Shoptalk recap: Fulfillment’s faster, freer finale
In the frictionless world of online retailing, getting the order is easy. Delivering on the promise is hard.
At Shoptalk last week, retail thought-leaders shared insights about the fulfillment challenge. Their consensus: it’s not going to get any easier.
“My bet on shipping is faster and freer,” said Jason Goldberger, president, Target.com and Mobile Target, in a panel on The Changing Role of Stores in Ecommerce Fulfillment.
“It used to be that our guests just wanted free shipping,” he added. “Now they demand overnight delivery and same-day store pickup.”
Michael Tobin, SVP strategy & innovation at Macy’s, said effective fulfillment now requires a sophisticated algorithm that balances the ship-to address, units on hand, units to ship, location capacity, combinability of items in an order, and more.
“A couple of years ago it might have been driven by a business rule. Now it’s multi-factor, with settings that can be tweaked,” he said.
Online increasingly includes a store or curbside pickup option. In this realm, being big is not always the key to price competitiveness, said Helen Vaid, VP digital store operations & experience for Walmart Global ecommerce. “Some costs go down as you scale; others go up.”
One of the lessons from Walmart’s click-and-collect experiment is that staffing costs increase, for example. The added investment may prove to be justified, however.
“Customers don’t like waiting,” said Ms. Vaid. “Anything that helps improve that is worth considering.”
Jet.com keeps costs in line by persuading shoppers to build larger orders delivered in a single shipment, said founder and CEO Mark Lore. The startup builds excitement into the online experience in real time with “Smart Cart Savings” that accrue each time an item is added to the virtual basket.
“We currently average about six units per order,” Mr. Lore said. Jet.com has a free shipping and returns policy with two-day delivery on most consumables, so highly efficient fulfillment is essential to its bottom line.
That intention is now about to be tested harder, as Jet.com launches a fresh products delivery business, beginning in the New York metro and soon to cover the eastern seaboard.
DISCUSSION QUESTIONS: Which delivery benefit should online retailers focus on in the next few years to be most competitive — faster, freer or more flexible? How will retailers manage to meet more demanding fulfillment expectations and still make a profit?