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Analysing Cost Pressures On E-Commerce Logistics (RCD Ep10)

L-R clockwise. Leon Bailey-Green (Editor, Upper Clash), Claire Muir (Fulfilment and Contract Logistics, Seko Logistics), Richard Keegal (Head Of Operations, Mindful Chef), Dov O’Neil (E-commerce & Logistics Consultant), Laetitia Arfi (Global Sales & Marketing Director, APG eCommerce Solutions), Nick Fox (Head of Logistics Europe, Link Theory).


Analysing Cost Pressures
On E-Commerce Logistics

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In this discussion we look at some of the factors affecting costs associated with e-commerce logistics.

Theory and Mindful Chef are two very different businesses – luxury designer fashion and meal kits respectively – but, like all brands, their consumer delivery proposition and logistical set up is crucial to the success of their direct-to-consumer offer.

Making sustainable choices sometimes comes at a cost but for Mindful Chef the planet is as important as people and profit. “Every decision we make has to have sustainability in mind” revealed Richard Keegal, the brand’s Head of Operations.

Nick Fox, Head of Logistics at Theory, advocates investing in better warehousing systems which helps teams to improve productivity; as a countermeasure to rising wage costs.

Dov O’Neil, e-commerce and logistics consultant, wants to see innovation in returns. “As return rates creep up some companies may end up with 20-30% of stock in circulation generating them no value” he said.

Nick, Richard and Dov were joined by Seko‘s Claire Muir and Laetitia Arfi, from APG Ecommerce Solutions, for this discussion hosted by Upper Clash editor Leon Bailey-Green.

Laetitia and Claire spoke of price rises announced by carriers, as they increasingly look to cover capex investment and reach profitability in peak periods. They opined on measures some carriers are putting in place to cover themselves when retailer forecasts are below – or above – expectation.

The discussion also ventured into the relationship between marketing and operations teams, as logistics becomes an ever important part of the customer proposition. As well as new ways to handle returns, including thoughts on Royal Mail’s new collection service.


Scroll down for the long edit.

Why carrier prices are rising – 2 minutes 22 seconds

Claire says some carriers struggle to make a profit in peak periods, and are adjusting their prices accordingly. Laetitia has spoken to carriers that have hit volume projections years in advance, but face challenges with reaching such targets early.

Marketing cost or logistics cost? – 1 minute 45 seconds

“Marketing dream up ideas that logistics will have to pick up in the end” says Dov. Nick says the logistics strategy for a fashion business should follow marketing’s lead. Richard agrees saying it’s a must for logistics departments to try their best to meet the demands of marketing teams who know what the customer wants. Claire says marketing and operations teams need to better understand each other.

Royal Mail’s return collection – 1 minute 34 seconds

Richard thinks Royal Mail’s return collection will change how consumers see returns. Dov reminds Royal Mail is the only carrier with the network and infrastructure to knock on every door every day. Claire thinks the initiative will increase returns, but sales will go up too. Nick welcomes the competition it brings to the market. Laetitia thinks it will drive other carriers to innovate.

The minimum wage impact on warehousing – 1 minute 46 seconds

Claire explains how the minimum wage impacts the cost of fulfilment in shared user warehousing. Nick urges fulfilment providers to improve systems in order to increase productivity as a means to offset wage rises.

Managing the rise of returns – 1 minute 52 seconds

“As return rates creep up some companies may end up with 20-30% of stock in circulation generating them no value” says Dov, asking if peer-to-peer solutions are the answer. In clothing, where return rates are around 25%, Claire says three successful sales are needed to pay for the cost of processing one return. Luxury items, like jeans retailing upwards of £1000, need careful returns management reminds Nick. Laetitia says carriers are increasingly improving the front-end customer experience for returns using platforms like ZigZag.

Choosing sustainable options – 2 minutes 42 seconds

Richard explains the importance of sustainability to Mindful Chef. Claire wonders whether Royal Mail’s collection service is more sustainable compared to services offered by other carriers. Laetitia reveals sustainability is one of the benefits brands can experience when choosing to ship cross-border orders to customers in the Middle East from Dubai.

Crossing the UK-EU border – 2 minutes 23 seconds

Richard expects price rises as a result of the new UK-EU border. Claire talks about retailers co-locating warehousing to serve different markets as a result of Brexit. Laetitia says her business is already Brexit proof as they cross borders daily. Nick is hoping not to have to move his brand’s warehousing. Dov think it’s going to be tough for smaller logistics suppliers to manage the bureaucracy that will come with the change of relationship between the UK and the EU.

The Long Edit – 22 minutes 53 seconds

In this discussion we look at some of the factors affecting costs associated with e-commerce logistics.