Target and Toys R Us posted overall sales declines during the holidays.
In the era of free and same-day shipping, e-retailers at IRCE 2014 focus on how to keep up with the big boys.
“You can ruin a brand in a day,” Kirk Meyers, Recreational Equipment Inc.’s corporate social responsibility manager at told attendees at IRCE.
Meyers wasn’t talking about poor web design or not having the hottest new product or even a lackluster marketing strategy. He was talking about operations—fulfillment and delivery specifically.
While not the flashiest of the e-commerce topics discussed at this year’s conference, they are crucial for keeping customers happy. The UPS and research firm comScore Inc. “Pulse of the Online Shopper” study released during IRCE finds that 54% of shoppers have abandoned a cart due to long estimated delivery times.
But even more important than delivery times are the shipping costs. Free shipping still wins, the report says. 58% of consumers have added items to their shopping carts to qualify for free shipping and 83% are willing to wait an additional two days for delivery if shipping is free. More than half of those surveyed say they want to see the total purchase cost, including shipping, early in the checkout process.
Retailers know how important delivery is to consumers and have been experimenting with different methods to get products to consumers quickly and inexpensively.
Macy’s Inc., which recently launched a program allowing customers to buy online and pickup in stores, has emphasized the connection between its stores and e-commerce sites. Kevin Gardiner, the retailer’s director of online and omnichannel customer service, told attendees that store fulfillment and same-day delivery represent important opportunities today for Macy’s. The retailer began testing store fulfillment of online orders from its stores in 2012, and all of Macy’s 675 full-line department will soon be fulfilling web orders. That’s in addition to five dedicated online fulfillment centers, with a sixth under construction. The biggest challenge has been store employees finding items, as a customer may have left it in a dressing room or put it back on the wrong rack, he said. “It’s not like a warehouse,” he said. “We need to determine how long an associate should look for an item before turning it over to another store.”
Several large e-retailers, including Target Corp. and Amazon.com Inc., are experimenting with same-day delivery. Target announced earlier this summer that it will test it in Minneapolis, Boston and Miami starting this summer. The rush delivery service will allow consumers to order products as late as 1:30 p.m. and receive those orders between 6 p.m. and 9 p.m. Amazon now offers same-day delivery to consumers in 12 major markets.
Top of mind for some retailers during the conference was how to avoid shipping disasters during the holiday season. So much so, in fact, an entire session was dedicated to making sure retailers are prepared this year. Jay Kent, senior vice president of distribution at supply chain consultants Spend Management Experts said in his presentation that e-retailers need to make clear to their carriers how much volume they will be shipping, when their volumes will peak and any special requirements, such as oversize boxes. He said they must also be ready to activate contingency plans if problems—be it bad weather or unexpectedly high package volume—arise again this year to overburden shipping carriers.