What will it take for retailers to win the last-mile race for customers?
Best Buy's new distribution center, Missouri City, TX - Photo: Best Buy
Top retailers have improved their speed in last-mile fulfillment drastically over the last two years and those gains have been instrumental in helping them stay afloat and even make headway in categories dominated by Amazon.com. This was one of the major takeaways from research presented by Ken Cassar, principal analyst at Rakuten Intelligence, in a RetailWire webinar earlier this week.
Using Best Buy as an example, Mr. Cassar showed that while the store's click-to-ship rate — the time from user purchase to a product leaving the warehouse — had not sped up, the time it takes to get product from the warehouse to the customer dropped from 6.3 days to 2.7 days within the past two years. This is consistent with an industry-wide trend.
"That Best Buy story isn't a novel one," Mr. Cassar said. "The improvement that retailers not named Amazon have made is almost exclusively coming from faster delivery — from faster ship-to-door."
Improving this leg of the last mile, however, is an expensive proposition due to high shipping costs.
The return to fashion of brick-and-mortar retail, however, has positioned retailers with physical stores to thrive in the last mile, thanks to trends like ship-from-store and buy online, pick up in-store (BOPIS).
"We do believe that there's a pretty significant opportunity for retailers to invest more in their fulfillment capabilities in order to allow those fulfillment centers to turn orders around much more quickly," said Mr. Cassar.
BOPIS appears to offer a far better proposition for retailers than just a year ago; it jumped in popularity 73 percent between 2017 and this year's Thanksgiving, according to Adobe’s research.
Charles Dimov, vice president of marketing at OrderDynamics, who joined Mr. Cassar on the webinar, noted that these statistics illustrate that BOPIS is expanding beyond an industry buzzword and into a service that customers are aware of as an option.
"[The numbers on BOPIS adoption are] a testament to the fact that awareness is growing," Mr. Dimov said. "I think the rewards are going to go to the retailers that have already put [BOPIS] in play. I think there's going to be a propensity for other retailers to scratch their head and say, 'Hey maybe I should be putting a little speed behind this and accelerate our pace a little here.’"