Fulfillment Strategies: Is Your 2021 E-Commerce Plan in Place?

Fulfillment Strategies: Is Your 2021 E-Commerce Plan in Place?

This is important for many reasons, not the least of which is the big uptick in e-commerce that’s occurring in 2020, and that will likely continue well into 2021. Already increasing year-over-year, U.S. e-commerce sales were up 43% in September 2020, having grown by 42% the prior month. This growth impacted manufacturers, distributors, and retailers, many of which were unprepared for the onslaught. 

If you spent most of 2020 just trying to get through the pandemic, it’s time to dust off your supply chain, logistics and transportation plans and make sure your fulfillment strategies align with your 2021 e-commerce goals.

Changing Business Models 

As a whole, the pandemic was a wakeup call for these companies that were forced to question some of their fundamental assumptions. 2021 could bring an entirely new set of supply chain, logistics, and transportation challenges with it. 

“As many executives heave a sigh of relief, they are also preparing for a dramatically different environment in 2021,” Industry Week points out. 

“Recent economic challenges have forced manufacturers to change their business models, seemingly overnight, to stay competitive and prepare for not just recovery, but unprecedented growth,” it continues. “However, it may be difficult for manufacturers to keep up with both a snap-back in demand and a huge appetite from customers for innovative products and solutions.”

Navigating the New Fulfillment Normal

Under normal circumstances, companies can add labor and shifts to make up for throughput problems in their warehouses and DCs. With social distancing guidelines in place and the need to keep employees healthy a huge issue for companies right now, simply throwing labor at the problem doesn’t work anymore. 

These realities directly impact customer service which, in turn, affects margins and revenues. When customers feel like they’re being kept in the dark or that they’re not in control of the ordering and shipping process, they’ll take their business elsewhere. 

Here are six more strategies that all companies should include in their 2021 plans: 

  • Get your parcel shipping act together. In a world where nearly all customers expect their goods in three days or less, and where 30 percent of them expect them next day, you can’t reduce shipping costs at your customers’ expense. With this emphasis on delivery expectations, companies have to create parcel strategies that acknowledge the fact that shipping is the highest cost component of any e-commerce order.   
  • Watch your accessorials and peak surcharges. With the parcel carriers continuing to roll out increasingly-complex pricing strategies and inflating rates due to the lack of competition, shippers also have to keep a close eye on accessorials and peak surcharges at the package level. Understand how it’s impacting your costs and how to adjust and adapt moving forward into 2021. If SKU-level profitability is an important KPI, for example, then add that to list of metrics to measure. 
  • Consider a multi-carrier solution. There’s a lot of good value to be had by working with regional carriers and freight consolidators. Varying your approach also helps support customers’ delivery expectations. Amazon, for example, has worked hard to ensure high levels of visibility that starts when an order is placed and that doesn’t end until the package is on the buyer’s doorstep. With more of these customers having same-day and next-day delivery expectations, the multi-carrier approach can help support your overall fulfillment strategy and even make it more affordable. 

  • Rethink your fulfillment approach. To meet your customers’ fulfillment needs, you can either offer a higher shipper service level or you can change how your product is fulfilled and positioned (i.e., either with a bicoastal or multiple fulfillment level location plan). Whether you’re fulfilling it yourself, using a third-party logistics provider (3PL), or a hybrid approach, the key is to look to 2021 and beyond when setting up these networks. 
  • Use advanced technology tools. To get a head start on 2021, companies can tap into the tools that help automate, personalize, and engage virtual transactions, and that fuel their e-fulfillment engines. Cart integration, for example, automatically answers buyer questions like: How much is it going to cost? What are my shipping options? And, is there an opportunity for me to pick it up in-store? Through that integration and automation, the customer gets the choice and the control that they’re looking for today.
  • Focus on more than just the sales process. Companies should also consider post-purchase experience and post-purchase engagement tools, both of which automate the customer buying journey. These data-centric tools also lighten the workload for your customer service team. Finally, having shipping analytics right down to the individual order level puts the power of business intelligence (BI) into the shipper’s hands, and allows it to make good decisions based on accurate, relevant information (versus just guesswork).  

