Gen Z wants perfect CX and wants it now

Online shipping technology company Neopost Shipping has published a survey report that highlights the need for shipping to contribute to ‘customer experience’ (CX), with 98% of young consumers abandoning their carts online due to shipping-related friction.
The report Great Expectations: Shipping, CX & Gen Z underlines the influence that shipping has on e-commerce conversion and retention. It features survey data from retailers and online consumers in four countries: United States, United Kingdom, France and Australia.
“Gen Z is changing the e-commerce playbook by challenging retailers to elevate the customer experience. Shipping is a key element of online shopping, so retailers who are adept at working through its complexity to leverage it as a revenue-driving CX tool will reap great returns,” said senior vice president Americas at Neopost Shipping Matthew Mullen.
Key findings of the report include:

  • Cart abandonment strongly influenced by the lack of shipping options: 98% of Gen Z consumers have stated that they will abandon cart if a preferred shipping option is unavailable to them at checkout, with 44% opting to then buy from a competing online brand, 33% attempting to visit the brick and mortar store of the same brand, and 21% planning to visit a mall to buy the items.
  • Retailers are not keeping up with Gen Z shipping demands: Compared to the previous year, Gen Z’s willingness to pay for new types of shipping services such as hyperlocal (1-3 hours), same-day and weekend or after-hours delivery has increased. Additionally, Gen Z’s demand for these consumer-centric shipping services is significantly higher compared to the average consumer, yet only up to a fifth of retailers offer them.
  • Strong appetite by Gen Z for speed-based delivery services: Gen Z is more committed compared to the average consumer to shop online if retailers can have their orders shipped faster. 71% of Gen Z versus 56% of average consumers will increase their basket size to meet the spend threshold for free hyperlocal delivery (1-3 hours), while 44% of Gen Z versus 25% of average consumers will shop more online if next-day delivery was available.

“Gen Z is instant gratification personified,” said Mr Mullen, “In a market where the likes of Amazon are pushing the boundaries on what a great shipping experience looks like, retailers rarely get a second chance with young and savvy consumers who won’t think twice about abandoning brands that cannot provide the shipping choice and convenience they desire.
“It’s a known fact that shipping and fulfillment can be operationally challenging for many retailers. Instead of taking on the burden of building everything from the ground up, (retailers should) leverage the supply chain innovations that are in the market – such as updating your technology stack with a shipping software platform, trialling smart parcel lockers, and accelerating the process of getting online orders out the door with automated packing machines,” Mullen said.
The Great Expectations report includes new insights on how shipping can motivate or detract Gen Z from online shopping, why shipping can drive Gen Z to abandon cart and buy from a competing retailer, what retailers can do to convert and retain Gen Z through shipping, and how marketplaces like Amazon are winning Gen Z over with their approach to shipping.

Digital Link to connect brands and consumers online

Global supply chain standards organisation GS1 has announced a new global web standard to help industry optimise online shopping for the consumer.
In an age where the shopping activity can happen anytime, anywhere – and product data and transparency are in demand – this new GS1 standard will empower consumers and businesses alike to move seamlessly through the world of physical and digital commerce, bringing mobile phone scanning into the 21st century.
Head of customer relations and standards office at GS1 Australia Sue Schmid said: “The GS1 Digital Link is a new generation GS1 global standard that is the foundational bridge between physical products and their digital twins.”
Developed by a group of retailers, brand owners, software providers and technology experts, together with GS1, the GS1 Digital Link standard will complement the traditional, ubiquitous GS1 barcode, which is expected to remain the universal standard for product identification for many years to come. It opens the door, however, for a potential opportunity to migrate to a single web-enabled barcode in the future.
Resembling a Uniform Resource Locator (URL) or web address, the GS1 Digital Link can enable connections to all types of business-to-business (B2B) and business-to-consumer (B2C) information.
Retailers and brands deploying GS1 Digital Link will benefit from the simplification of product packaging and the ability to connect with their customers. By linking the physical world of commerce with its digital counterpart, customers will be able to be alerted on discounts and price matching while they are still inside the physical store.
“As businesses begin to develop systems using the new GS1 Digital Link standard, consumers will be able to access a variety of brand-authorised product information by simply scanning a web-enabled barcode. The product information available will be everything from dimensions and images to expiration dates, nutritional data, warranty registration, troubleshooting instructions, discount offers and even social media links,” added Ms Schmid.
GS1 senior vice president solutions & innovation Robert Beideman said: “The GS1 Digital Link standard will ensure that product data, information about inventory and digital assets for a particular product are linked to each other through a common identity that also links to the actual physical product, which is essential to serving the needs of consumers today.”
Pilot projects are now underway in several countries and some solution providers and brands are already cooperating to upgrade their platforms to support this new GS1 Digital Link standard. Other GS1 standards will also continue to improve the efficiency, safety and visibility of supply chains across physical and digital channels.
The GS1 Digital Link was developed through the Global Standards Management Process (GSMP), the community-based forum, facilitated by GS1, where businesses facing common problems work together and develop standards-based solutions.
For more information about the GS1 Digital Link contact the GS1 Customer Support team or call 1300 22 263.

