Online retailers enjoy big Christmas but deliveries struggle to meet demand

It was a bumper Christmas for Australia’s online retailers, but there was a hitch: the country’s delivery infrastructure wasn’t up to scratch, leaving many customers waiting for parcels.

Wai Hong Fong, founder and managing director of multi-niche online retailer OZHut, says customers have complained about missing or delayed items over the key trading period.

“We had issues with customers saying ‘where is my item?’” Fong told SmartCompany this morning.

“There was definitely a problem with volume, not having the infrastructure to cope.”

A flow on effect of the estimated 30% jump in parcel numbers for Australia Post was that corners were cut, he says.

Fong says he’d heard complaints that drivers would leave items at the door when they weren’t supposed to or deliver items directly to a post office without leaving a note (even when the customer was at home).

“You can imagine that if you typically deliver 30 items a day and suddenly you have 90, there will be difficulties.”

Fong says one way of stemming the issues would be better tracking between delivery points.

“At the moment, there’s not a good system in place to do that, and if an item is lost by the driver there’s little accountability.”

As Fong points out, the inability to track items leaves retailers at risk of disgruntled customers, even if the item is lost through no fault of their own.

“Once it leaves our warehouse, what else can we do?”

The comments come as Paul Greenberg, executive chairman of department store giant Deals Direct Group, complained that not all deliveries reached their destinations in time for Christmas Day.

“The big shift this year is the real focus on shipping,” Greenberg told the Australian Financial Review.

“The surge in consumer direct online retail has taken people by surprise. What we’ve seen was that resources were stretched.”

Greenberg said Christmas sales were 40-50% up on last year.

Problems with Australia’s delivery infrastructure were highlighted as a key problem in the Productivity Commission’s recent report into the retail sector.

The Commission said the costs of processing and handling parcels is too high and involve too many manual and “clunky” systems.

“The current parcel handling logistics processes used in Australia by Customs and Australia Post need to be significantly improved.”

“In fact, such processes need to be examined…as they appear not to be up to the task of accommodating the future demands from the expected growth in online retailing.”