While it’s easy to get mired in the complications of 2020 right now, you’ll be much better prepared if you break the mold and start planning for the future today. That way, you’ll be in the right position and ready to pivot—in whichever direction is necessary—when 2021 comes. 

4 Tips: Improve Profitability Despite Rising Transportation Costs

Profitable shipping is a very attainable goal, even in today’s uncertain environment, where FedEx and UPS peak carrier surcharges have become a moving target for all parcel shippers. Despite these rising costs, there are ways all companies can improve shipping profitability in 2020. 

Try using these four tried-and-true tactics for improving shipping profitability in any market conditions. 

  1. Think at a Package Level
    If you’re handling multiple pick-and-pack orders, you need to know what you’re putting into different sized packages. Align that information with the actual transportation costs, and then figure out the profitability level on each. 

    This can be a complex process, but ultimately it is important to understand that the dollar amount on your transportation invoice does not tie into your product profitability. Once you determine what it costs to ship each SKU, it becomes clear that offering free shipping at a $50 order threshold, for instance, may not yield a profitable order for your company. 
  2. Use Good Margin Management
    When your marketing department launches a promotion – “Buy $50 worth of stuff and get free shipping” – make sure the “losers” do not fill-up e-commerce shopping cart and drive your cost above profit. To avoid these problems, share relevant information across your organization to keep everyone marching in the same direction. 

  1. Leverage Data 
    Look not only at carrier data, but also sales data, product costs, fulfillment costs, and other metrics that go into a single order. Transportation Insight helps shippers accumulate all of that information and consolidate it into a unified dashboard that is used to track trends, pinpoint winning/losing SKUs, and single out other areas where the company may be losing money.

  1. Partner with a Transportation Expert
    Work with a reliable logistics provider that has built out the necessary systems and that spreads the value of those systems across numerous different users. The latter allows providers to leverage economies of scale and offer their services at an affordable cost. This translates into high value for shippers in any business or economic condition. 

Protect Profit for Every Customer and Every Order

Our latest strategy guide “You Shipped It, But … Did it Make Money?” raises a question that is on the minds of many business leaders. 

Your business has responded to significant shifts in consumer buying behaviors and your customers expectations are being met. But did the transaction yield profit for the business? Or did transportation cost complexity eclipse your margin in the rush to serve?

Open our guide on margin management for more strategies that will help you master your supply chain to protect profit for every order.

Cost Changes Hide in Shift to Online Fulfillment

By expediting moves toward ship-from-store, buy-online-pickup-in-store (BOPIS) and other alternative fulfillment options, those retailers seized a growth opportunity in a slow economy. At the same time, they continued to move inventory, employ associates, and effectively utilize brick-and-mortar assets all while delighting customers.

However, in the rush to make those changes and meet consumer demand, it is not enough to have resources capable of adapting and executing your supply chain network strategy. It is essential that those resources provide a clear understanding of how alternative services affect costs across your transportation network.

While offering service alternatives to a demanding consumer base can drive revenue growth, profit margins can quickly disappear without awareness to how those new delivery options can affect freight cost, time-in-transit and carrier utilization, among other key transportation performance metrics.

We help our retail clients recognize the financial implications of their service changes with a transportation alignment study that helps them quickly redesign their network strategy, execute on transportation procurement and access the evidence required for decision-making that protects profitable performance.

Evolving Fulfillment Strategy to Meet Online Demand

When the pandemic began affecting U.S. retailers, many of our clients with distribution centers faced the risk of closure due to “Stay at Home, Work Safe” guidelines issued by federal and local agencies. At the same time, revenue was stagnant for retailers with brick-and-mortar storefronts that were required to close due to social distancing expectations.

With online sales booming, some of our retail clients took brave action to convert darkened stores into mini-fulfillment centers. Deploying staff from distribution centers and stores to complete fulfillment activity at the retail locations, these clients are not only able to keep staff gainfully employed, they are also utilizing store inventory that might have otherwise gone unsold.