Online returns piling up in a warehouse.

That’s a lot of parcels: Australians sent 841 million

The Pitney Bowes Parcel Shipping Index reports Australia’s annual parcel shipping volume grew by 63 million in 2017, and is expected to surpass one billion parcels in 2020.
The index reports that parcel shipping generated $9.2 billion in revenue last year, an increase of 6.2 per cent over 2016. Parcel volume in Australia grew eight per cent last year to 841 million parcels, up from 778 million in 2016.
The annual report, which measures both volume and spending for business-to-business, business-to-consumer, consumer-to-business and consumer-consigned shipments, shows Australians receive an average of 34 parcels each year, driven by fast growth in e-commerce sales this past year.
The e-commerce revolution in Australia has contributed significantly to the strength of the parcel shipping market. The seamless service provided by many online marketplaces has driven consumers’ expectations for convenience, price and availability of products from around the world, made possible through global e-commerce.
The omnipresence of e-commerce has spurred a global boom industry, with parcel shipping generating $279 billion in global revenue last year, increasing 11 per cent from 2016. In the 13 markets reviewed, the Shipping Index expects global shipping volume to surpass 100 billion parcels by the year 2020.
Pitney Bowes ANZ country manager and director Stephen Darracott said: “The parcel shipping market remains strong, with growth across all regions. Global e-commerce giants continue to raise the bar, resetting customer expectations when it comes to shipping. As retailers and marketplaces look to cross-border commerce to drive growth, carriers must create efficient, seamless routes to market. They’re doing this by turning to technology, investing in commerce platforms, logistics hubs and distribution centres. Over the next year, we expect businesses will be undergoing a digital transformation in their mailing and shipping workflow, improving their efficiency and inbound and outbound tracking capabilities.”
Australia’s parcel market is expected to grow to more than 1 billion parcels a year by 2021. The parcel delivery market is seeing an exponential growth backed by ease of shipping, delivery and tracking parcels domestic and internationally.
“The Australian and New Zealand market is gearing for an exponential growth as we’re also seeing more and more e-commerce companies looking to the shipping industry with a value proposition. Pitney Bowes accelerated its entry into the shipping market by introducing SendPro to Australian SMB retailers. As the competition heats up, simplified and reliable service, accelerated delivery times, and transparent and accurate tracking will be the key to success,” Mr Darracott continued.
Topline trends Across the globe

  • China’s Parcel Volume Triples United States’: China (40.1 billion), the United States (11.9 billion), and Japan (9.6 billion) represented the top three countries for parcel shipping volume in 2017. China’s parcel shipments represent 53 per cent of the total shipments in the Pitney Bowes Parcel Shipping Index.
  • United States Tops Shipping Revenue: The United States ranks highest in parcel shipping revenue at $107 billion, generating 38 per cent of the total revenue of the 13 countries. China ($73 billion) and Japan ($25 billion) follow. The average shipping price of a parcel is $8.95 in the US, compared to $1.83 in China and $2.64 in Japan.
  • China’s Parcel Growth Continued to Soar: Despite slower parcel volume growth from the previous four years, China represents the largest market in parcel volume growth at 28 per cent YOY. India (11 per cent) and Sweden (9 per cent) followed.
  • Japanese Residents Receive the Most Packages: Japan tops per capita shipping with 76 parcels shipped per person in 2017. The UK follows at 48 parcels shipped per person, and then Germany at 41 parcels.

Methodology
The Pitney Bowes Parcel Shipping Index measures parcel volume and spending for business-to-business, business-to-consumer, consumer-to-business and consumer-consigned shipments with weight up to 31.5kg (70 pounds) across Australia, Brazil, Canada, China, France, Germany, India, Italy, Japan, Norway, Sweden, the United Kingdom and the United States. Population data points were sourced from the International Monetary Fund, World Economic Outlook Database published in October 2017. The Pitney Bowes Parcel Shipping Index spans 13 countries and represents the parcel shipping activity of 3.7 billion people.
 
 

Reverse logistics – who does it well? From MHD magazine

It would be tempting to think of reverse logistics as forward logistics done backwards. Tempting, but wrong. Reverse logistics isn’t simply a reverse gear. Almost everything can change. Products come back in dribs-and-drabs, not in neatly packaged batches. They don’t come back to predefined schedules. They don’t even come back in the same state in which they went out.
Reverse logistics can also have a dramatic effect on steering a company’s fortunes. Go one way and you can boost profitability, customer loyalty, and brand image. Go another way and you’ll leak dollars, lose customers, and even run afoul of regulations about what to do with stuff that people no longer want. Reverse logistics is therefore worth doing, and worth doing properly.
Looking to real-life examples for inspiration, we can ask, ‘Who does reverse logistics well?’ Companies like Sears, Dell, and Zappos are often pointed to as models to follow for reverse logistics. Yet given the changeable nature of the beast, we also need to ask what ‘doing it well’ means in this context, especially if we want to know how much of others’ success can be applied to one’s own organisation.

