UPS Announces Last Day to Ship

A later-than-usual Thanksgiving on Nov. 26 condenses the shipping season by almost a week. Meanwhile, continuing effects of COVID-19 drive more buyers online to fill holiday wish lists – and many of them will avoid the personal contact of store shopping altogether.

Combined, these factors predict a capacity crunch for the small package networks. Already experiencing service delays and disruptions, these networks will not see relief until after the New Year, even as parcel carriers bring on thousands of new workers.

Be mindful of the “last shipping days” announced by UPS and FedEx, but that may not be enough to avoid a disappointed holiday customer in 2021. That’s why the world’s largest retailers are turning the holiday shopping clock from Black Friday toward a “Black October.”

Navigating this year’s peak season during the middle of a pandemic will require companies to be more creative and flexible. Forward-thinking shippers should be prepared to adjust. 

Retailers Drive Christmas Creep, Protect Experience

Amazon’s Prime Days on Oct. 13-14 delivered $3.5 billion in sales to small- and mid-sized businesses, with a 60 percent uptick in sales over last year. The move expedites holiday shopping – and product shipping. It also adheres to latest guidance from UPS: “encourage your customers to shop earlier than ever with special offers or other incentives.” FedEx echoes the same advice for shippers preparing for the 2021 holiday season.

Promotions like Walmart’s “Big Save Days” and Target’s “Deal Days” are all designed to pull parcel volume forward and avoid a costly catastrophe caused by a lack of capacity in December. 

If your organization is focused on protecting customer experience this holiday season, keep these five things in mind: 

  1. It is more important than ever to make sure that you proactively and clearly communicate the potential for delays. Every year the national carriers suspend their on-time guarantees during the holiday period. Earlier this year they suspended the guarantees due to COVID-19 complications and disruptions.
  2. Retailers can ship-to-stores for curbside pickup.
  3. Retailers can also ship-from-stores to shorten the distance that the package travels in the carrier’s networks and thereby reduce the potential for delay.
  4. Shipments can be made to alternative delivery locations such as certain retail partners, your customer’s office, or to one of the many parcel lockers.


5. Finally, if you operate multiple DCs across the US, it will be important to have the right inventory at the right locations to speed delivery and avoid split orders.

In a time where lockdowns have driven e-commerce shipments to levels never seen before, companies will need to deploy an all-of-the-above strategy to navigate it appropriately.

Know the Last Days to Ship

Now more than ever, it is important to make every possible effort to avoid deadline shipments. If you anticipate a last-minute holiday rush, make sure your UPS shipments go out on or before these dates to give your parcel the best possible chance to arrive by Dec. 24:

  • UPS Ground: As early as Tuesday, December 15* 
  • UPS 3 Day Select®: Monday, December 21 
  • UPS 2nd Day Air®: Tuesday, December  22 
  • UPS Next Day Air®: Wednesday, December 23

*Note UPS advises that most UPS Ground shipments have a later “last recommended shipping dates.” Shippers can track their transit time and cost here

FedEx released its holiday schedule ahead of UPS, and both schedules align closely. We detailed 7 tips for holiday delivery success shortly after the FedEx announcement. 

Regardless of the service provider you trust with your shipments, through full transparency and good information, you can effectively manage customer expectations while also syncing with the carriers that will deliver the goods to their doorsteps.  

You Shipped it – Did it Make Money?

Protecting customer experience this holiday season will require timely shipments and thorough communications throughout the sales cycle. 

Protecting your organization’s profit while responding to these customer expectations requires additional awareness and proactive measures.

  • Be aware of the Peak Season Surcharges and more importantly the differences for UPS, FedEx, Regional carriers and now the USPS.
  • Perform a detailed analysis to estimate the surcharges financial impact and to mitigate any negative effects on profitability.
  • Identify specific SKUs that will be negatively impacted and make decisions regarding those items to protect profit margins.  
  • Raise the cost of the item.
  • Increase the free shipping threshold.
  • Pass some or all of the additional cost to the customer.
  • Ensure carriers agreements are best in class and that invoices are audited for compliance to them.
  • Make sure you have the right box sizes so that the packaging is only la
    rge enough to adequately protect items during transit.
  • Work to eliminate operational errors that create avoidable costs such as incorrect addresses, unnecessary declared value and unauthorized packages.

To help shippers protect profit on every customer and every order, we created “You Shipped it … But Did You Make any Money.” Open it today for more guidance on making sure your peak season ends in the black.

Last Days to Ship? 7 Tips to Meet Holiday Deadlines

According to MarketWatch, Deloitte is forecasting a 1% to 1.5% year-over-year sales increase for the upcoming holiday season, during which time total retail sales will be about $1.15 billion (between November 2020 and January 2021). Meeting holiday shipping deadlines will be more important than ever.

“E-commerce sales, which have been strong throughout the coronavirus pandemic, are expected to climb 25% to 35%, reaching $182 billion and $196 billion,” Deloitte predicts. “Regardless of the scenario, however, consumers’ focus on health, financial concerns, and safety will result in a shift in the way they spend their holiday budget.”  

Here are seven tips for making sure your holiday packages get to their destinations on time.

7 Tips for Holiday Delivery Success 

The new realities of the current shipping environment have created ongoing service delays and disruptions, both of which have compounded into an overall capacity crunch for small parcel carriers. Working through this issue will require forward-thinking companies to adjust accordingly.

