Fast Retailing upgrades e-commerce

With retailers now firmly in control of their supply chains, and e-commerce growing quicker than any other sales channel, the major brands are just beginning to initiate moves to take better control over logistics functions too. Last month Fast Retailing completed a deal with Daiwa House aimed at improving distribution both at home and overseas.

In October Fast Retailing and Daiwa House announced a new joint venture company to improve online fulfilment. Daiwa House is one of the country’s largest providers of third-party logistics as well as a major store builder and fitter. The deal will see an entirely new logistics facility for Uniqlo and its sister brands in Tokyo in 2016, at which point Fast Retailing will begin offering same day delivery services for online orders.

The new DC in Koto-ku in south Tokyo will be responsible for supplying central Tokyo with same day deliveries, and next day delivery for greater Kanto. At present, orders from uniqlo.com take 2-5 days to arrive, far slower than the brand’s main, online-only rivals Amazon and Start Today. So same day delivery capability, even for what is primarily a high street fashion retailer, is seen as an essential upgrade to its online shopping offer.

In addition, Daiwa will be helping to improve Fast Retailing’s store delivery system and the companies will be working together on international logistics projects too.

Amazon opened its huge Odawara DC in September 2013 and provides same-day delivery throughout both Kanto and Kansai, while Start Today’s DC in Chiba began same day deliveries in central Kanto in March, and even made these free from last month.

Last year, Fast Retailing’s online store accounted for around 4% of total sales, roughly ¥30 billion. Like most companies it expects this figure to balloon over the next few years and logistics that can provide fast, free or very cheap delivery will be essential.

Meanwhile, Fast Retailing’s latest results for August 2014 showed yet another great year, with sales up 21%, even though profits were well down. The company remains steadfast in its PR of ¥5 trillion in sales by 2020. No matter how much it can boost its online sales, this not only looks increasingly unrealistic, but the three larger global players, Inditex, H&M and Gap, are all growing too, leaving Fast Retailing needing unimaginably high performing new chains or big acquisitions to catch up.