First, understand ‘what’ and ‘why’
Let’s take a step back. Reverse logistics, while not being the opposite of forward logistics, is still about products moving backwards in the supply chain. Often, the term reverse logistics is used for products that have already reached the final point of sale or been bought by a customer. However, remember that products or sub-assemblies that never made it out of the factory may need to travel backwards one or more stages along the supply chain. This also qualifies as reverse logistics.
Reasons why reverse logistics are necessary can be diverse. Customers may find a product to be faulty or unsuitable for their needs. They may have ordered more than they need. They may have simply changed their mind. Manufacturers may recall stock because of flaws or to replace older products with newer ones. They may recall inventory from retailers or reprocess it because it has passed its sell-by date or demand is insufficient.
Many views of reverse logistics performance
Different parties judge whether reverse logistics is done well or poorly in different ways. For customers, the quality of reverse logistics revolves around the ease with which they can return a product and be reimbursed. US retail pioneers Sears and J.C. Penney understood this a century ago, when they offered money-back guarantees to their clientele. That meant that customers felt safe when shopping, increasing sales and customer loyalty.
From a shipping standpoint, reverse logistics works well when the product being returned is routed directly to the correct location. In a manufacturing plant, reverse logistics performance is tied to the money or materials that can be recovered cost-effectively from the returned product. This might be by reselling, repairing, remanufacturing, or reclaiming parts of value. For regulators and the public, reverse logistics may be judged by how safe and how green the process is, for example, recycling products instead of throwing them into a landfill.
Some estimates put product returns at 6% of total sales revenues. In addition, returns typically cost more to handle than outbound shipments – 3 to 4 times more for traditional retail companies, for example. Clearly, successful reverse logistics cannot be left to luck. A plan is necessary, possibly based on one of the following strategies.

“Clearly, successful reverse logistics cannot be left to luck. A plan is necessary.”

Reverse logistics strategy 1: don’t do it!
We’re not talking about just sweeping returns under the carpet. Instead, we need a way to constructively avoid the need for reverse logistics.

  • Persuade the customer otherwise. IT vendor Dell, for example, handles requests for returns via its support organisation. Reps work with customers to get computers installed and working as required, rather than shipping them back. Customer satisfaction goes up, reverse logistics costs come down.
  • Pay for the return not to happen. Procter and Gamble developed its ‘zero returns’ policy a couple of decades ago. Also known as a swell allowance or adjustable-rate policy, there is no physical return of products. Instead the supplier (such as P & G) issues a credit allowance.
  • Get product marketing involved. Reverse logistics is often seen as the last part of a product lifecycle. Yet reverse logistics is largely the result of marketing and product design decisions at the beginning of the lifecycle. When marketing sees why products are being returned, it can improve product features like quality, packaging, and usability.
  • Forecast demand better. As market and buying trend data becomes more abundant and IT systems more connected, retailers can better estimate demand and adapt their ordering. Sectors like publishing of software, books, music, and so on, also offer another way to reduce returns. They increasingly make their wares digital instead of physical and sell on demand.

Reverse logistics strategy 2: make it painless
Pain is a sign that something is wrong. When something is wrong, it usually ends up costing more, either in real money or lost opportunity.

  • Make it painless for customers. Increasingly, ecommerce vendors understand the advantage of an easy-to-print, free-of-charge return shipping label for a customer to stick on a box and return by post. The cost to the vendor is compensated by increased customer satisfaction and brand loyalty.
  • Use simple, streamlined processes. Take the hurdles like who pays for the shipping out of the equation. Sort items early in the return journey, routing products directly to their correct destination, whether for resale, refurbishing, or other means of disposal. Note that this may require extra training for people who will do the sorting.
  • A barcode on a return label can be scanned, and refund, storage, disposal and other decisions taken automatically. Retailers have often been faster than manufacturers to move to the requisite technology.

Reverse logistics strategy 3: make it profitable
It makes sense to run reverse logistics as a profit centre with corresponding KPI and metrics. Speed will be an important factor. The faster a returned item moves through the system, the greater the net value that can be recovered.

  • Design reverse logistics into operations. Network analysis will be crucial for finding the best configuration of return centres, given factors like retail locations and transport facilities with backhaul possibilities. Grocery retailers have been innovators here, obliged to maximise performance from returns in the face of already slim profit margins on forward logistics. Several large 3PL now leverage their resources to offer tailored reverse logistics services.
  • Design reverse logistics into the business model. Online shoes and apparel seller Zappos has made a name for itself with its return policy extending up to 365 days. Supported by reverse logistics, this becomes a means of encouraging consumers to buy more and to recommend Zappos to others. Zappos’ focus on products of a certain type and within a certain range of weight and volume helps simplify its reverse logistics processes.