For example, shippers will need to be more creative and flexible to cope with the combination of COVID and the normal peak season. FedEx, UPS, and other carriers are hiring a lot more workers for the season, but we still expect to see some capacity issues. With the uncertainty, it will be more important than ever to inform customers when to expect shipments and be extremely transparent. 

Here are seven tips that will help you get your packages to their destinations on time: 

  1. Know the cutoff dates. FedEx’s last days to ship calendar is online here and UPS publishes its holiday deadlines here. The USPS plans to release its cutoff dates for holiday shipping sometime in October. Be sure to factor in these last days to ship dates when planning your holiday shipments. 
  2. Talk to your carriers. Proactively communicate with carriers regarding any expected increase in volume and any additional equipment requirements (e.g., feeders or bulk-type pickups). This will help your carriers plan ahead and provide some assurance that there will be capacity to accommodate your volume spikes (or, allow you to make alternative arrangements). 
  3. Next, talk to your customers. Companies should proactively communicate anticipated delays and properly set customer’s expectations on their websites and in any email communications. This could be as simple as featuring the holiday cutoff shipment dates prominently on the first page of your website. 
  4. Know the limits. Shippers should clearly understand any potential volume limits or caps that may be put in place by the carriers. Because these constraints can impact your ability to deliver on time, be sure to discuss them with your carrier. 
  5. Explore your options. Shippers should also understand their carrier options and negotiate favorable agreement terms to properly leverage all national, regional, and postal carriers. Having a “Plan B” in place is always a good idea during the busiest times of the year. 

  1. Start your product promos early. Don’t wait until the last minute to kick off your holiday promotions. Starting early will help you pull volume forward to avoid peak shipping periods and allow time for expected delays. 
  2. Factor in holiday business schedules. For example, USPS is closed for all of the major federal holidays. With delivery times varying between its services, knowing the cutoff dates and hours of operation are both important. 

Maintaining Transparency  

Reflecting on how parcel carriers performed for the 2019-20 holiday shipping season, UPS’ SurePost and FedEx’s SmartPost both assured 100% delivery for holiday orders that were shipped on or before December 14 or 9 (respectively). However, we also saw that as the cutoff date approached, those commitments slipped. This is something to keep in mind as you lay out your plans for the 2020-21 season. 

Using the tips outlined in this article, you can strike a nice balance between growing your company’s holiday sales while also letting customers know that there is a risk of passing the carrier’s “suggested date” for accepting pickup for a Christmas delivery. Through full transparency and good information, you can effectively manage customer expectations while also syncing with the carriers that will deliver the goods to their doorsteps.  

Peak Season Performance Requires Visibility

To make sure holiday shippers are aware of the latest trends affecting their transportation cost management, we convened a roundtable of our parcel experts. Watch or listen to our webinar “Peak Season: Are You Ready?” to hear Todd Benge, Robyn Meyer, Toni Caputo, Bernie Reeb and myself address the unprecedented challenges emerging his year.

This digital event shares strategies to help you protect profit and enhance customer experience. Watch it today to make sure you are getting charged correctly and manage the capacity risks that threaten to derail your performance.

6 Qualities to Look for in an E-Commerce Logistics Partner

With changing customer demands, new carrier surcharges, COVID, and other challenges taking a bite out of shippers’ bottom lines right now, those companies are best served by logistics partners that bring a high level of value to the table. Even better, they do this while helping shippers overcome their key pain points and achieve their organizational goals.

If your e-commerce logistics provider isn’t living up to expectations in these six areas, it may be time to find one that will.

  1. Technology Systems that Mirror the Carriers’ Own Systems
    This allows the provider to estimate cost impact and predictive modeling to the penny. Every time the carriers make a change, that change should also be made in your provider’s system.
  2. A Strong Team of Subject Matter Experts
    That team should include engineers and analysts that know how to leverage the carriers’ profitability areas to gain better advantages for you (versus what a traditional account rep can manage). Our experts regularly share their insight with the marketplace.

  1. Ongoing Analysis and Strategic “Thinkery”
    Look for a partner that thinks well beyond the “one and done” approach. Today’s business environment requires a partner that focuses on continued delivery optimization and cost mitigation.
  2. A Proactive Auditing Function
    Rather than relying on a reactive mindset (e.g., asking for the same refunds over and over again), your provider should be working with an “identify and repair” mindset to eliminate these potential issues and mitigate ongoing costs.
  3. Advanced Analytics and KPI Tracking
    As e-commerce continues to grow, you need a partner that is constantly innovating and adding functionalities like margin management, SKU-level profitability, KPI tracking, order performance management and high levels of supply chain visibility.   
  4. A Problem-solving Mindset
    When new accessorials or surcharges are released, your logistics provider should be measuring the impacts of those changes on your budget and helping you mitigate those impacts.

Master Your E-Commerce Supply Chain

Possessing these key qualities, we bring our client partners ongoing value as they race to meet demands for delivery speed, service and choice. Supporting your efforts to enhance customer experience, we also implement strategies to control costs so that you can maintain awareness of how each and every product and customer is performing. 

Our Parcel Experts created “You Shipped It, but … Did it Make Money?” to identify some of the emerging challenges that jeopardize your profit. It highlights our approach in the marketplace and gives you a glimpse into the level of analysis that we bring our customers. 

Let’s take a deeper look at the supply chain challenges you are experiencing. Reach out to our supply chain masters today to begin a conversation about your personalized solution.

