John Lewis on Fulfilment Challenges in the Online World

Online fulfilment is a customer norm and a retailer challenge when it comes to profitability. Just one of the interesting challenges discussed at our NG Retail Summit. In our latest GDS Video Snack, David Meredith, Head of Operations at John Lewis explains why that online fulfilment comes at a cost for retailers.

Less than two months to go until Christmas and if you’re like me and want to avoid the crowded high street, you’ll be going on overdrive with online shopping. While we as the customer love the convenience, the fulfilment comes at a cost for retailers. We spoke to David Meredith, Head of Operations at John Lewis to understand why.

David Meredith, Head of Operations, John Lewis:
The challenge is around profitability in the sense that it generally is three times more expensive to fulfil an online customer than it is to serve a store customer. And that is simply from a supply chain perspective, the old way of delivering a pile full of stock to a store, where the customer will come and collect that product on their terms to the remote management, which is individually picking and packing items and sending them to either a customer’s destination of choice, which is obviously more expensive to fulfil”.

You may feel the click and collect option is less costly for the retailer.  But it’s not.

David Meredith, Head of Operations, John Lewis:
Even if you order a product to collect at your local John Lewis store and we have that product in store we will not fulfil that order from the store inventory, we would still pick, pack and dispatch that product from a central warehouse and operation and send it to the store. Why you may ask, because that sounds crazy.
Whilst we do have a visibility of inventory instore, we don’t know where it is instore, so it can be sat on the fixture, the shelf waiting to be picked, in which case we could do that, but it can also be in a customer basket at the check-out, just waiting to be paid for and about to leave the shop. And the one thing we are absolutely obsessive about in terms of customer service is not disappointing the customer, so we wouldn’t risk sending you to a store for your click-and-collect order and potentially be out of stock or someone had just bought it, so the cost drive in the whole picking and packing of that make it a challenge from a profitability perspective”.

Watch more videos by Sasha Qadri, here 

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