Different solutions for different needs
There is no one-size-fits-all solution for reverse logistics, even within the same industry sector. In the fashion sector for example, US department stores like Saks 5th Avenue and Nordstrom have second-tier sales outlets (off-5th and Nordstrom Rack) to which they can hand off excess inventory at marked down prices. On the other hand, a very high-end fashion company might insist that all excess inventory was returned to the factory for recycling, rather than see its brand in low budget shops.
In addition, getting it right once is no guarantee of getting it right the next time. Pharmaceutical company Johnson & Johnson conducted one of the most skilful product recalls ever, when it had its cyanide-adulterated Tylenol product returned from pharmacies and shops in 1982. Unfortunately, it did not exercise the same skill and transparency in recalling its Motrin product in 2009, to the extent that congressional investigators became involved to find out what was going on.
Who will do reverse logistics well in the future?

“Now is the time to stand up and be counted among those who do their reverse logistics well.”

The immediate future of logistics and distribution is omnichannel – order anywhere, buy anywhere, collect anywhere, return anywhere, including web, post, and any physical point of sale. Recent survey information from magazine DC VELOCITY suggests that supply chains are moving towards omnichannel mostly to increase sales, market share, and customer loyalty. Improving margins comes in as a distant fourth reason. Yet margins are likely to be under even more pressure because of the added complexity of omnichannel reverse logistics.
Good solutions are therefore likely to be specific to the supply chains they serve and leverage the specific configurations of those supply chains. For example, online retailer Amazon recently moved to buy physical retailer Whole Foods. For reverse logistics for this part of its business, Amazon could allow or even encourage any returns from online sales to be made in-store. This would increase the number of visitors to the physical store and decrease reverse logistics costs by batching together returns instead of transporting them one by one as small parcels.
Whatever the reverse logistics solution, it will need to be planned. Also, it might not look anything like your forward logistics. But for all the reasons above, including financial, reputational, ecological, and regulatory, now is the time to stand up and be counted among those who do their reverse logistics well.
Rob O’Byrne is a consultant, coach and author in the field of supply chain and logistics. He publishes regularly at  https://www.logisticsbureau.com/blog/ 
This topic and many others are covered at Supply Chain Leaders Insights in Melbourne and Sydney this August. It’s a roundtable event for delegates to ask all their burning questions on supply chain. Experts from right across the industry will be running training and Q&A Sessions throughout the day. Readers can use the promo code MHD for tickets at only $47!  Visit www.supplychainleadersinsights.com.au. All ticket proceeds will go to charity on the day.
 
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“Clearly, successful reverse logistics cannot be left to luck. A plan is necessary.”
“Now is the time to stand up and be counted among those who do their reverse logistics well.”
 
[Pics: please use the first one and then one or both of the others as you need them.]
https://www.istockphoto.com/au/vector/swim-against-the-tide-one-fish-is-swimming-in-another-direction-symbol-for-courage-gm666115762-121408261
https://www.istockphoto.com/au/photo/heavy-cargo-on-the-road-gm683876862-126335593
https://www.istockphoto.com/au/photo/mid-adult-worker-driving-forklift-reversing-in-a-warehouse-gm637762168-113933731
 
 

Australia Post pays $593m in taxes

An Australia Post electric tricycle.

Australia Post has announced a full-year profit after tax of $134 million, up 41 per cent on FY17. This result was largely driven by substantial growth in parcel revenues and a continued focus on efficiency gains, the company said.
This result was underpinned by strong parcel volume growth, both domestically (B2C up 10 per cent) and internationally (up 19 per cent), and a range of efficiency measures across operational and support functions. Together this helped offset the impact of an 11 per cent volume decline in the important domestic letter business.
Once again, this year Australia Post said it has either met or exceeded all of the prescribed performance standards that underpin the community service obligations. Importantly, the organisation maintained broad community access to the network via 4,356 post offices (in excess of target of 4,000), and delivered 98.5 per cent of letters on time or early (ahead of target of 94 per cent).
Australia Post’s Group chief executive officer and managing director Christine Holgate said: “While this result was pleasing, it demonstrates the business has a significant challenge ahead as it continues to transform. Although we continue to optimise our delivery network, we require $2 of parcel revenue to mitigate the impact of every $1 decline in letters.
“In parallel with letter volume decline, many of us are paying our bills online and large organisations are withdrawing from regional towns. This puts further pressure on our local post offices to serve these communities with important services, including financial transactions. These growing services require investment and increased funding to ensure we can meet communities’ needs.
“As Australia’s most trusted delivery partner, facilitating 82 per cent of the nation’s e-commerce, we are uniquely placed to take advantage of a number of growth opportunities. This includes serving our business & government customers better, rejuvenating the role of the post office in the community, focussing on the significant international opportunities, and creating and simplifying our products that people value and trust.
“To build world-class service we are investing in capacity and efficiency in major parcel processing facilities and across our delivery network, with over $300 million of investment in FY18 and $500 million forecast in FY19.
“We are proud that Australia Post plays such an important role in our country, contributing over $6 billion to the economy. For every role we employ, we secure another in Australia including two in regional and rural areas. Our trusted brand and posties are loved by Australians. Around 91 per cent of Australians have visited a post office in the last six months, on an average of 10 times, with 85 per cent of Australians saying it was very important their local post office remains.
“To help keep all our people safe, including our posties, we will invest an additional $30 million in skills, tools and capabilities. We will reduce the number of motorcycles on delivery routes where other transport is safer, such as three-wheeled electric delivery vehicles and electric bicycles.”
Australia Post also made a significant contribution to the community by paying $593 million to the federal and state governments, through dividends ($79 million) and taxes ($514 million), while remaining entirely self-funding. Furthermore, the fully funded cost incurred by Australia Post in meeting its community service obligations during the year was $404 million.
Australia Post has forecast there will be greater pressure on profitability in the 2018/19 financial year due to the continued decline in letters and caution around domestic and cross-border retail conditions.
The 2018 Remuneration Report for key management personnel has also been released today. This report is available at www.auspost.com.au/2018remunerationreport. This year the report also includes forecast remuneration payments for FY19.
At a glance