Plan, Adjust, Communicate with Data Visibility

Shippers with good visibility into all aspects of their supply chain – including suppliers for multiple tiers – can build resilience and agility to lessen the impact of disruptions like global pandemic, natural disaster or political upheaval.

Data visibility, however, is just one piece of the puzzle. Your ability to act on that visibility is the key.

Drive Network Improvement with Data Visibility

Supply chain leaders around the globe are basing immediate action on real-time supply chain information – often captured through emerging supply chain technologies.

According to a recent Oxford Economics survey of 1,000 supply chain leaders, 49 percent – the top 12 percent of respondents – can capture real-time data insights and act on them immediately. Of those surveyed, 51 percent use Artificial Intelligence and predictive analytics to capture information. Although more than 75 percent of respondents recognize the importance of visibility into sustainability practices of their organization and suppliers, few have visibility into either.

While those leaders may realize new efficiencies in tactical execution, truly developing a strategic plan for procuring services and serving customers, requires more than a customized transportation management system.

Visibility End in Mind: Plan, Adjust, Communicate

You can know where to find the load, the inventory or the vendor, but you need technology, tools and talent to execute three steps integral to monetizing that information into cost savings or enterprise growth:

  1. Supply chain visibility is vital to initial network design, as well as contingency planning that may be required during an era of disruption.
  2. Supported by a contingency plan or evidence-based analysis, visibility empowers tactical operators and executive leadership to adjust their strategy to mitigate risk or seize an opportunity.
  3. Close the loop by communicating those adjustments to customers and supply chain partners, and enhance experiences while controlling costs across your supply chain.

Ultimately, visibility into your end-to-end supply chain helps you understand how to pull different levers across your network and increase the return on investment of the whole supply chain.

Real-Time Data vs. Real-Time Access

There’s a big difference in real-time data and real-time access, the latter can be far more valuable because allowing data to solidify can increase accuracy. The most important real-time data is track and trace. Although from the standpoint of being actionable, there is likely limited actions that can be taken to impact it other than communication.

There’s a balancing act between the information you have and the amount of lag time required for the information to be validated and integrated across the reporting. The length of time the data needs to “soak” depends how you intend to use it. You want to be able to correct performance before it gets out of hand, but at the same time you don’t want to make decisions based on incomplete data.

For instance, bidding on an LTL shipment in the TMS, you don’t want your financial reporting to reflect cost until the carrier has invoiced with any additional accessorials applied. Real-time access to your latest data gives you the power to identify trends so you can validate or eliminate services for improved cost control.

Mastering Data Visibility

Deep, multi-layered visibility is a fundamental ingredient in elevating your supply chain to its optimal performance. Solutions for achieving that visibility are widely available, but none deliver greater supply chain mastery than Transportation Insight.

We build personalized solutions that give you visibility to rate savings, optimization opportunities and behavioral changes across the organization that reduce cost and can fund your initial start-up in the process. Executing in those areas, our team leverages transportation technology tools to improve the flow of data to drive ongoing process improvement that generates waste reduction, improves equipment utilization and protects profit margins.

Master visibility across your supply chain with our free resource “Mastering Your Supply Chain: Layers of Visibility.”  Download it today to access the information you need to improve service and achieve monetary savings.

Service Merchandise omnichannel fulfillment

Master Omnichannel Fulfillment, Enhance Experience

Retail has changed a lot in nearly four decades since Service Merchandise – and its catalog – was familiar in households across North America. Still, many of the retailers’ leading-edge concepts are just as applicable in an e-commerce age that requires customer service capabilities across multiple channels.

Let’s look at some supply chain practices that can support an omnichannel service that enhances the experience of your customers – whether they are shopping in-store, online at their desktop on their smartphone or by telephone.

Can You Compete with Amazon? Should you Try?

Most retailers are still trying to figure out the right recipe for omnichannel. Revisiting the strategies that anchored the success of Service Merchandise, alongside modern supply chain best practices can help retailers focused on managing fulfillment costs and expanding growth across all sales venues.

Companies have to decide where they want to play. With more service comes more cost. You have to understand your customer base and understand who you want to compete against. Can you compete against Amazon at a national level? Maybe not, and if you try you may bankrupt yourself.

With customers’ rising expectations for free shipping and 2- or 3-day delivery, retailers need to be able to design a distribution network where every customer in the U.S. can be reached within two days.

For companies that have brick and mortar locations, the question becomes: How do you leverage all inventory assets to decrease customer lead time – and do it cost effectively?

That requires analysis, good data, good tools and people who know how to interpret that information.

A 21st Century Hurdle

One obstacle facing today’s retailers that Service Merchandise didn’t have to deal with: massive SKU proliferation. While the retailer probably carried a significant number of SKUs in its backroom, it also knew that most of its customers were not walking in the door with the goal of buying 10+ items.

This didn’t pose a problem until the definition of “convenience” changed. The world’s super centers caught onto the shift and started carrying dozens of different “similar” items – all on the sales floor.

At that point, all that a shopper had to do was walk in, fill a cart, and walk out the door.

In today’s landscape, if you are competing against retail and e-tail giants, it is critical to understand the profit performance of each product you offer, particularly in light of any associated fulfillment and delivery costs.

Model Networks to Manage Mistakes

Modelling exercises help retailers determine cost trade-offs versus service before you start an initiative. This can allow you to determine where to guarantee 2-day delivery in certain areas, while offering longer service time and lower cost in other areas.