Making this type of move with your fulfillment strategy can happen quickly – scenarios within 10 days have been reported for some retailers. Adding BOPIS with curbside capabilities can happen in 60 days. These types of changes have become a necessity for retailers across the country, but by changing fulfillment models, these organizations also completely changed their supply chain and distribution network. Unfortunately, because this adaptation occurred so quickly and with such a need to continue business, it is not always supported by the essential transportation study and analysis that determines the cost implications of the network changes.

Do you have the systems in place to determine how these changes affect freight cost, profit margin and customer experience?

Leveraging Data, Analysis to Manage Cost of Online Fulfillment

As our retail clients are rapidly responding to the changes the pandemic is driving in consumer behaviors, we use technology tools and industry expertise to support network alignment studies that clarify cost implications of service changes.

Using historical shipping data, analysis and multi-modal expertise, we help clients manage cost/identify opportunity by providing greater visibility to:

  • Impact of network changes to overall transportation cost
  • Time in transit through predictive modeling based on carrier zone information
  • Freight expense as percentage of cost to serve
  • Margin impact by product level
  • Consumer geography and accessorial changes
  • Overlapping shipment details
  • Store-level profitability
  • Split-order percentage trends
  • “True” customer experience metrics
  • Consumer behavior analysis

With the results of our network alignment/margin management study, we help our retail clients make changes to their carrier contracts, their carrier utilization or their market response. In doing so, we’re able to help make sure they are fulfilling orders in a profitable way, while protecting customer experience.

Master Online Fulfillment

Organizations that create a supply chain personalized to the expectations and behaviors of their customers can achieve greater brand loyalty and improve customer retention. At the same time, the shippers that establish a nimble network can rapidly respond to fluctuations in supply and demand and capitalize on opportunities for growth.

If your business is pursuing rapid deployment of alternative fulfillment practices, make sure you understand fulfillment costs at the retail store location. Retailers that can manage network costs associated with a strategy adjustment in order fulfillment can realize competitive advantage. That’s especially meaningful in a tumultuous environment where rapid supply chain pivots are required to capitalize on changes in consumer behavior.

As a supply chain master, we’ve worked with hundreds of organizations mapping thousands of supply chains. Applying expertise across diverse retail categories and industry segments, multi-modal transportation management capabilities and technology-enabled data management and analysis, we help clients align their transportation practices with their business goals.

To master your online order fulfillment and deploy a variety of final delivery options talk to one of our experts today.

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.

Delivery Speed Drives E-Commerce Fulfillment Success

Today’s online shoppers certainly agree with the sentiment of Tom Cruise’s character in the 1986 movie “Top Gun.”

Thanks to the “Amazon effect,” consumers have a nearly insatiable appetite for speedy delivery. In fact, according to Elastic Path’s recent survey, 75 percent of consumers expect to enjoy same day delivery by early this year. 

Other than Amazon, Target, and Walmart – and even then, only in certain markets – most online retailers aren’t there yet. And consumer expectations probably won’t slow down any time either. That means Consumer Packaged Goods manufacturers venturing into e-commerce have no choice but accelerate their delivery performance. 

Overcoming the Transportation Cost Challenge

Consumer products manufacturers that aren’t yet immersed in e-commerce face numerous obstacles when striving to meet expectations for prompt delivery. The most obvious: companies that aren’t drop shipping online orders for retail clients already don’t have the systems, processes and procedures in place for piece order processing and fulfillment. 

Still, even the digitally native vertical brands built on an e-commerce model must address one of the biggest issues affecting online order fulfillment: high transportation costs. The “State of Logistics in 2019” report from Logistics Management notes that freight transportation costs comprise the biggest share of U.S. business logistics expenses. 

Companies struggle to reduce that expense. In fact, Inbound Logistics magazine’s 2019 “3PL Perspectives” report reveals that nearly two-thirds of shippers surveyed said that cutting transportation costs is their top challenge.

Location, location, location

For many, strategic location of the fulfillment center is a dual-purpose solution: It helps manage shipping costs while meeting consumer “need for speed.”  