  • FY18 profit after tax of $134m, up 41% on previous year.
  • Excluding property, pre-tax profit up 280% from $19 million to $72m.
  • Parcel revenue $3.5bn – volumes up 11%. Letter revenue $2.4bn – volumes down 10%.
  • Other businesses contributed $1bn – consistent year-on-year with significant mix changes.
  • Significant contribution to government. Tax payments up 22% to $514m and tax collected up 6% to $1.2bn. Dividends up 57% to $79m.
  • 18th consecutive year all community obligations exceeded.

Australia Post delivers a $6 billion package

Australia Post CEO and MD Christine Holgate.

Australia Post contributed $6 billion to the national economy last financial year and created tens of thousands of additional jobs across the nation, a new report from Deloitte Access Economics has found.
The report says Australia Post facilitates 82 per cent of Australia’s $14 billion e-commerce market and that 80 per cent of Australians see no convenient alternative for receiving parcels other than through the post office.
It also found that for every worker Australia Post employed, another job was secured in the community. With Australia Post directly employing the equivalent of 26,500 full time staff, this meant a total of more than 51,000 full time jobs were supported by Australia Post’s operations last year.
In local communities, the employment ratio was higher, with every post office job supporting a further two jobs elsewhere through flow-on economic activity, such as motor mechanics, property managers and information technology jobs.
The report found that 92 per cent of Australians visited a post office in the previous six months and highlights the tremendous social value they place on the postal service, with 79 per cent saying Australia Post ensured equity of access to core services for all communities. Seventy-three per cent rated Australia Post a trusted and valued part of the community.
Australia Post’s group chief executive officer and managing director Christine Holgate said post offices are well placed to help provide a range of vital community services on behalf of organisations, such as the government and banks, and to help local businesses grow.
“For example, there are now about 1,500 communities in Australia without a bank branch, and many more without access to government agencies, where Australia Post provides access to Bank@Post and other essential services including drivers licence renewal and passport applications,” Ms Holgate said.
Australia Post currently provides community-wide access to services on behalf of more than 750 businesses and government agencies.
“This report underlines the fundamental role Australia Post plays in communities across Australia. If these communities are to prosper, we need to continue to connect them to the rest of the country and the world, and ensure they have access to essential services that in many cases only Australia Post delivers,” she said.
“Almost 60 per cent of our network of more than 4,300 post offices are located in regional and remote communities. This is double other critical service industries such as electricity, gas, water and waste and almost treble others including health, finance, education and training.
“With 45 per cent of Australia’s economic output generated in regional and rural areas, as well as an ageing population and infrastructure pressures in our cities, protecting and building our role is important to this country’s future.”
Partner at Deloitte Access Economics and an author of the report John O’Mahony said: “Contrary to perceptions of a declining value in the digital age, our report finds that Australia Post is supporting our transition to the economy of the future, by facilitating e-commerce, exports of small and medium-sized businesses, electronic payments, and digital identity solutions.”
Australia Post was found to be particularly important for the one million households that did not have internet access, and for Australians in regional and remote areas, which were very likely to rely on post office services.
“Post offices are used by Australians for a large range of delivery, financial and other services, and consumers place significant value on these services. Consumer value exceeded the price paid for services by more than $2 billion last year,” Mr O’Mahony said.
The Deloitte report found:

  • For every $1 that Australia Post contributed to national GDP last year, another 86 cents in economic activity was generated in other industries.
  • With a direct economic contribution of $3.2 billion, this means Australia Post created a further $2.8 billion through flow-on economic activity, generating a combined total of about $6 billion.
  • Australia Post’s national delivery network is particularly important so that small businesses can access new customers in the booming e-commerce market, forecast to grow to $22 billion by 2022.
  • Australia Post’s total economic contribution was more than other significant industries, such as broadcasting and electricity generation, which contributed $5.8 billion and $5.1 billion respectively.
  • Australia Post’s activities deliver social benefits worth $185 million per year.
  • Around 82 per cent of Australia’s $14 billion e-commerce economy is facilitated by Australia Post.
  • Australia Post today reaffirmed its commitment to rural and regional communities and maintaining its post office network. It will release its full year financial results next week.