One of the core benefits of network modelling: you can do all the what-if scenarios so you know how the network reacts before you invest dollars and make a mistake.

Data-driven network modelling is also an asset when disruption threatens the order-to-cash cycle. This type of proactive modelling allows a shipper to identify response options before disaster occurs and jeopardizes successful final delivery.

Leverage the Right Resources

Most retailers may not have resources to manage massive amounts of data and then turn around to review and reproduce network designs every six months or faster – all while managing a separate returns network and a separate dot-com network.

Many organizations cannot afford to obtain the people, obtain the tools and manage to keep them. If you do have a staff on site, those people may not always be needed for network design or analysis. You end up re-tasking them with other things so they are not staying fresh on their modelling skills, and when it is time to update the model – what if they are working on other critical projects? That work falls by the wayside.

Another downside of an internal modelling team: They get to know your business, and how it works. There’s a tendency to get into a modelling rut, modelling within your constraints rather than challenging “sacred cows”.

Someone outside your organization knows what other companies have done, what works and what doesn’t, – and they’re not limited by your constraints. That’s why consulting companies exist. They can think outside the box and apply your constraints rather than operating under assumptions.

Master Your Domain

Retail companies in particular should focus on their strengths.

Buying the best products and marketing to customers is the core competency of most retailers – not transportation and logistics. In that case, an outside expert can offer an unbiased, view informed by supply chain best practices effective in varied industries and many different retail organizations.

Hire an outside expert that can leverage fulfillment expertise, data and supply chain planning to help take care of customer delivery demands, so you can focus on the retail areas where you excel.

Manage Fulfillment Cost, Support Prime Performance

We are in an era where higher fulfillment costs continue to erode retail margins. It’s time for stores to think harder about how to fulfill orders across all channels, while also factoring in parcel transportation costs and how to package in a way that minimizes dimensional charges.

The complexities of omnichannel fulfillment and all the requirements that come along with it drives many retailers to rethink store layout plans, network design and support partners. Applying the Service Merchandise approach to customer experience in the 1980s could give today’s retailers a competitive advantage in the marketplace.

To help retailers understand how Service Merchandise delivered experience and omnichannel excellence we created “Prime Before Its Time: The Service Merchandise Experience.”

Download the guide to learn how the retail innovations of yesterday can help you deliver a prime performance today.

Omnichannel: 3 Ways Service Merchandise Got it Right

In its heyday, Service Merchandise was a retail force. With 413 stores and $4 billion in revenues at its peak, the company singlehandedly turned the “catalog showroom” shopping experience into one that consumers flocked to for fine jewelry, electronics, toys, and other merchandise. 

Hindsight being 20/20, modern-day concerns like high inventory carrying costs, the escalating cost of expansive retail space, and the labor-intensive nature of its decidedly non-DIY showroom should have all been red flags for Service Merchandise. Despite these oversights, the company definitely had a few things nailed when it comes to omnichannel. Let’s look at three areas where Service Merchandise excelled.

Lesson 1: Sales in the Front, Fulfillment in the Back

Service Merchandise stored inventory in the backroom versus in the front of the house and basically understood the value of the omnichannel model as far back as the 1980s.

Stores aren’t meant to be fulfillment centers. Employees don’t know how to pack boxes efficiently. They rely on their own judgment about how much packing material and product to load into a box for a ship-to-home customer. That can get expensive when dimensional minimums come into play. For example: If a box is too large relative to the weight going into the box, the shipper is going to overpay. 

Service Merchandise escaped these challenges.

  • All inventory was maintained at the store level, in the back of the house, where customers couldn’t touch it until they ordered it, initially using a clipboard and written order and later using the “Silent Sam” ordering system.
  • Employees were trained on efficient fulfillment techniques: The goods were either sent by conveyor to the customers or shipped to their homes. 

“The average price of an item sold in the store was $30. The average transaction was $55, so we were selling less than two items per transaction,” says Service Merchandise CEO Ray Zimmerman. “Because they were $30 items, it was less expensive for us to handle it on a pick and conveyor basis than it was to stack it out and let the customer pick it up.”

Obstacles emerge when fulfillment creeps into a retailer’s sales floor customer-facing roles:

  • Store employees picking orders instead of taking care of customers. 
  • Aisles congested with big carts and harried fulfillment individuals trying to fill orders quickly. 
  • Online shipments packed inefficiently by store employees untrained in the fine points of fulfillment. 
  • Unnecessary touches: product is received, unpacked, put on store shelves, retrieved, repacked and shipped back out. 
  • Multiple touches create a high volume of dunnage and corrugate waste.

Just think about how far a store employee has to walk to collect all of the items from an online order, versus someone who was working in a warehouse with very high pick densities. Warehouses also incorporate technology (i.e., pick-to-light and voice options) that makes picking and packing more efficient.

Lesson 2: Technology is Integral to Omni-Channel Success.

Retail has come a long way since the 1980s, but it’s clear that Service Merchandise’s leaders had a knack for understanding their customer base and serving it well. They also weren’t afraid to invest in technology long before terms like omnichannel, automation, robotics, and Amazon were common vernacular for retailers. 

“We had a great group of IT people – and that was unique for most companies at the time,” Zimmerman says. “At the time, there was no point-of-sale system that had an alpha numeric. They were programming in BASIC language, it was very simple, but that’s how we developed all these systems.”