E-commerce brands are seeking fulfillment options in carefully selected locations that can provide same- or next-day delivery where needed. Solutions include: 

  • Opening new fulfillment centers 
  • Acquiring businesses that are already doing it successfully
  • Contracting with experienced third-party or enterprise logistics providers 
  • Filling orders from brand-owned brick-and-mortar retail outlets

The latter option was just one solution a global, omni-channel retailer used when it partnered with our team to reduce its transportation budget. Leveraging brick-and-mortar stores as e-commerce fulfillment centers was one element of a multi-faceted strategy that cut transportation spending by 18 percent – $10 million – in just six months. 

Fulfillment Center Checklist

With each solution, consumer packaged goods manufacturers need to ask questions regarding each fulfillment center’s capabilities. The list of questions breaks down into three areas – location, facility suitability, and access to talent. 

Location

Key questions include:

  • Does the facility have adequate access to transportation and logistics partners? 
  • What market(s) can you serve from there? 
  • Most importantly, will you be able to meet customer delivery expectations from there affordably? 

Transportation Insight has a comprehensive network of warehousing and distribution partners with facilities throughout North America. We serve clients across the continent and overseas from our headquarters in Hickory, NC, and operating centers strategically located throughout the United States.

Talent

Access to the right workers can be as important as physical location. Among other things, you want to know:

  • Is there an available, trained workforce?
  • In markets where competition is tight for skilled workers, what processes do your partners have in place to attract and retain the right people?
  • In less-competitive markets, what training opportunities are available?

Facility suitability

How prepared the facility or partner is to being able to serve your customers has an impact on how quickly you’ll be able to start filling orders from there. Asking the right questions helps determine the best fit. They include:

  • If you need special handling such as cold storage, is it available or will you need to add it? 
  • Are there enough loading docks to handle bulk deliveries and parcel shipments? 
  • Do racking and materials handling processes in place already meet your direct-to-consumer order needs? 
  • Is the building wired for the technology you’ll use?

Success Formula

The final step is using data analytics and other resources to determine the right inventory mix in each location. 

With the right combination of resources, fulfillment center locations, and inventory management, consumer packaged goods manufacturers can serve shoppers in population-dense markets just as quickly as the big box retailers can. 

Ready to learn how manufacturers can evolve an effective e-commerce program? Download Transportation Insight’s guide, “Start the Cart: A Manufacturer’s Guide to Achieving E-Commerce Fulfillment Excellence.”

Improve E-Commerce Experience Without Sacrificing Profitability

With Amazon commanding 47% of U.S. e-commerce sales and on track to grow its online sales by 20.4% to $282.52 billion, pursuing this formidable opponent makes sense to a lot of companies. Unfortunately, many of them are sacrificing profits in their attempt to compete, with transportation and fulfillment costs consuming a large part of their budgets.

Opportunity or Liability?

In many cases, the risks of racing Amazon have literally turned into liabilities, effectively slowing progress and forcing companies to rethink everything from their online order interfaces, shopping cart conversions, and final-mile/same-day order fulfillment management.

The brick and mortar world has really ramped up its game, but Amazon has conditioned us, as end consumers, that those efforts just are not good enough.

4 Practices to Protect Profitability

The good news is that there are steps that companies can take to improve e-commerce strategies without sacrificing profitability. Here are four that your company can start using today: 

  1. Develop an above-par order fulfillment strategy. Amazon built its order fulfillment strategy around offering choices to its customers. In doing so, it made the online shopping experience all about the customer and his/her decisions. The e-tailer provides high levels of supply chain visibility as shipments move from Point A to Point B, maintains good inventory control, and understands its cost to serve. One good metric to use, when judging the efficiency of your order fulfillment processes, is the “Perfect Order,” or one that is on time, complete, intact, and includes the right shipping paperwork. In an environment where order fulfillment can comprise over 60% of the typical warehouse’s total direct labor, even small gains in this area can lead to profitability improvements
  1. Now, deliver on that strategy (on every order). Not only does shipping have to be free and fast, but if it includes a hovercraft and a promise to get a package to your doorstep within an hour, then all the better. We’re at a point where anything less simply doesn’t meet customer expectations. There’s little (if any) room for error on this step. 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 and choice. 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. Making that happen requires locations and/or warehouses positioned close to those buyers; a modification of existing fulfillment procedures; a smart, profitable BOPIS strategy; and ensuring that the right product is in the right place and at precisely the right minute.

