GRUMPY CAT’S GUIDE TO A HELL OF A CHRISTMAS

“Everybody has a plan until they get punched in the mouth.” This quote by Mike Tyson could be the best summary of the UK´s peak-season 2014 delivery disaster.

It was always going to be the worst Christmas ever, and Grumpy Cat knew it. He was watching the UK drama unfolding as the newly imported Black Friday and Cyber Monday hysteria took over, knowing there was no way any of this was going to happen smoothly on our less-than-logistics-proficient shores. You see, Grumpy Cat recognised that the problem with all those fresh-faced interns in the Marketing department is that they live in the online world (Digital Natives, innit!) and have never had to carry a parcel to the second floor of a typical house in the UK, or take a John Lewis delivery in the lift of an inner city high-rise. They’re also not able to predict the likely customer response to those oh-so-tempting 50% off deals that were pushed out for Black Friday on sites that frankly should have known better.

They would then have known that delivery takes a lot longer in the UK than in those happy, traffic free and wide avenue US suburbs with grid-like clear street layouts that you can´t miss, even when drunk on mulled wine. What Grumpy Cat also knew was that the Americans have been trying to perfect the logistics for Black Friday since 2003. Despite having a longer run up, after 10 years they still couldn’t get it right, and Christmas deliveries in 2013 were about -50 on the scale of 1 to 10, when all those best laid plans came to nothing due to extreme weather conditions. This year UK retail had no such excuse – the weather was just fine.

However, the over-enthusiastic Marketing teams cut web shop prices so deeply that some retailers experienced traffic increases of up to 300%, as bargain hunters stormed to cyberspace. For most retailers it’s simply not viable to pay for additional server capacity of 300% throughout the year, just to accommodate such massive spikes for one or two days. It’s the same reason why Britain comes to a halt on the days when a bit of snow falls from the sky, whilst Swiss trains run immaculately because these conditions are what they’re used to, hence snow ploughs. This massive response to the discounts could have been predicted, but the necessary contingency planning didn’t happen, and websites crashed en masse.

Tesco, Marks & Spencer, Argos, Boots, John Lewis and nearly everyone else experienced severe outages online during Black Friday and Cyber Monday, many without an emergency Dark Site in place. John Lewis’s MD has already warned that the brand will have to rethink Black Friday next year, probably prompted by Yodel. Yodel, a combination of PayPoint and Collect Plus who manage about 80% of UK deliveries, and collapsed after Black Friday and were unable to collect parcels at all for at least a few days. There is a good chance that Yodel´s CEO’s days are numbered, as the company has already won the dubious accolade of being Britain´s worst delivery service.

But Yodel are not the only guilty party, as Marketing and Ecom departments are still working in silos, not talking to each other enough to establish what is actually possible in terms of increased server capacity or logistics. Then Maniac Monday, (with somewhat less fanfare) delivered the final nail in the logistics companies’ coffins, as omnichannel retail took over £650m, 26% up on last year, pushing already stressed couriers over the brink. So how to get rid of that smirk on Grumpy Cat’s face and actually deliver the children’s gifts on time next year?

Regardless of the logistics crisis, why did large delivery company City Link stop trading in a dramatic collapse on Xmas Eve, quoting “overcapacity in the market”, when clearly the market does not have enough capacity to ramp-up on peak days? On closer examination we noted that, although the demand for number of parcels has gone up, the delivery business itself has somewhat shrunk as the big players are managing delivery in-house, to control the brand experience and flex-up by large amounts on a few days of the year – a clearly impossible feat for external couriers. This trend for bringing delivery in-house will only continue, as the actual moment of the customer receiving the parcel is now considered part of the brand experience.

It also doesn´t help that loss-making Amazon has accustomed the customer to free, rapid and trackable delivery of even the smallest purchase to any part of the country. The jury is still out if Bezos’s unprofitable business is a real retail business or just a lot of cloud-based smoke-and-mirrors. Even Bezos himself appears to be unconvinced and has been offloading shares in a systematic manner. However, as his investors are still patient, UK retail has to tackle the problem and come up with a better delivery plan for the next peak – and it will take some big thinking.


In September, Hongkong experienced iPhone 6 mania, when thousands came down with iPhone fever. They reacted to the challenge by providing pop-up distribution centres that opened at the crack of dawn to ensure iPhone fans could get their mobile on the way to work. Those who I interviewed were pleased about their experience, as most expected to have to queue for hours and getting crushed in the store. Instead, the local distributors used some thinking from a new perspective and delighted the locals with fun-looking pop-ups that served as collection points at many convenient locations in town. Although the logistics this year were poor, in India the express delivery companies that serve Amazon, Snapdeal and Flipkart have scored well by booking slots for their cargo planes at airports in smaller cities with lighter traffic, to counter the overcrowding and lack of cargo air slots at Mumbai aiport.

In the US, Fedex has set up a “war room” with a team of in-house meteorologists to watch for negative weather fronts and route their planes around the bad spots in real-time. Target offered a ship-from-store service, using shops as local distribution centres with taxis and Uber to get the peak shipments out. UPS has set up aluminium-walled “mobile delivery villages” across the country, with an additional 90 trucks on standby. Fedex has gone to town with two empty cargo planes, to fly across the US, ready to hit emergency route if an unexpected rise in volume occurs anywhere in the country. They also got a new scanner, that checks out 6 sides of the packet at once, saving time   and improving accuracy. Last but not least, UPS introduced 7 day delivery to major cities, to handle double digit growth of online sales this year.
Alternatively, our Gaelic neighbours are betting on Le Drone as the solution, currently being tested by GeoPost in France, as the famous Le Poste moves on from the charming but somewhat inefficient postman on a bicycle, to a geo-location-driven drone. The trials appear to have resulted in successfully completed 4kg parcel delivery on the new cross-country distance testings, so expect this to be a hit for Noel next year. Or perhaps we should take a cue from the astronauts, where the presents for the international space station crew will be delivered as a file to their 3D printer that can work in Zero-G. Forget the atoms and focus on transporting the bytes, much lighter, faster and if  it’s chocolate, then end-product is likely to be equally pleasant. Teleportation will be the hot news in logistics in 2015! What will the Grumpy Cat have to complain about then?

 

The Future is Cash-less, but is it secure? 
Save the date! On 30th January we are holding an event to discuss cashless payments. If you would like to attend, please email hello@theretailpractice.com for your personal invite.