 

Australia is suffering from a digital delay

A new study has found that:

  • Leaders do not have a clear understanding of the full impact of digital transformation.
  • Lack of skill sets and legacy organisational siloes cited as top barriers to digital transformation.
  • Business agility, enhancing digital culture, and delivering a seamless customer experience seen as key organisational drivers of building digitally agile business models.

Australian (AU) and New Zealand (NZ) businesses are trailing behind their global counterparts, with only 17% of businesses digitally mature enough to build disruptive business models at scale compared to a global standard of 22%. That is one of the key findings from research undertaken by Infosys.
The research, Infosys Digital Acceleration Study: Infosys Australia and New Zealand Report, polled 175 senior business decision makers from the region’s biggest companies, each with a revenue of over $1 billion, to better understand where Australia and New Zealand’s largest enterprises are in their digital transformation journey and what they require to accelerate that journey.
The survey of senior IT decision-makers reveals that enterprise leaders across sectors are at varying stages of digital agility while facing consistent barriers and opportunities to building disruptive business models at scale.
The report identifies three clusters based on digital maturity:

  • Visionaries transform to meet business objectives through new business models and an innovative culture. They understand digital is central to the success of future endeavours.
  • Explorers are committed to improving their customer’s satisfaction levels. They identify with digital programs that enhance customer service or increase brand value through differentiation.
  • Watchers are largely focused on efficiency-driven outcomes of digital adoption.

Approximately 17% of AU and NZ respondents are identified as Visionaries, in contrast with 22% of their global counterparts, indicating that fewer AU and NZ leaders have identified digital transformation as a central part of their business strategy in comparison to global peers.
The majority of Australian and New Zealand businesses surveyed (55%) fall into the Explorers category, with a focus on digital transformation for the differentiation value it gives them in either customer experience or an uplift in brand value. This is higher in comparison to global peers, of whom 50% are categorised as Explorers.
Additionally, 28% of AU and NZ respondents are identified as Watchers, which is on par with global research. Watchers have partially deployed digital initiatives but are focused on efficiency-driven outcomes.
Common to all groups of business leaders is an understanding that business agility (85%), enhancing digital culture (82%), and delivering seamless customer service (78%) are key organisational drivers to enable them to build disruptive business models at scale. Visionaries particularly recognise that there is a constant need to reinvent themselves to stay relevant to their customers.
Senior vice president and regional head Australia and New Zealand at Infosys Andrew Groth said: “Digital transformation is a process of constant re-invention, where businesses must implement disruptive models that create agility in constantly driving new experiences for the customers at scale. This research illuminates how businesses in Australia and New Zealand can successfully move forward in the journey to digitally accelerate, to leverage the opportunities available to better operate in a digitally-driven market at significant scale.
“Over the years, large businesses within the region are progressing along different digital transformation journeys with varying levels of maturity. We can see a massive opportunity for businesses in the region to leverage digital and disruptive technologies with speed, and also use learnings from some of the more mature global peers from their digital transformation journeys.
“Organisations are facing the challenge of bringing disruptive products and solutions to market, despite having a clear vision and strategy for their digitisation journeys,” he said. “What our research uncovers is that a large number of organisations are encumbered by rigid technology, the digital skills gap and more importantly a culture gap that stifles innovation, which is key to achieving a digitisation vision. This is ultimately resulting in businesses being unable to create the customer experience and competitive advantage at speed, eventually losing the mindshare with their customers.”
Creating an environment conducive to digital maturity a significant challenge
Interestingly, internal challenges rather than external market forces are cited as a major barrier to change with resourcing and legacy issues preventing organisations from making rapid progress. Organisational silos (38%) and transforming from a low risk organisation to an organisation that rewards experimentation (37%) are some of the most prevalent challenges cited by businesses, as well as hiring digital natives and building digital skillsets (38%).
Mr Groth said: “What is apparent in this research is that business leaders know what they need, but often underestimate the full impact of digital transformation once you dig deeper. There is a skewed view of digital transformation, with 67% of respondents having a clear outlook on opportunities, and a considerably lower 50% having a clear understanding on threats. Interestingly, as businesses move to becoming digitally mature, there is a correlation between maturity and higher risk awareness, but we have some way to go in this market.”
Global counterparts are leading transformation, differing vastly per sector
Despite 72% of AU and NZ respondents identified as belonging in the visionary and explorer cluster, there is an overall sentiment amongst enterprise business leaders that their digital transformation journeys are not comparable at an international level. When comparing themselves to global clusters respectively, slightly over half (54%) of AU and NZ visionaries perceive themselves to be globally ahead, while only 22% of explorers and a quarter of watchers (25%) feel globally ahead of peers. When compared to local counterparts, this perception is higher, with 62% of visionaries, 35% of explorers and half (50%) of watchers feeling ahead amongst their peers.
The survey also revealed industries such as the public sector, healthcare and utilities are feeling most behind global counterparts, while logistics and manufacturing are the most confident. Half of public service organisations (50%)  feel their digital maturity is behind global peers, with only 7% reporting being ahead. Healthcare and telecommunications/utilities both report only 19-20% maturity. The retail industry reports a split, with 30% of respondents feeling behind, and 47% of respondents reporting maturity. Both logistics and manufacturing organisations feel comfortable, with 80% and 93% respectively reporting digital maturity on par or ahead of global counterparts.
A full copy of the report is available here.
 
