The decision by John Lewis to start charging consumers £2 for click and collect on orders less than £30 has been seen as a controversial move by some. However, when we consider the business costs involved with click and collect, it is perhaps no surprise that the retailer has taken this decision. The issue now is whether other retailers occupying a similar space in the market to John Lewis will follow suit with their approaches to click and collect.
Retailers often look to the ‘pillars’ of British retail for best practices and delivery is no exception. For many, John Lewis has set consumer expectations around the cost of delivery, especially by offering click and collect as a free option. Because it's a pioneering retailer, the move is likely to send ripples through the retail sector.
In reality, click and collect is not free and many retailers are feeling the strain of having to operate as both a retailer and a logistics company. Despite the customer service benefits of owning the ‘final mile’, running a successful logistics business can be very costly. Following Amazon’s recent announcement on its pledge to offer delivery in London within 60 minutes, it's likely that many retailers will soon rethink their approach to fulfilment.
Offering free collection can be tough. Unless you are Amazon and can subsidise delivery costs or one of the big four supermarkets which view low-cost delivery as a loss leader, then it has been difficult for many retailers to compete with the likes of John Lewis on its free collection offer. This is especially true if you are shipping collection orders from warehouse to store, rather than picking product direct from store.
Looking ahead, retailers should view this announcement as an opportunity to ensure that their delivery strategy complements their business as a whole. For retailers, this isn’t just about reducing costs, it is also an opportunity to explore how to best use the ‘final mile’ in order to offer a unique value proposition to customers.
Whether consumers continue to use John Lewis’ click and collect option, despite the charge, will be an indication of the true consumer appetite for click and collect and an eye-opener for the industry and its approach to fulfilment.
In the short-term, consumers may respond negatively to having to pay for something that was previously free, however, they may have to get used to it as retailers come to feel the financial implications of being both a retailer and a logistics business. Once the dust has settled, it will be interesting to see how retailers react to this news and what additional, if any, ‘final mile’ options they roll out in the lead-up to Black Friday and Christmas.
Darryl Adie, Managing Director of Ampersand