Did you know Amazon accounted for about half of e-commerce sales in 2017? Retailers continue to search for ways to compete with the online retail giant. Three particular areas stood out in Multichannel Merchant’s 2018 Outlook Survey report: the last mile of fulfillment, outsourcing logistics services, and customer returns.
We highlighted some key takeaways from the report below:
More than one-third (34.9%) of operations executives said the biggest “Amazon effect” for them is the pressure to ship faster. However, faster delivery poses significant last mile delivery and logistics challenges for retailers.
Last Mile Strategies
Retailers continue to search for ways to optimize the costly final mile of delivery. Yet shipping costs from traditional carriers continue to rise. The survey reported most respondents use the U.S. Postal Service. It also showed the use of local and regional couriers, like Dropoff, is on the rise.
Perhaps this is a result of the recent trend towards fulfilling orders from local and regional stores to get orders to consumers faster. Last mile costs aren’t going to fall in the near future. But there are ways to offset them by plugging into a broader on-demand delivery network. Taking advantage of a trusted courier’s fleet of drivers, vehicles, and logistics capabilities can help retailers meet expectations for same-day delivery without breaking the bank.
Amazon is also launching Shipping With Amazon (SWA) in 2018, its own “shipping-as-a-service” offering which aims to help get shipments from retailers’ facilities to their customers. Nearly all respondents (91.8%) said they believe Amazon will move more aggressively into shipping and logistics in 2018.
Another growing trend to address last mile fulfillment is buy online, pickup in store (BOPIS), also referred to as click and collect. This fulfillment method has seen rapid growth and is often “a win-win solution that offers both supply chain efficiency for the retailer, convenience, and choice for the customer. To make it even more convenient, many are offering curbside pickup services using apps that notify shoppers when an item is ready.” In the survey, 26% of respondents with physical stores indicated that they plan to add in-store pickup of online orders in 2018, up from 18% in 2017.
Pickup lockers and pickup points at local convenience stores are another growing practice, with thousands of locations run by Amazon, UPS, FedEx, and others.
Outsourcing fulfillment can be beneficial to retailers of all sizes. It puts merchandise closer to customers, which speeds up delivery times and reduces shipping costs.
Operating your own distribution center can be costly for smaller retailers and startups. Warehouse management software, equipment, labor, insurance, real estate and taxes, among other expenses, add up. The article does point out that 3PL isn’t necessarily a cheap option, but it can be less than doing it yourself.
Many retailers decide to outsource fulfillment so they can focus on what they do best. “They see warehousing as the ugly part of business, and that’s something they feel they don’t have competence in.” 3PLs can often deploy technology that may be too expensive or out of a retailer’s realm of in-house expertise to develop on their own. They also usually have warehouse space, networks and resources available and can share staff across accounts.
Returns are a Key Component of the Customer Experience
As e-commerce sales rise, so do e-commerce returns. And the report notes “study after study has shown that an unfavorable returns policy at checkout can lead to increased cart abandonment.” Though, “reverse logistics” can be complicated and expensive for retailers, how they are handled can significantly influence repeat business. Consumers aren’t shy to take to social media to share a negative return experience.
Making returns effortless for consumers can help win their loyalty. With more consumers trying items on at home in various sizes, then returning what doesn’t fit, retailers need to make the process both consumer-friendly and efficient at the same time. A few ways to do this are:
- - Including a return label with the shipment
- - Authorize returns online, which facilitates the process and gets consumers theirs refunds faster
- - Encourage in-store returns, which generate foot traffic and can potentially result in more sales.
Set Yourself Apart
As retailers continue to strategize ways to compete with the likes of Amazon, these three areas stood out the most in Multichannel Merchant’s 2018 Outlook Survey. It’s evident retailers are striving to set themselves apart and deliver the “elevated fulfillment experience customers have come to expect.”
If you’re interested in learning more about how Dropoff can become your last mile solution partner, contact us today. We partner with many retailers to provide same-day delivery solutions across the U.S.