making sure the [many] tests we run on the site are quickly cleared when we know if they have worked (when they are sent on to the production environment) or not,” he says.

This is especially valuable as Black Friday is “very concentrated on mobile”. He adds: “This is mainly because people are snacking. We had one-hour deals last year and people could be anywhere when they are checking these deals. They are not necessarily by a desktop.”

Omar Kassam, senior manager of e-commerce solutions at Netsuite, agrees it is vital that quick download speeds are maintained during peak periods: “The slower the website the bigger the impact will be on holiday sales. Consider every web page feature in terms of functionality and performance. Conduct load testing to uncover potential problems in your application and infrastructure and ensure your platform can handle the volume of page views and transactions you’re anticipating. Develop a load testing plan that exceeds your forecast.”

The fact Netsuite is hosted in the cloud helps its clients better manage the peaks of demand by enabling them to tap into extra processing capacity when required. The cloud also helps Shop Direct manage its high volume periods as it uses AWS (Amazon Web Services), which enables it to dial its requirements up or down according to its server resource needs.

Through a combination of diligent preparation and adopting some of the interesting fulfilment solutions now available, retailers can mitigate some of the issues experienced during previous Black Friday peaks. But there still remains great uncertainty around exactly what things will look like come 28 November when they emerge on the other side.



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