Blog postsMarch 22, 2018
What’s Your eCommerce Strategy? Is Fulfillment Part of It?
Within the world of retailers, 2017 was anything but quiet.
Within the world of retailers, 2017 was anything but quiet. Cyber Monday topped the sales charts—beating out Black Friday for the first year to date and making it the largest U.S. online shopping day in history. Amazon continued to expand and innovate its reach. And brick-and-mortar storefronts continued to hang up their hats and lock their doors—more so than during 2007’s recession. It’s clear a strong eCommerce strategy is needed to compete.
Those determined to remain relevant, on the other hand, are left grappling with customers’ ever-increasing demands—a list of expectations that continues to grow. From sales and fulfillment operations, to on-demand commerce, retailers are realizing that strong eCommerce and fulfillment strategies matter now, more than ever.
Below, we look at several strategic considerations retailers are making, whether or not a marketplace is worth it, and how to maintain your brand, experience, and data quality to ensure the success of your brand.
Modern changes worth considering
Omnichannel: Get on it
There is a distinct difference between “multichannel” and “omnichannel” retail. Most retailers are tackling the multichannel experience, in which multiple platforms are being used to connect with customers (remember when the corner mom-and-pop shop unveiled their online store?). Omnichannel, though, is much more than that today.
Omnichannel once centered around a multichannel strategy, but has continued to evolve. It’s about creating an interconnected and seamless shopping experience across channels. In fact, 36% of online shoppers search via one channel (smartphone, perhaps), and close the sale on another (in the store or on a desktop, for example). For eCommerce retail, it’s easier than ever to make that second channel another retailer’s website.
Today’s omnichannel strategy must consider how a seamless shopping experience and level of personalization will translate into sales conversions and loyal shoppers. There are a lot of contributors—behind the scenes—to ensure that happens.
The same store won't work anymore
The shopping experience has changed. Massive, “one-stop-shop” retail formats aren’t as necessary anymore with online shopping. Instead, retail formats that are more focused and tailored are popping up, and it’s not just new entrants leading the charge. From Target’s “next-generation” stores (for the in-and-out buyer, online order pickup counter included), to Amazon Go, a line-free, hassle-free, fully digitalized brick-and-mortar, are providing new formats for today’s shoppers.
For many retailers that don’t have physical stores, the storefront is the online experience. Clunky websites and complicated checkout processes aren’t user-friendly and deter shoppers from converting. There are multiple eCommerce platforms (Shopify, Magento, BigCommerce, to name a few) available that help retailers create an online shopping experience that is easy to use. Customers, both in-store and online, want to be able to find what they need quickly and easily, because we’ve all got things to do…
On-the-go-lives, on-the-go goods
As shoppers, we want options—options on how and when to shop and options about how and when something is delivered. For many, purchasing everyday items comes down to convenience. Amazon Prime’s delivery promise for faster and faster delivery is proof of that.
As customers’ delivery choices continue to increase, will retailers’ headaches follow? Businesses integrating technology that’s equipped to track inventory and order data, in real time, across multiple management systems, likely have an upper hand here. As consumers, we want to know where our purchases are in the delivery promise so we can plan our lives.
A fulfillment network to meet demand
These days, fulfillment and distribution are no longer one-size-fits-all solutions. Fulfillment footprints must bridge the gap between both business and customer demands. While this could look a variety of ways, standard solutions often involve more locations, closer to customers, and a streamlined last mile.
As a retailer, you have to make sure your shelves (digital or physical) are stocked at all times. Having a distribution network that makes retail replenishment and direct-to-consumer fulfillment possible is key. Customers want to know they can rely on you to have something they need. Being able to give that to them, quickly and easily, is what keeps them coming back—shopping on your channels and not your competitors’.
Does 2018 include a marketplace?
