Case Study: AO.com: The Distribution That Delivers – Magazine Articles
White goods and tech retailer AO.com has logistics at the center of its business: its delivery capability is designed not only for its own operations, but for third parties as well.
For more than 20 years, it has offered two-person delivery as a service, using its fleet of trucks, white vans and 7.5 ton and 3.5 ton vehicles in AO.com colors, all marked with its own 3PL Expert Logistics operation.
Deliveries are made 362 days a year, with a promise to AO’s own customers of next day delivery, 7am to 7pm in 95% of UK postcodes. Customers choose the time slot when ordering.
AO.com operates a hub-and-spoke model, with two National Distribution Centers (NDCs) in Crewe holding inventory for all UK operations. From there, orders are trucked to 19 secondary storage depots across the UK from Dundee in Scotland to Exeter in the southwest.
No inventory is kept in depots – known as outdoor bases – as they function as locations to move customers’ orders to their last mile delivery vehicles.
In fact, the items don’t even touch the ground between the NDC and the customer’s home, as the company uses trailers with movable floors, walls, and ceilings, which means items can move from truck to vehicle. of the last mile. The fleet also makes return trips so that vehicles do not return empty to an NDC.
A total of 5,500 SKUs are held for next day delivery. Many products sold by AO are susceptible to damage, so most of the picking and packing processes are manual. Toyota narrow aisle trucks are used between racks to ensure every item is accessible.
The company does not intend to outsource the last mile of the operation, preferring to retain responsibility for the entire customer journey. But some small packages are currently being delivered by DPD and in April of this year (2019) it entered into drop-shipping agreements with logistics specialist BluJay, in order to expand its supply chain operations and support the delivery of its vast and growing range of products.
AO.com’s Expert Logistics business has delivered customer orders for white goods manufacturers including Hoover and Electrolux for many years, but recently signed its first contract to deliver customer orders for the furniture maker. The Cotswold Company.
Operating its own warehouse management system and having computer programmers based in Crewe means that AO.com can constantly push its proposition and easily integrate into third-party systems. The retailer also operates in Germany, and the star model operating in the UK is reproduced there.