Those systems monitored inventory, too.

“We had to keep inventory tight and we spent a lot of time monitoring to make sure that stores were making inventory adjustments,” Zimmerman says. “If they didn’t have any adjustments, the store wasn’t doing its job verifying inventory count; if there were too many, the store was having a shrinkage problem.”

If afforded today’s technology advances, omnichannel data management and its innovative mindset, here’s what a profitable “Service Merchandise 2020” might look like.

  • An early adopter of warehouse automation, it deploys advanced technologies like robotics.
  • Warehouse pickers are equipped with wearable technology that enables them to do their jobs faster in a hands-free environment. 
  • Integrating automated co-bots, conveyors and cranes into its stockrooms, it effectively leverages technology to shorten fulfillment times and hit two-day and one-day shipping windows.
  • Leverage artificial intelligence (AI) and machine learning to optimally determine placement and levels inventory based on predicted customer demand. 

Lesson 3: Give Customers an Experience

Customers like going into stores to look at and touch products. 

Service Merchandise knew that its customers really wanted to experience a product before buying it, which meant stores didn’t really need to have all of their inventory visible and stacked to the ceiling when those customers walked in the door. 

With its part-catalog/part-showroom approach, Service Merchandise was meeting customers where they were in the ‘80s.

“The catalog was not for people to order from. It was an advertising tool – people could pick what they want and come into the store,” Zimmerman says. “If that customer drove 3 blocks to come into our store, they expected to get it. We had to be in stock every day, on every item.”

Many people still remember fondly a key aspect of the Service Merchandise experience, even if the retailer’s dominant presence has faded.

“When the company liquidated, I bought the name to keep it in the family. I put up a website – it didn’t sell much merchandise, but it got a tremendous amount of comments,” Zimmerman says. “Many wanted to tell me how much they loved watching the merchandise coming down the conveyor belt.”

Putting it all Together

Retailers are still trying to figure out the right recipe for omnichannel success. A multichannel approach to sales focused on providing customers with a seamless shopping experience — be it online, on a desktop, via a mobile device, by telephone, or in a brick-and-mortar store — omnichannel is pushing companies into new terrain when it comes to fulfillment, transportation, and delivery.

To help retailers understand how to improve omnichannel performance, we created “Prime Before Its Time: The Service Merchandise Experience.”

Download the guide to learn how the retail innovations of yesterday can help you deliver a prime performance today.

The Service Merchandise Experience: Omnichannel in the ‘80s

Standalone brick-and-mortar structures with expansive parking lots — most of which were packed with cars during business hours — Service Merchandise stores were where people went, catalog in hand, to look at product displays and check off their selections on order forms – or in a computer terminal. A few minutes later, their goods appeared on a conveyor straight out of the onsite stockroom.

Let’s explore Service Merchandise’s roots, dig into its retail strategy, and see how its strategies for customer experience can apply in today’s omnichannel retail environment. 

Customer Experience Innovator

Headquartered in Brentwood, TN, Service Merchandise was built on an innovative business. The company broke new ground in a handful of retail landscapes. In fact, many of its competitive moves were well ahead of their time, leading us to believe that Service Merchandise may have actually mastered “omnichannel retail” decades before the term was even coined.  model. Initially a variety store opened in 1934, it went from being a chain of dime stores to a catalog business. Operating from warehouses in Tennessee, that business eventually morphed into the showroom concept that made Service Merchandise famous. 

  • 1980 – Allowed customers to place orders via specially equipped TV sets.
  • 1981 – Developed a computer program that used demographics and a specific location’s characteristics to predict the market.
  • 1982 – Installed a cash register that allowed customers to check on product availability and order merchandise right on the sales floor. 

Three years later, it implemented a computerized inventory replenishment system that helped it reduce inventory carrying costs while also reducing its out-of-stocks. In 1986 it opened an automated, 752,000-square-foot warehouse in New York.

Convenient Fulfillment Options

For retailers, having the right inventory at the right place and at the right time has become table stakes. Service Merchandise served multiple channels efficiently from its brick-and-mortar locations. It had walk-in business, for example, and it also had a successful catalog component. Really, the latter is no different than today’s online environment, where “order online-pickup in store” is the newest dynamic that retailers are trying to harness. 

“The catalog was not for people to order from,” says Raymond Zimmerman, CEO of Service Merchandise. “It was an advertising tool – people could pick what they want and come into the store. If that customer drove three blocks to come into our store, they expected to get it. We had to be in stock every day, on every item.”

Service Merchandise also leveraged brick and mortar locations to meet retail customers where they were. Inspired by UK-based retailer Argos’ fulfillment model that allowed freight deliveries to a secured inventory room without store access, Service Merchandise tested a warehouse-only model. 

In Metro Atlanta, a handful of 13,000 square-foot suburban stores opened with the catalog as the main attraction along with a few display items. Customers could access Service Merchandise inventory in the warehouse and have it shipped to the catalog store for next-day pick-up.

Everything was in stock, but very little was on display. 

“All the online guys are opening brick-and-stores or they are creating places where you can pick up merchandise in the existing stores,” Zimmerman says. “That’s where we were going – to have all those 10-15,000-square foot stores, so we could open hundreds of them close to the customer. … In the ‘80s and ‘90s, we were where everybody is trying to get to now. It was the implementation that was our failure.”

