Zoe’s new quarterly subscription service costs $100 per shipment and will feature at least one item sold at significantly below cost.
The retail chain makes delivery gains during the holidays by turning its stores into “mini-warehouses,” StellaService says. Its new analysis and Top500Guide.com data show how major retailers fulfill e-commerce orders.
Best Buy Co. Inc. may have found a way to compete with Amazon.com Inc. when it comes to getting items quickly to customers, suggests a new study from customer service ratings firm StellaService Inc. Its analysis could offer hope for other retail chains seeking an edge against the largest web merchant in North America.
StellaService, which monitors customer service levels offered by e-retailers, says the consumer electronic chain’s ship-from-store strategy was paying off in late 2013, during the holiday shopping season. Starting in the second quarter of 2013, Best Buy, No. 10 in Internet Retailer’s 2013 Top 500 Guide, began fulfilling web orders from 50 of its more than 1,500 U.S. stores.
At first, Best Buy was much slower in delivering orders to customers than Amazon. But that changed over the holidays.
During the summer, Best Buy took nearly seven days to deliver an order on average. That compared to four days for orders made with Amazon.com, StellaService says. By October the gap had narrowed, to about two days and seven hours for Best Buy orders compared with about three days and 12 hours for Amazon orders. Best Buy lost ground in November. But on Dec. 13 the chain could claim victory, if only barely. Its orders were in the hands of customers in just under three days, while Amazon’s orders needed a few more hours.
StellaService based its findings on orders it placed for delivery to destinations in each of four regions in the United States: the Midwest, Northeast, South and West Coast. The products varied by month but were the same for each retailer: video game system (July); tablet computer (August), portable speaker (September), video game system (October), tablet (November) and headphones (December).
Amazon (No. 1 in the Top 500) did not respond to a request for comment and a spokesman for Best Buy declined comment about the StellaService findings. The company credits the narrowed gap between the two retailers as of the end of 2013 on Best Buy’s ship-from-store program, which turns stores into “mini-warehouses,” StellaService says.
“One of the challenges of ship-from-store is training in-store teams to pull, pack and ship,” says Kevon Hills, director of research at StellaService. “Best Buy has figured out a way to get orders out for delivery same-day, a sign they’ve built a very smart process and their employees have bought in to this initiative.”
As of March 2013, Amazon operated 49 fulfillment centers in North America, according to Top500Guide.com though that number is likely higher now since Amazon has invested heavily in expanding its fulfillment footprint in the last year. Scot Wingo, CEO of online marketing firm ChannelAdvisor Corp. and a close Amazon observer, estimates that Amazon operates 54 U.S. distribution centers.
In late 2013 when Amazon last spoke publicly about the size of its fulfillment center footprint, it said it had at least 89 warehouses around the world but declined to break out North American figures. Amazon is scheduled to report on Thursday its earnings for the fourth quarter and full year 2013. Fresh estimates from analysts often follow Amazon’s financial releases.
By comparison, as of Feb. 2013, Best Buy operated 23 distribution centers in 17 U.S. states, according to its fiscal 2012 annual report. However, the retailer did not disclose how many of those warehouses are dedicated to e-commerce.
Only Netflix Inc., ranked No. 9 in the guide, has more e-commerce fulfillment centers than Amazon, with 58. W.W. Grainger Inc., No. 15, comes in behind Amazon with 28; Grainger sells office and industrial supplies.
Best Buy is scheduled to report its latest financials on Feb. 27.
For its fiscal third quarter, ended Nov. 2, the chain reported online sales of $499 million, up 15.1% from a year ago. That compared with an overall revenue decline of 0.2%. Among the factors driving that growth, Best Buy said, were higher inventory availability due to its ship-from-store capability and expanded distribution centers for online orders.
Other retailers that fulfill items from stores include: Wal-Mart Stores Inc. (No. 4 in the Top 500), Urban Outfitters Inc. (No. 48), The Finish Line Inc. (No. 151) and The Jones Group Inc. (No. 188), which operates the Nine West brand of stores, among others.