 

There’s hope for supermarkets yet

Most consumers trust supermarkets more than online-only retail giants such as ASOS, according to new research from Monash University.
The first annual Monash University Business School’s Australian Consumer, Retail, and Services (ACRS) Consumer Retail Trust Index 2018 found consumers see online retail and discount variety stores as the least trustworthy of the retail industry.
“Surprisingly, despite the e-commerce and online shopping boom, the least trusted retail sector was online-only retailers who were rated well-below their retail counterparts,” according to Paolo De Leon, research consultant at the ACRS research unit with Monash Business School’s Department of Marketing.
“Unlike with the retail industry overall, when it comes to clothing retailers, communication and products are also key in driving trust. This differs again for supermarkets, where we saw trust in information security emerge as important.”
With current fears around computer hacking and data breaches, customers want to be reassured that the data they provide as part of their local supermarket rewards scheme is secure.
But this didn’t translate to clothing, footwear and personal accessories retailers where key trust factors are communication and products, rather than data security.
More than 630 Australian consumers took part in the study survey, which asked them to indicate their faith in several retail businesses to do what is right. Ratings of trust were also collected in automotive, food and beverage, media and entertainment, and financial services business for comparative purposes.
The research shows that Australians valued five key retail trust attributes: employees, store presentation, product quality and innovativeness, communications and information security. While retail stores and their employees are key when it comes to trust in the overall retail industry, these weren’t necessarily influencing factors of trust in specific retail sectors.
Senior research consultant at the ACRS research unit Dr Eloise Zoppos said this research highlights the need for retailers to understand the factors driving consumer trust, which can then help to refine their business operations, including marketing campaigns and communications strategies.
“Our research found that trust has a strong impact on loyalty and likelihood to recommend, including the Net Promoter Score – a tool used to gauge the loyalty of a firm’s customer relationships,” she said.
“Trust varies greatly by retail sector. Brands and retailers need to know their trust drivers and which trust levers to pull, as it’s only after that point that an effective trust building strategy can be developed.”

Most trusted retailersLeast trusted retailersImportant factors of trust
SupermarketsOnline-only retailersEmployees
PharmaciesDiscount variety storesStore presentation
Sporting goodsDiscount department storesProduct quality and innovativeness
Computer / technology Communications
Department stores Information security
Homewares  
Clothing / accessories  
Footwear  

Source: Australian Consumer, Retail, and Services (ACRS) Consumer Retail Trust Index 2018

Why are Australian retailers missing out?

Australian shoppers are flocking back to traditional brick-and-mortar stores compared to online, but retailers are failing to capitalise on this resurgence, latest research from Monash University has found.
The latest data from Monash Business School’s Australian Consumer, Retail and Services (ACRS) research unit quarterly survey of Australian shoppers shows 65% of shoppers prefer using bricks-and-mortar stores most of the time, compared to 18% of Australians preferring to shop online.
Despite this renewed attraction to traditional shopping methods, Dr Rebecca Dare, managing director of the ACRS research unit within Monash Business School’s Department of Marketing, said Australian retailers are not maximising their in-store experience.
“We see trends overseas with empathic, human-centred design and advanced technologies that make shopping easier and/or more pleasurable, however, in Australia it’s all too common to see that in some cases the basics aren’t right – stock is piled high to the ceiling, merchandise is displayed poorly, and finding personalised customer service can be difficult,” Dr Dare said.
The current trends show Australians are shopping more frequently in 2018 than they were in 2016, but bucking the general theories, ACRS research shows that Australian shoppers are increasingly drawn to physical stores, not online channels, to make non-grocery purchases.
“We are also seeing similar trends overseas. Nearly 80% of shoppers in the USA purchased more than half of their items in-store in 2017. Australian retailers need to understand that customers want the experience that the physical store can bring. Retailers just need to provide it,” Dr Dare said.
Dr Dare said there are numerous best practice examples of overseas brands and physical stores winning on customer experience.
IKEA in the UK is discounting umbrellas on rainy days that communicates a human understanding, while providing a solution to an everyday problem. Also, Nike in the USA is using technology-enabled personalisation through the Nike Maker’s Experience, which allows shoppers to design their own custom shoes in-store.
Dr Dare said such notable examples are sparse in the Australian retail landscape and Australian retailers need to become better equipped to take advantage of the shift back to bricks-and-mortar.
“There is a return to the importance of customer experience at physical stores. Human touches and the sensory experiences of a store visit are increasingly important, particularly with millennials – who prefer to spend more money on experiences than on material things,” Dr Dare said.
“Shoppers miss the customer experience of physical stores; ‘real life’ connection with other people, touching things and trying them on is not an experience you get online.”