The retailer developed inventory management systems that, if one location was out of stock, store staff could identify the five closest stores with the item on site. The customer could pick it up there or have it shipped to their home by UPS. 

“We took that system and expanded it so that you could go to a store in Columbus, Ohio, pay for something and send it down the conveyor belt in the Tuscaloosa, Alabama store,” Zimmernan says. “At the time, customers couldn’t go online and order and then pick up in the store.”

Customers Want to Experience their Purchases

Service Merchandise knew that its customers really wanted to experience a product before buying it. They like to go into the stores to look at and touch products. Stores didn’t really need to have all of their inventory visible and stacked to the ceiling when those customers walked in the door. 

But they did need to make sure items promoted in the catalog were available in local store inventory.

“The hottest item that wasn’t in the catalog was less important than the worst item in that catalog,” Zimmerman says. “The customer that comes in has pre-shopped and they knew what they want.” 

So the question becomes, is there really a need for high levels of inventory on the retail floor, if all customers want to do is experience the product versus walk out the door with it? 

Ultimately, customer experience was enhanced by the Service Merchandise strategy of separating the sales floor from order fulfillment in the warehouse.

Many retailers trying to fulfill multiple channels from physical stores often threaten their in-store success. Likely earmarked for in-store or curbside pick-up, those orders consume labor and get in the way of a pleasant shipping experience for customers. The sales floor isn’t very welcoming when aisles are congested with big carts and harried fulfillment individuals trying to quickly fill carts.

Omnichannel Fulfillment Jeopardizes Performance

We’re in an era where higher fulfillment costs continue to erode retail margins. It’s time for stores to think harder about how to fulfill orders across all channels while also factoring in parcel transportation costs and how to package in a way that minimizes dimensional charges.

Knowing the struggles that retailers face as they navigate the complexities of omnichannel fulfillment, reflecting on how Service Merchandise approached the customer experience could give companies a clear advantage in the marketplace. 

To help retailers understand how to protect customer experience while balancing the cost of service, we created “Prime Before Its Time: The Service Merchandise Experience.”

Download the guide to learn how the retail innovations of yesterday can help you deliver a prime performance today.

The Logistics of Valentine’s Day: Signed, Sealed and Delivered

February 14 marks the most romantic day on the calendar: Valentine’s Day. It’s certainly not a cheap endeavor: The National Retail Federation estimates Americans will spend a record $27.4 billion on their showcases of love this year, with an average spend of $196.31 per person. 

While it’s not unusual to be loved by anyone, making sure every rose, heart-shaped chocolate box and sentimental card takes an unusual amount of effort. Valentine’s Day is the second busiest time of the year for shippers, behind only the Christmas season. And just like for Christmas holiday shipping, the logistics of Valentine’s Day highlights how the right supply chain network is needed to delight every end customer – no matter what product you’re providing.

We love and care for supply chains. That’s why I wanted to share some thoughts on the logistics of Valentine’s Day – so you can understand how suppliers and shipping companies ensure everything arrives on time – before the last candlelight dinner ends.

Flowers, Chocolates, and Cards: Managing Valentine’s Day From Multiple Fronts

With the shortest shelf life of all traditional Valentine’s Day gifts, fresh-cut flowers depend on the cold chain for success. Over 80% of flowers are imported, with most coming from Colombia. 

The International Trade Centre estimates over 500 million tons of flowers are sent for Valentine’s Day. After the flowers are harvested, the blooming buds are cooled to 35 degrees and loaded onto both commercial and freight aircraft for transport to the United States. 

At each point of entry, U.S. Customs and Border Protection officers thoroughly inspect every shipment for pests, disease and contraband. Once they clear Customs, it’s back to near-freezing temperatures for the flowers as they go to the warehouse, then the distribution center, before finally arriving at the florist. 

But what if there is a problem clearing Customs? Or a network disruption impacts a climate-controlled facility? Without the proper logistics processes – and contingency plans – one problem can quickly spoil the Valentine’s Day bouquet.

Many of these bouquets are accompanied by exquisite German chocolates. According to the UN Comtrade Database, 5.6% of all the chocolate imported into the United States comes from Germany. Getting the sweet treats to the United States poses an equally daunting task. 

While the chocolates can take an intermodal route into America, they have to be transported very carefully. After packaging, each load must be protected from moisture, humidity and temperature changes. The German Transport Information Service recommends all chocolates be transported in refrigerated containers to maintain the cold chain from start to finish. Doing that requires a lot of visibility to the product and its transit across the supply chain.

And what would these gifts be without the written words of love to accompany them? Hallmark estimates over 145 million Valentine’s Day cards are exchanged across the United States. The mid-February tradition is the second largest holiday for greeting cards, trailing only behind the Christmas season. 

As with anything you send through post or parcel service,  planning ahead is vital for mailing chocolate and gifts Based on the 2019 USPS holiday season estimates, sending gifts to APO, FPO and DPO addresses can take up to six weeks to arrive!If your loved ones are in America, you can still get away with Priority Shipping within the continental United States four days in advance. For those extreme procrastinators, a parcel carrier like UPS can guarantee delivery even if you are shipping on Feb. 13 – but it will cost you hundreds of dollars. 

Understanding the characteristics of your shipment – size, weight, destination and delivery timing – can help you avoid some of those costs, while still warming a heart at the end of the love line.

