Is the logistics challenge for online retailers any easier today than it was in the 1990s? The first wave of online retailers faced a huge shortfall between what consumers were willing to pay for home delivery and its actual cost – also known as “the last mile challenge”. This profitability gap drove most online pioneers out of business.

Last week I lost a really important notebook (yeah, I know – pretty analogue for a digital retail adviser!). Still, I mention it because what happened after I discovered it was gone reminded me of a very important principle for every retailer.

Most online retailers face an operations bottleneck. Operations issues are driving poor service, high costs and team member frustration. These retailers are falling behind a handful of leaders who have their online operations under control and can now focus on improving their customer offer and profitability.  

The “last mile problem” remains one of the biggest challenges for online retailers: how to find profitable ways to deliver products to residential customers’ doorsteps. A wave of high-profile innovators, from Instacart to Uber, are bringing fresh approaches to the last mile problem. But we can also learn from someone with a much longer track record in last mile delivery: Santa.

The last few years have seen a wave of interest in “digital transformation”. Many companies have now publicly committed to a digital transformation strategy, often linked to the appointment of a Chief Digital Officer to the Executive team. There are several definitions of digital transformation.

Around the world e-commerce now accounts for around 7% of total retail sales. However 7% is an average that masks massive variation between sectors.

I started working in retail with Tesco.com back in 2001 and noticed immediately that different leaders would approach the same situation with completely different approaches.