Embrace transparency – from MHD magazine

Walter Scremin

Australia Post recently announced it wants to use Uber-style tracking for parcels. It’s an interesting and possibly courageous move because there are few similarities between parcel delivery and ride sharing services.
But the development raises some interesting key question for logistics divisions, such as: how would our business look with Uber-style tracking? Will more transparency make us look good to our customers, or make us look silly?
Parcel tracking does not offer the same near-instant gratification available to Uber’s ride-sharing customers. When Uber customers place a request, they are quickly alerted to a nearby Uber vehicle and can watch its progress to the customer’s address. In urban areas this procedure takes only minutes. Can a parcel delivery provide such an instant response?
Consider the risks if parcel delivery customers are paying attention and seeing their parcel taking the ‘scenic route’ to the destination, parked for an inordinate period, or constantly dropping back to the depot. Greater scrutiny has potential to backfire on inefficient companies.
We know from experience that even experienced logistics divisions, which consider themselves efficient, are often shocked by what is revealed under technology’s cold gaze. They may find systems that are sound in principle, fall down in practice: this may include obvious issues such as poor communications across the business, drivers doubling up on delivery routes, or drivers backtracking due to overlooked or misplaced items. No doubt Australia Post is working hard to ensure systems and processes stack up to this increased scrutiny.

“Technology can improve efficiency in any-sized delivery transport division – but only if you continue to monitor and nurture it.”

But the benefits from increased transparency easily outweigh the risks. I know auto parts companies with small delivery fleets that use telematics to provide their customers with total transparency – essentially already using Uber-style tracking. Some of these fleets may only have three or four vehicles and use the technology to gain a competitive edge on the big guys. Their customers love this transparency, and the technology has helped make the business better.
Efficiency in delivery fleets cannot be understated, with both B2B and B2C businesses currently engaged in a ‘logistics arms race’ of ever-shorter delivery times – for example, retailer Cue recently launched a three-hour delivery service throughout Australia; the Iconic also offers three-hour deliveries for Sydney and same-day to Melbourne metro; JB Hi-Fi and Harvey Norman offer same-day delivery; and Amazon offers one-day deliveries.
We’re also seeing tighter delivery times in B2B industries such as auto parts, catering, building materials and other sectors where there are opportunities to improve
Those who are less efficient will be left behind. Yet there is evidence many fleets are lagging on efficiency by not properly engaging with technology: Teletrac Navman research on its UK operations showed 27% of fleet organisations are interacting with the telematics technology on a daily basis – not bad, but doesn’t this also suggest 73% of organisations aren’t so attentive? A 2015 ACA Research survey showed that while most large fleets use telematics, the take-up falls dramatically for fleets between six and 25 vehicles (49 per cent), and for fleets with less than six trucks the take-up was just 18 per cent.
Technology can improve efficiency in any-sized delivery transport division – but only if you continue to monitor and nurture it.
Consider how technology is used for vehicle maintenance. In the past, logistics firms would act on maintenance when a vehicle broke down. Now, technology allows us to be proactive rather than reactive by tracking vehicles and anticipating maintenance schedules with greater accuracy. The same proactive approach can apply throughout logistics, not just maintenance.
Currently, too many delivery fleets treat their telematics systems like a gym membership – they sign up with great enthusiasm only to drop off three months’ later, as interest wanes. Maybe the return on investment is not immediately apparent, or maybe they find it difficult to keep up with the data produced. Technology’s many benefits are often found beyond the bottom line: customer service may not immediately show up as a ROI, yet may foster greater customer loyalty.
Technology should improve delivery times but also lead to increased professionalism, and more accuracy in delivering items in full, undamaged and on time. These may take time to track as a measurable ROI.
Responsive and efficient logistics businesses understand telematics and related technologies are what you make them. Those prepared to put in the effort and focus on efficiency – often on a daily basis – will shine under greater scrutiny, impress their customers and remain competitive.
Walter Scremin is general manager of Ontime Delivery Solutions, developer of Ontime Earth. For more information visit www.ontimegroup.com.au.
 

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