In other parts of the world, convenience stores are basically storefronts packed with multiple vending machines selling everything from soup to nuts. Store hailing basically takes that concept and puts it on wheels. The future of convenience stores will likely be a mosaic of different models such as DTCs like GoPuff, traditional stores like 7-Eleven, vending machine shops as seen in Europe and store hailing vehicles, all fighting for the same market share.
It might be time to consider making these stores multi-purpose locations: retail for foot traffic and micro-fulfillment for online orders. This would reduce the delivery distance, costs and time to get an order to customers living in the city (for the short to medium term) while also maintaining a physical retail presence (for the long term).
What intrigues retailers about the use drone tech? I would say costs. It could potentially be more cost-effective to deliver small packages by drone (especially if their flight paths are pre-determined vs. remote controlled) than having couriers drop off packages to each home as is done today. I could see this working for a 7-Eleven or Amazon — maybe Walmart where orders are single box shipments or smaller. Not so sure about grocery delivery with heavy and bulky goods.
Retailers need to rethink their supply chain processes and start viewing their store network as a fulfillment network. Combining this with investments in transportation management solutions will enable retailers to also own their last mile, building brand loyalty and reducing shipping costs.
The increase in volume of online orders has driven up delivery fees significantly, so omnichannel is definitely more expensive today than it was pre-pandemic. Online orders also make up a larger percentage of total retail sales than they had in the past, so even if sales stayed the same, margins are lower as online orders are less profitable than in-store purchases. To remedy this, retailers need to find ways of minimizing last mile costs. From a fulfillment perspective, promoting click and collect vs. home delivery, order routing and consolidation to reduce multiple shipments per order and micro-fulfillment to fulfill closer to the customer are strategies retailers can implement today with the right order management system.
A push to be more sustainable doesn't need to be an all or nothing approach. If we just look at the last mile as an example, retailers can put steps in place today including order consolidation (reducing shipments per order) micro-fulfillment (fulfilling and shipping from a store closest to the customer) and click and collect, which can help reduce the emissions stemming from home package delivery.
An omnichannel retailer is one that provides a seamless shopping experience for customers regardless of the channel, be it a physical store, pop-up, webstore, social commerce, etc. Launching new brands, reimagining stores and modernizing an ERP are great steps to take, but the ultimate goal of omnichannel is to create a shopping and customer experience ecosystem that is consistent across all touchpoints.
With drop-shipping, the retailer has a higher degree of control over the customer experience and the customer retains the convenience of a relationship with the retailer (for example, you can't return a marketplace product to a Best Buy store). Therefore, brand promise is kept more or less intact. The biggest challenge I can see arising from marketplaces is differentiation. As the proliferation of marketplaces continues, they risk becoming commoditized, diluting the power of the brand.
The mall of tomorrow needs to be a destination: part amusement center, part micro-fulfillment center (for package pickup) part farmers market, with the addition of food courts, restaurants, bars and health and wellness centers. Customers should want to go to the mall for reasons other than shopping and will likely end up shopping once they are there.
One way retailers can reduce out-of-stocks is by leveraging inventory across all of their fulfillment nodes, including warehouses, stores, drop-shippers and 3PLs. The way forward would be to leverage the distributed order management functionality of their OMS and build order routing rules that cost-effectively routes inventory to the customer. While not a silver bullet in terms of effectively forecasting demand, it could help as a stop gap solution by routing inventory where it's needed most. Retailers that have built in store fulfillment, micro-fulfillment and distributed order management into their omnichannel offering are best positioned to deal with the inventory uncertainty that re-opening will bring.
While localization could help reduce supply chain disruptions (provided the local vendors aren't disrupted) and demand planning is vital for every organization, the key to responding to future supply challenges is an agile supply chain that is able to respond quickly to demand fluctuations and disruption through the use of a nimble network of supply partners across multiple geographies.
Supply chain bottlenecks caused by inclement weather, accidents and work stoppages for example, are to be expected in the normal course of importing goods. However, this time it's different due to the pandemic and importers who do not have the necessary clout with the shipping lines/forwarders will find themselves without stock to sell. The way forward is to diversify the base of manufacturing from a single country to multiple countries in different parts of the world, sourcing locally and ordering early to ensure stock arrives on time. Unfortunately, this solution is not simple but will be critical to ensuring business continuity in the face of future disruptions to the supply chain.
Once people feel safe to go out again (through vaccinations, herd immunity, etc.) we will likely see a huge surge in mall and store traffic. This will be due to pent up demand and need for experiences. Eventually when things get back to normal, this will subside and unless malls and stores offer something new and exciting to shoppers, store traffic will continue to decline.
With the price of retail real-estate down and the cost of shipping surging, now is a great time for DTCs to build their physical footprint. Doing this will not only open the brand to a much larger shopping audience, through micro-fulfillment and click and collect, it will help reduce delivery costs for online orders.
Shopping cart abandonment due to shipping fees is a symptom of a much larger problem: customers are buying the price of the item. Unless a retailer is able to differentiate the product, the shopping or the brand experience from mass merchandisers like Amazon and Walmart, it will be a race to the bottom on pricing to compete, a race they will ultimately lose.