Future of Commerce
The Future of Commerce Is at Your Door
As eCommerce pushes the center of retailing out of the big stores and malls where we used to shop, retail spaces have generally shrunk, and many have disappeared completely. With customers ordering goods for delivery from any place that has Wi-Fi, retailers must find ways to bring their goods closer to where their customers are—quickly and efficiently—because speed and choice are everything.
In phase one of the transition, retailers began to meet more of their customers online—offering more shipping options and better delivery promises. With stronger options, they began building trust and a loyal customer base.
This will come as no surprise to anyone in the industry, but logistics can quickly become expensive when you’re trying to sustain compelling delivery promises. To provide a truly omnichannel experience—one that’s optimized for both customers and margins—retailers must rework inventory allocation and management.
Operating one or two massive warehouses won’t work for how dynamic business is today. Instead, meeting customer demands for fast, affordable delivery means dispersing inventory into a constellation of smaller, more agile distribution centers. Today, you need smaller sites flung across the map near every population center.
To customers, omnichannel means being able to order across any retail channel seamlessly—having the flexibility to buy how and when you want. Omnichannel retailers should have the same level of agility in logistics. Retailers have to process orders from the web, in stores, or over the phone, and need a flexible fulfillment network and technology platform to choose the best location, or combination of locations, from which to deliver the goods. Sometimes that means filling an order from the backroom of a retail location or from a dedicated fulfillment center.
It can also mean better allocation and routing of inventory among various local markets throughout the year; imagine a store in North Dakota that has leftover pool toys in September—instead of discounting them or dumping them, the retailer makes them available online to potential buyers in warmer climates.
Retailers must find ways to bring their goods closer to where their customers are—quickly and efficiently—because speed and choice are everything.
Localizing mass retailing
As systems and inventory allocation become more sophisticated, we are already preparing for what’s next: an even more efficient, more localized approach to mass retailing. In the next ten years, we are likely to witness the arrival of new fulfillment formats, including automated mobile fulfillment centers.
One potential model would involve convoys of pilotless vehicles, which will release small robots (aka “the DelBot” as they enter a city or neighborhood. You might meet it at the door, or you might not; the DelBot could deposit your packages inside a secure lockbox, or we might even see a variation of the doggie door, which will allow the robots to enter your home when you aren’t there. And, that’s only if your HouseBot has not gone out to retrieve your items—be it groceries, shoes, prescriptions!
These may sound too futuristic, but we’re not far off from incorporating more robotics into our everyday lives. Of course, each concept will come with challenges (hopefully not the kind portrayed in the 1984 classic movie War Games, or any of the Terminator movies!). The biggest challenge will be building public support for thousands of drone vehicles zipping down streets and sidewalks. This is where the government steps in—local, state, and federal—to insure the safety of the general public.
How we shop is changing; how we fulfill purchases should, too.
Mobile commerce, mobile fulfillment
How we shop is changing; how we fulfill purchases should, too. Incorporating new technologies, devices, and frameworks—like mobile fulfillment systems—will be well worth the service improvements they’ll deliver to customers.
Consumers will get back even more time, building on the gains eCommerce has already given. We could drastically reduce the need to stand in line at checkout counters for commodity goods. It might also save some money, but even if it doesn’t, consumers will likely pay a little more for the added convenience.
An interesting question will be who manages those robot deliveries. Amazon is an obvious potential candidate, as are the current commercial package handlers. The big traditional retailers could do it themselves, but they might be better served through partnerships with third-party logistics providers (3PLs). We might also see brand new businesses emerge and take the lead in building automated fulfillment systems that manage the last mile.
All of this will mean big changes in commercial real estate and transportation. Technology is moving so fast that fulfillment and last-mile solutions will completely evolve in coming years.
It’s always been difficult to predict the future. Will we see Amazon’s train-mounted drone deliveries or hovering dirigibles? Maybe not in the near-term, but check back in about five years, just to be sure.
Tell Us More
What’s one piece of advice you’d give that you’d follow?
"Give 'em the pickle." The online customer can be fickle, so you need to figure out what the pickle is that the customer will rave about. Free samples, free shipping, surprise-and-delight gift in the order? Try different approaches, and be willing to fail fast and try again.
What’s something we, as an industry, aren’t talking about that we should be?
The true social impact of automation on the industry as it relates to the loss of jobs, particularly the manual labor done in most fulfillment centers by the warehouse associate.
What’s a product that you now buy online but thought you never would?
The Total Gym
What’s a product that you don’t think you’ll ever buy online?
Any type of bed or furniture that you sit or sleep in. I don't want the hassle of dealing with a return if the item does not meet my "comfort" bar.
You’re a new addition to a crayon box. What color are you?
LogisticsGray - 'cuz it ain't black and white anymore........
Retailers, Give Your Customers What They Want
Brian Kilcourse, Retail Systems Research LLC
- Chapter 1: Disrupting Retail: eCommerce Breathes New Life Into The Retail Industry
- Chapter 2: Enabling Retail Transformation: Technology Adds a Little Bit of Magic
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Laura Behrens Wu, Shippo
Innovation is Merging Online and In-Store Retail
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Shoppers Expect Magic, Everywhere
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- Chapter 3: Making Retail Experiences Memorable: Customer Experience Is at the Center of Your Brand
- Chapter 4: Powering Retail into the Future: Logistics Is the Undercurrent of Commerce
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Ben Marcus, AirMap
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