Tying The Logistics Knot 

In every stop, each of these gifts face unique challenges in their supply chains. Matching them all together requires an intricate dance that depends on every stage of the transportation process going nearly perfect. One mis-step in the supply chain, like exposing chocolates to moisture or keeping flowers outside a cold environment, results in a product that is unsellable.

Without proper planning and coordination of all the moving parts, your items could either arrive too early, or too late. Valentine’s Day gifts aren’t as effective on Feb. 13, and they’re completely useless on Feb. 15. 

The good news is that many of these situations can be mitigated using modern technology. While all the pieces are dependent upon each other to make Valentine’s Day pass without a hitch, technology plays a critical role in avoiding broken hearts.

To maintain quality, companies use robust logistics monitoring, modelling and execution tools. This supports planning for the most effective port of entry, warehouse and distribution center locations, and network reach. Often an enterprise logistics company helps analyze all these factors to determine the best route forward. Supply chain data combined with analysis supports  real-time decisions if there is disruption in the chain. 

Enterprise logistics providers also offer insightful observations when there are unique breaks in the supply chain. It is important to be able to trace and track every transportation activity in the best scenarios, just in case a contingency – or official record – is needed for the worst.

In those cases, the solution for wilted flowers is not the same as the solution for ruined chocolate. Sometimes it helps to have a partner that has experienced challenges in other just-in-time supply chains. They can bring an objective viewpoint to tie everything together and determine solutions if one piece breaks in the overall supply chains. 

We’ve created a map of your Valentine’s Day rose bouquet from the time it arrives in the U.S. to its last mile delivery to your door.

Reverse Logistics: Charting a Course to Protect Profit

But in the real world, errors can happen without warning. From human errors in picking orders to wrong shipping labels applied to boxes, even the best logistics plans can face uncertainty. In fact, as more apparel shoppers buy various sizes and return what doesn’t fit, a perfectly processed shipment can still result in returned goods. That’s where the “Reverse Logistics” process comes in: returning items from the consumer back to the company with the goal of managing final disposition. 

Does your company have a solid reverse logistics plan? As customers demand more flexibility, it’s important now more than ever to consider how reverse logistics fit into your overall strategy.  

What is Reverse Logistics?


The term “reverse logistics” was first coined in a 1992 whitepaper written by James R. Stock, Ph.D., a professor at the University of South Florida, and published by the Council of Logistics Management (now known as the Council of Supply Chain Management Professionals). In scholarly terms, reverse logistics is defined as: “the process of moving goods from their typical final destination for the purpose of capturing value, or proper disposal.”

Five years later, a Dutch research team would delve further into that category with their own paper, published in the European Journal of Operational Research. Titled “Quantitative models for reverse logistics: A review,” the team acknowledged the “recently emerged field of reverse logistics” was a new area of study, and “…the time seems right for a systematic overview of the issues arising in the context of reverse logistics.” 

As computing advanced, the study of reverse logistics changed from an operational and mathematical field to a technology-driven field. Dr. Stock revisited the topic in a 2002 article published in Harvard Business Review, writing: “There are many reasons for this trend—the rise of electronic retailing, the increase in catalog purchases, more self-service in stores, lower tolerance among buyers for imperfection—but few companies are doing the best job of dealing with it.” He also noted several companies that were handling reverse logistics well at the time, including General Motors and Volvo.

In short: Every business that ships goods from warehouse to the customer needs a reverse logistics plan. And with technology touching every aspect of our lives, a traditional approach may not be enough to keep customers happy. 

The Problem With Standard Reverse Logistics Strategy

Traditionally, the reverse logistics plan always began with a human touch. After receiving a damaged or incorrect parcel, the customer called a toll-free number and requested permission to return their product. If approved, a return merchandise authorization was issued, and the customer was free to return their product via the preferred shipping method. The returned product  then took a long journey from customer to distribution center to returns center where the product’s ultimate fate was determined. 

Technology has made this model entirely outdated. First, utilizing traditional methods can add unnecessary shipping costs, making a return even more expensive than a lost refund. In addition, going through each of these steps adds a manpower cost – one which requires paying a salary and a share of benefits. 

While these steps were necessary in a pre-Internet world, technology has rendered much of this process obsolete. The problem is that despite the leaps that provide a much more customer-focused approach, some companies are still doing things the old-fashioned way – and quietly losing money as a result. 

The Benefits Re-Focusing the Reverse Logistics Strategy

Today’s reverse logistics doesn’t require a staff of hundreds of people processing  returns from around the world to determine their final disposition. Instead, a re-focus of reverse logistics can save a company time, manpower and realize a reduction in shipping costs. 

By utilizing a technology-focused approach to reverse logistics, the returns process doesn’t start with a call center and toll-free number, but with an automated form leading a consumer down a guided path. The right forms can lead users down a focused course of action that has more accuracy than a voice call and that effectively pre-sorts items before they are inspected for disposition. 

Through this pre-screening process, companies can significantly save on shipping costs. Once the technology determines where the item is destined, a return merchandise authorization form and shipping label with the most cost-effective means possible is automatically produced. This sends the item to the appropriate return center, where a quick inspection can confirm the item condition and bundle it with other items on an LTL load. Utilizing technology, the company reduces the amount of trucks required for shipping, resulting in actualized savings. 

Finally, a process that once involved several steps and weeks becomes a streamlined solution. Technology-enabled management of the intake process frees your workforce to focus on value-driven tasks, giving you optimal productivity from your team. 

