Top retailers have improved their speed in last-mile fulfillment dramatically over the last two years and those gains have been instrumental in helping them stay afloat and even make headway in categories dominated by Amazon.com.
In an online discussion last week, members of the RetailWire BrainTrust commented on research illustrating this trend that was presented by Ken Cassar, principal analyst at Rakuten Intelligence, in a RetailWire webinar.
Using Best Buy as an example, Mr. Cassar showed that while the retailer’s click-to-ship rate — the time it takes Best Buy to ship a product from its warehouse after an online purchase is made — had not sped up, the time it takes Best Buy to get product from its warehouse to a customer dropped from 6.3 days to 2.7 days within the past two years. This is consistent with an industry-wide trend.
“That Best Buy story isn’t a novel one,” Mr. Cassar said. “The improvement that retailers not named Amazon have made is almost exclusively coming from faster delivery — from faster ship-to-door.”
Paula Rosenblum, managing partner at RSR Research, saw this as uphill struggle, however, for Amazon’s competitors.
“Amazon doesn’t make much money on its retail operations (I’m being charitable, here). Most other retailers can’t get away with that,” wrote Ms. Rosenblum. “So they’ve got to ultimately be better than Amazon. The narrower their assortments, the easier that will be. I see specialty stores and giants doing well. Others will struggle, and profits will be hurt. There’s just no choice.”
With shipping speed improvement in particular being an expensive proposition due to high shipping costs, some on RetailWire’s BrainTrust noted that it was key for retailers to use data to understand and manage those investments.
“What gets measured gets done, and can be managed,” wrote Chris Petersen, president of Integrated Marketing Solutions. “It is alarming how many retailers do not have adequate systems or KPIs to track both effectiveness and efficiency of last-mile deliveries.”
But BrainTrust member Ananda Chakravarty noted there was more to the last mile than being fast and free.
“Success is not about delivering fast, but delivering the way the customer wants it and still making money,” wrote Mr. Chakravarty. “This translates into better understanding the customer — something all retailers must strive more to do. Even retailers in the middle will have the advantage of a physical presence and can work on retaking market share from Amazon, but it’s a long term commitment.”
With brick-and-mortar retail coming back into fashion, retailers with physical stores are now better positioned to thrive in the last mile, thanks to trends like ship-from-store and buy online, pick up in-store (BOPIS).
“On their fronts, Target and Walmart will take advantage of their brick-and-mortar presences to do Instacart-like deliveries for relatively short money,” wrote Ms. Rosenblum.
BOPIS appears to offer a far better proposition for retailers across the board than just a year ago; it jumped in popularity 73 percent between 2017 and this year’s Thanksgiving, according to Adobe’s research.
Charles Dimov, vice president of marketing at OrderDynamics, who joined Mr. Cassar on the webinar, noted that these statistics illustrate how BOPIS is expanding beyond an industry buzzword and into a service that customers are aware of as an option.
“[The numbers on BOPIS adoption are] a testament to the fact that awareness is growing,” Mr. Dimov said. “I think the rewards are going to go to the retailers that have already put [BOPIS] in play. I think there’s going to be a propensity for other retailers to scratch their head and say, ‘Hey maybe I should be putting a little speed behind this and accelerate our pace a little here.’”
Date: December 6, 2018