It’s a fair question. For some retailers, it make absolute sense to sell through a marketplace; for others, it doesn’t. Whatever your decision is, selling through a marketplace should align with your larger business strategy. For example, do you want more exposure; is it easier to have a marketplace manage fulfillment; do you want to prioritize your own website for sales?
While using a marketplace like Amazon has its upside (market exposure and a built-in supply chain network), there are several cons to this alliance as well. How so?
- Customer details – When retailers sell through Amazon, they risk, and even jeopardize valuable customer data. In fact, retailers never see behind their buyer’s curtain. The illuminating statistics surrounding customer preferences are never shared, leaving retailers in the dark.
- Supply chain information – Selling via Amazon informs Amazon where a retailers’ specific products are made. A vulnerable window of visibility that, in theory, could enable Amazon to create similar products, via the same manufacturer—and sell it for less. Nowhere else in the omnichannel process are companies left as exposed to potential competition.
- Branding – Products—retailers’ products—are sold via the Amazon-branded website, and packaged in Amazon-branded boxes. Point blank, it’s a complete Amazon experience, from online perusing, to successful purchase, to package arrival. As further insult to injury, sellers on Amazon don’t get to control how their products are placed or marketed—details that matter, especially when showcased directly next to competitors.
- Cost – It’s no secret among the industry. Amazon is pricy. There are numerous fees tacked onto services, from handling fees, to storage fees—even additional ‘peak season’ storage costs.
- Comingling – A slippery slope, for new businesses especially. Comingling occurs when Amazon locates an exact replica from another retailer, and sends on your behalf to ensure fast shipping times. Amazon looks efficient. The retailer looks like an imposter.
The big three: Brand, experience, data
Three elements remain vital to the continual success of today’s retailers: brand, shopping and checkout experience, and data.
Handing the keys to your kingdom over to Amazon runs the risk of ruining a sustainable business model, and certainly doesn’t ensure consistency throughout the selling process. Retailers must prioritize their own website as the primary sales channel, and in turn, create the distribution and fulfillment network that can match customers’ demands.
High risk, high revenue
Amazon shows no sign of slowing, and has demonstrated its willingness to hemorrhage money in the short-term, knowing there are immense payoffs down the line. As retailers continue to compete and stay relevant, smarter decisions and strategy remain essential. Fortunately, the shared economy and innovative technologies are evolving alongside the global supply chain.
Services are enabling businesses to optimize their eCommerce operations, from online shopping platforms, to alternatives in transportation and real-time visibility, to on-demand warehousing networks. In short, there are a multitude of means for modernizing the supply chain, without investing in stagnant, non-agile solutions, or dealing with fixed costs.
The year ahead
Given the industry’s current shifts, it’s likely that trends from 2017 will only continue to evolve. Brands that can’t move sales away from Amazon or build their own digital storefronts will continue to close for good. That said, retailers that continue to modernize their eCommerce strategy stand a chance against Amazon and other leading marketplaces.
Needless to say, the “on-demand economy” is in full force. Customers will find easier and more convenient methods for getting what they want, when they want it. In fact, U.S. shoppers alone are predicted to spend $460 billion online. Sellers, in turn, will need to anticipate this growth and satisfy expectations with better on-demand commerce strategies.
Ready, set, innovate
How will retailers keep up? With streamlined internal processes, the latest technology solutions, an agile approach to the supply chain, and, more so than ever, a customer-first methodology.
If you’re a retailer looking to transform your eCommerce and fulfillment strategies, here are a couple things to keep in mind:
- Look for a solution that integrates with your current technologies—any new solution should enhance visibility, not hinder it
- Consider a solution provider and platform that can grow as you do—for example, if you’re in need of a new fulfillment solution, being able to start with one new location that can quickly scale to include more locations is a better approach to implementing new processes and growing smartly
- Look for solution vendors that have strong partnerships in the industry—new technologies have disrupted traditional supply chains, making it easier for businesses to find a set of supply chain vendors and partners, instead of investing in traditional, static solutions