  1. Focus on continuous monitoring and improvement. Companies can no longer wait until quarterly review meetings to uncover a problem that happened a month ago. Smart companies use daily scorecards to gather, compare and disseminate meaningful, actionable intelligence (e.g., what products were shipped? How quickly were orders fulfilled? Did we pick all of our orders yesterday? If no, how can we make that up today?). By taking an introspective look at their e-commerce operations and developing metrics based on those results, retailers can adapt faster in a world that demands speed, accuracy and delivery on promises. 
  2. Make the right transportation choices. If your company can’t access data that provides strategy around carrier contract alignment and then facilitates choosing the most economical transportation mode, it’s probably losing money. And, if it’s channeling all of its resources into 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 − it’s losing even more money. These are huge risks 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% and 75% of the total U.S. population, respectively. Retailers should be using technology (i.e., transportation management systems or TMS) to select not only the most economical mode, but also one that meets customers’ delivery expectations. Leveraging transactional audit across all modes, provides companies consolidated, visibility to know the rate they paid, identify service gaps, and improve their ability to make good transportation decisions going forward.

Following these guidelines, companies can effectively improve the e-commerce experience without sacrificing profitability − all while satisfying a lot of happy, repeat customers.

Ready to learn more ways retailers can improve e-commerce performance to satisfy customer demands for service and choice? Download Transportation Insight’s e-commerce guide.

5 Ways to Build an E-Commerce Engine that Wins

Facing stiff competition from web-based suppliers, e-commerce providers and even traditional companies, retailers must enhance the customer experience by offering variety in delivery options − and all without impacting the cost to the consumer.

In most cases, achieving this balance starts with a modern e-commerce engine that’s supported by a robust transportation and fulfillment approach.

Best Practices Achieve Competitive Advantage

Here are five critical steps for developing an e-commerce transportation and fulfillment plan that goes head-to-head with the e-tailing giants. 

  1. Make your website user friendly. This sounds elemental enough in theory, but in reality, very few companies are doing it. Success in e-commerce starts with a user-friendly interface that doesn’t frustrate customers or send them off to buy from another site. If your online store’s ordering system is cumbersome and difficult to use, no one is going to use it unless they have to. And mobile friendly is vital.
  2. Drive up online checkout rates. 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. If you ignore the need to drive down abandonment rates, 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. Measure key performance indicators (KPIs) like page views to cart conversions in order to get a gauge on 1) current state, and 2) what you can do to drive those numbers up.
  3. Develop a same-day order fulfillment strategy. Handled improperly, same-day delivery can be a logistical nightmare and major risk for retailers. Although becoming a necessary evil that all retailers must do for at least some of their customers, making that happen requires locations and/or warehouses positioned close to those buyers; a modification of existing fulfillment procedures; and ensuring that the right product is in the right place and at precisely the right minute. Aligning BOPIS strategies with profitability is significantly important when developing same-day order fulfillment.

  1. Factor in parcel, heavy home, and customized deliveries. 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; placing it in the room of choice; or both, plus opening up the box, removing the packaging, and setting up the product(s). Retailers must deliver on some, or all of these, expectations for the end consumer, who is typically willing to pay for those additional services.
  2. Select the best and most economical transportation mode. Retailers don’t always have access to the data that allows them to utilize economical mode selection. Instead, they focus only 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). Retailers should be leveraging carrier contract agreements that align with package characteristics/shipping networks. They should also use technology (i.e., transportation management systems or TMS) to select not only the mode that is most economical and provides tracking visibility, but one that also meets customers’ delivery expectations.

By keeping customers at the center of the conversation, providing visibility to shipments, working to fulfill their needs on every order quickly, and developing a transportation plan that aligns with these goals, smart companies can position themselves as suppliers of choice in today’s competitive e-commerce world. 

Ready to learn more ways retailers can improve e-commerce performance to satisfy customer demands for service and choice? Download Transportation Insight’s e-commerce guide, Managing the Risk of Racing Amazon.

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.