The Downside of Advanced Reverse Logistics Strategy

Of course, there are still challenges that can emerge in a holistic reverse logistics strategy. While technology is a great customer service enabler, it downsides can emerge as well. 

For example: a 22-year-old Spanish citizen was arrested in August 2019 on suspicion of returning boxes filled with dirt to a major online retailer. Instead of returning items, the scam artist weighed each box with items inside, and filled them to the same weight with dirt. He was accused of taking over $370,000 in fraudulent returns from the company. 

In this situation, the reverse logistics plan experienced an unforeseen issue. Automated inspection prior to disposition resulted in widespread fraud and benefit abuse. This is where the power of a trusted third-party logistics provider (3PL) comes in: through deep analysis of costs, benefits, gains and weaknesses, you can build an advanced reverse logistics strategy that will pass many common tests. 

How To Get Your Company Ready For Advanced Reverse Logistics 

If your reverse logistics process could benefit from a technology boost, it might be time to get a parcel program assessment from the leader in 3PL management: Transportation Insight. As your partner in transportation management, we can help you start preparing or fine-tuning a reverse logistics plan that utilizes technology to give you the competitive edge. Contact us today and get started on a strategy that prepares you for the future.

5 Red Flags for Retailers Racing Amazon

In an era where delivery choice and speed are becoming fundamental expectations for everyone, companies across most industries are rethinking how they receive, fulfill, and ship customer orders. Facing stiff competition from web-based suppliers, e-commerce providers, and even traditional companies, retailers, distributors, and manufacturers alike are challenged to enhance customer experience by offering variety in delivery options – without impacting the cost to the consumer.

Getting there isn’t easy.

Risks consistently stand in the way of retailers that want and need to deliver the best possible e-commerce experiences for their customers.

Driving Digital Growth and Retail Response

In its 2019 Retail Industry Outlook: Navigating disruption in retail report, Deloitte paints a picture of an industry where the consumer is unquestionably in the driver’s seat. “Consumers realize they can have it all. Today’s digital consumers are increasingly connected, have more access to information, and expect businesses to react to all their needs and wants instantly.”

Operating in an industry that’s in a state of constant disruption, retailers are managing through uncertain times and placing bets on what will separate the winners from the losers. “Those that can synchronize their investments to profitably empower the consumer will likely find themselves on the right side of the tipping point,” Deloitte concludes.

The good news is that the retail industry continues to thrive, with U.S. retail sales expected to rise between 3.8% and 4.4% to more than $3.8 trillion in 2019, according to the National Retail Federation (NRF), which credits high consumer confidence, low unemployment, and rising wages for driving these numbers up. The 2019 holiday season should be particularly bright, with Coresight anticipating a 3.5%-4.0% year-over-year increase in U.S. retail sales during November and December.

These positive outlooks present a viable opportunity for retailers that learn how to harness e-commerce and use it to their advantage. For many retailers, getting a piece of that pie will require a good, hard look at the red flags that are slowing down their e-commerce service and putting them out of the running for today’s “want it now” consumer. 

Red Flags that Slow the E-Commerce Profit Race

Here are five risks that consistently stand in the way of retailers that want and need to deliver the best possible e-commerce experiences for their customers: 

Risk #1:  Web-based order interfaces. Success in e-commerce starts with a user-friendly interface that doesn’t frustrate customers or send them off to buy from another site. Put simply, if your online store’s ordering system is cumbersome and difficult to use, no one is going to use it unless they have to.  

Risk #2:  Shopping cart conversions. The retailer that isn’t boosting online checkout rates will quickly find itself struggling to survive in a sea of companies that have figured out the formula. Ignore the need to drive down abandonment rates and all of the advertising, marketing, and sales efforts in the world won’t help you compete against the likes of Amazon and other large e-tailers.   

Risk #3: Same-day order fulfillment. Retailers that want to convert digital consumers know that competing on price and customer experience just isn’t enough anymore; they have to also be able to compete on speed. Handled improperly, same-day delivery can be a logistical nightmare and major risk for retailers. It’s also a necessary evil for them, and something that they all have to be able to do for at least some of their customers.     

Risk #4:  Parcel, heavy home, and customized delivery platforms. When it comes to bulky goods that require extra muscle and/or assembly, retailers need to factor in three different scenarios: leaving the box in the entryway of a home or apartment; putting it in the room of choice; or doing both of these plus opening up the box, removing the packaging, and setting up the product(s). With delivery on demand becoming increasingly prevalent, giving the customer scheduling control and providing reliable service further enhances customer experience.

Risk #5:  Selecting the best, most economical transportation mode. Often retailers don’t have access to the data that allows them to utilize more economical mode selection. Instead, many focus solely on getting same-day and next-day shipments out the door as quickly as possible without worrying about whether or not those are the best and most economical decisions. This is a huge risk in an era where companies are being forced to go head-to-head with Amazon and Walmart, both of which offer same-day and one-day delivery to 72%-75% of the total U.S. population, respectively.   

The retailer that understands the transportation risks that exist in the race against Amazon are positioned to proactively mitigate them in today’s disruptive selling environment. These organizations will be best positioned to not only maintain market share, but to also prepare itself for what’s coming around the next corner. 

Ready to learn more about the risks facing retailers on the e-commerce front and how to solve them? Download Transportation Insight’s e-commerce guide, Managing the Risk of Racing Amazon.