Illustration: Royal Studio
- How Can Retail Be More Connected?
- Brick and Mortar is Dead
- How Does Online Shopping Work Around the World?
The act of getting stuff these days is often the act of clicking. More people than ever are buying things online from a growing number of vendors, as the internet brings an endless aisle of consumer goods within reach of every smartphone. But with that process comes a unique set of headaches: Will it get here in time? Will I be home when they deliver my package? What if it gets lost in the mail? What if I want to return the product?
Those questions all speak to the importance of the physical process set in motion by the click that orders a product. It’s easy to believe that modern commerce lives completely digitally, with orders and shipments floating through the ether and magically materializing as neat packages on doorsteps two days later. That’s partially true: With mobile e-commerce sales in retail projected to hit $626 billion in 2018, and 80 percent of the online population participating in e-commerce, it’s clear that digital retail and online interaction is now a definitive aspect of our purchasing lives.
What does that mean for the tangibles that make the new marketplace possible - the warehouses, the packages, the delivery trucks?
Well, they’re not going anywhere: The United States Postal Service alone handled 4.5 billion packages in 2015 compared to 3.3 billion packages in 2008—and as digital demand for delivered goods continues to grow, retailers and shippers have been rethinking how to reckon with that unprecedented growth. Some ideas are technological innovations like automated drone delivery service; others are reshaping the relationship between consumer and manufacturer.
That’s because the accessibility and ubiquity of e-commerce is complicating the traditional mailing and delivery process. For most businesses, it’s no longer as simple as filling an order accurately and loading a package into a van; hundreds or thousands of orders need to be processed and sent to the right addresses in a timely fashion according to every consumer’s unique requests, whether they’re in the U.S. or abroad.
Same-day or two-hour delivery? Retailers ranging from J. Crew to Target are starting to crack the code. Drop-shipping that brings goods straight from manufacturers to consumers? E-commerce marketplaces from Etsy to Amazon have proved it to be a viable business model. Drone delivery? The technology is already in use—even a pizzeria in Brooklyn is participating.
And as convenience becomes a standard, not a bonus, most consumers want more than speed: Though they probably don’t use the term, they’re looking for an omnichannel experience, where they can purchase something (online, via a mobile app, or in-store), track something (online, on their app, or by making a quick phone call), and finally be able to choose how and when they receive their delivery (right at their door, or picking it up in-store or at a partner location). An omnichannel experience seamlessly integrates the information from its brick-and-mortar-stores, warehouses, shipping and delivery partners, and sales data across all its platforms.
According to an Aspect survey, 80 percent of Americans believe that businesses need to significantly change their approach to customer service (including the speed, quality, and convenience of delivery and pick-up). Aberdeen found that companies with strong omnichannel consumer engagement see about a 9.5 percent increase in annual revenue, retaining 89 percent of their consumer base as opposed to a retention rate of 33 percent for companies with weak omnichannel engagement.
In short, successful enterprises need to be investing in omnichannel capabilities. This means that inventory needs to be visible across a business’ entire network—at brick-and-mortar stores, by back-end staff, and at fulfillment warehouses—so that as soon as a consumer taps “purchase” on their phone, that purchase can be fulfilled. Do they want it delivered to their house within the day? Then the closest warehouse with the right inventory and appropriate delivery service needs to be identified. Do they want to pick it up at the nearest store on their way home from work? Then that specific location needs to ensure it has the item in stock and the appropriate staff need to know when to have it ready for pick-up.
Preparing for every variation of that scenario boils down to optimization. Omnichannel requires that a business is capable of shipping from multiple locations, with every site being carefully selected and customized. Analytics should be deployed to identify where demand is highest, how best to arrange warehouses and stores geographically, and what carriers or delivery services to employ. If it’s done right, fast delivery and convenient pick-up locations can be guaranteed—and made effortless—for a majority of the consumer base. And this kind of service isn’t limited to domestic purchases. Businesses with global operations can apply the same principles to help optimize delivery for cross-border transactions.
Take Target, the big-name, ubiquitous retailer that books billions of dollars in revenue online and through its mobile app. Over the past few years, Target ambitiously renovated its various channels, giving consumers options like curbside pick-ups, delivery from specific stores, subscriptions to repeat purchases, and an app for in-store use.
It seems to be paying off: Target logged a 2.7-percent, five-year compound annual growth rate in 2014 after it reimagined and rolled out its omnichannel offerings. With more people than ever making purchases online or through their app, but choosing to pick up their order in-store, Target noticed that customers would often simultaneously make additional purchases on their way out of the brick-and-mortar location.
So giving consumers a range of turnkey delivery options isn’t just good for an enterprise’s reputation: It can be good for their sales. That range of options turns into a range of opportunities to increase customer loyalty, improve the customer experience, and gain a competitive edge in an ever-shifting industry. Those considerations might not be as flashy as delivery-by-drone, but they speak to the importance of an enterprise’s ability to untangle its physical demands and processes using a fine-toothed digital comb. If they can do so, they will be empowered with the ability to deliver quickly and conveniently to a more engaged audience—who are likely blissfully unaware of the whirlwind of activity, both physical and digital, that brought their package to their door.