Free Shipping Strategies

It's not that everybody wants free shipping,it's that they  expect it.

So how do you solve the free-shipping issue when a company like Amazon is willing to lose $12 billion a year on shipping, delivering goods for free through deficit spending.

Here are a few strategies:

 

Minimum Order Amount

Set a purchase threshold before free shipping kicks in, which involves careful analysis of cost-of-goods and profit.  What is your typical per-order amount, and what is the profit on that? Setting a purchase threshold slightly higher than your typical order might cause customers to order more than usual in order to get the  free shipping. 

 

Targeted Free Shipping

Only offer free shipping on certain items (or certain categories), preferably  ones that cost you the least to ship (smaller and lighter).

 

Charge for Expedited Shipping Only

Depending on how you structure your shipping, you can give away the slow option (Ground, SmartPost, USPS, etc.) but charge for expedited (two-day or overnight). This will at least limit the damage.

 

Build  Shipping Costs Into the Product Price

This is the equivalent of charging $0.99 instead of $1.00, but it works. People love free shipping and will sometimes ignore companies that don't offer it. If you check out the prices for items that qualify for Amazon Prime vs. those that don't, you'll find there is often a jump in price for Amazon Prime orders. So Amazon isn't giving anything away, just creating the perception.

 

Offer a Subscription Program

If you have a product that requires regular replenishment, a subscription model can be a very cost-effective offer, allowing you to batch orders and send them all out at once. It is cheaper to assemble 250 orders on one day than 50 per day spread out over the work week. If you have enough volume, you might qualify for a remailer who offers  lower shipping costs, and if not, the resulting labor efficiency will at least cancel out some of your shipping costs.  

 

Perception is an important part of reality, and people always like to believe they are getting something for free, even if they got lured into making a bigger purchase than usual or paid for the shipping through a higher item price.

The E-Commerce Silver Lining

It is fashionable these days to complain about   online retail mowing down beloved brick-and-mortar fixtures,  causing massive layoffs and disrupting the economy.

But here's the silver lining. E-commerce transactions by definition require shipping and warehousing, and those businesses are booming.

And how about job creation? Virtually all e-commerce jobs exist beyond major urban centers (though near major highways) for the simple reason that land is cheaper there. Building an enormous warehouse off of exit 8A of the New Jersey Turnpike makes more sense than plunking one down in the middle of Brooklyn. The places hardest hit by manufacturing's decline are also the ones most attractive to e-commerce distributors.

According to the New York Times, warehouses have produced jobs at four times the rate as the rest of the economy since 2010.

And it's not just Amazon. All of the big players are erecting enormous warehouses in the hinterlands and staffing them with workers. 

And the pay is at least decent, certainly less than the old manufacturing jobs, but roughly equivalent to what can be earned in  brick-and-mortar retail.

It's not a perfect picture (it never is during transition periods), but as one area sinks, another rises up. It is the new industry's job to figure out how to make the whole thing work better for everybody.

 

 

 

The Last Mile Delivery Race Is On

Ten years ago, people thought two-day shipping was unbelievably fast. The new "unbelievably fast" standard is turning into same-day or even one-hour shipping.

There has been a 15% increase in e-commerce sales during the past year, and the delivery infrastructure is having a hard time keeping up.  The so-called Last Mile presents particular difficulties because of delays, repeat delivery attempts and "front porch" theft, which accounts for nearly 1% in lost revenue for retailers.

A titanic battle for dominance is taking place in this market, not only among established players but with numerous startups  attempting to get a foothold in this fertile territory.

Every discussion has to begin with Amazon. E-commerce accounted for 42% of retail growth last year, with Amazon - whose sales grew by over 30% - holding the majority of that increase.  The acquisition of Whole Foods gives Amazon a brick-and-mortar logistics hub that will greatly assist in Last Mile delivery. Combine that with the returns-policy arrangement it recently signed with Kohl's, and Amazon is well on its way to solving the two biggest e-commerce problems  dislike -  delivery time and returns.

Other retailers are responding.

Target's program Restock allows customers to choose from thousands of household items and have them delivered the next day for a $5 delivery charge.

Walmart is experimenting with large kiosks that allow customers to order online and then pick up at the nearest Walmart location, plus it has launched a program where Walmart employees can make deliveries on their way home from work. Walmart is also partnering with Uber for on-demand grocery deliveries.

Both Amazon and Walmart are experimenting with smart-lock programs that allow delivery personnel to  enter customers' houses to deliver packages.

Can startup delivery companies survive against these behemoths? Possibly, but success will probably depend on improved personalization and bundling with other services. 

The large retailers focus on more densely populated areas for obvious reasons, which makes for opportunity in the exurban and rural areas.

Either way, the bottom line will continue to be - whoever is faster and cheaper wins the race.

 

 

 

 

 

Same-Day Delivery Options

Same-day delivery has always been possible through specialized (and expensive) courier service, but now major established delivery as well as several startup companies are getting into the act.

FedEx just announced it has expanded same-day delivery service to 1,800 cities. The deliveries are made by FedEx drivers in FedEx trucks (in other words, they aren't outsourced to other carriers), and the service includes a mobile app for tracking. 

Deliv is an example of a startup company offering same-day e-commerce delivery. Deliv is present in 19 markets, and Walmart's purchase of Parcel gives it the ability to same-day deliver in New York City.

With the emphasis now on speed-of-delivery, expect these companies and more (including, of course, Amazon) to continue to improve their delivery systems, making them as fast and inexpensive as possible.

 

  

 

Three E-Commerce Platforms

Thee-commerce explosion has led to an equal profusion of shopping platforms. Here are three:

1. Shopify

Shopify hosts over 325,000 online stores with a focus on social commerce and mobile shopping.  It provides over 100 store templates and 1,500 plugins/extensions that improve functionality, such as integrating with other systems. 

For sites that want to sell through Facebook, Shopify will also connect your store directly to Facebook.

On the downside, if you don't use Shopify Payment, there is an additional transaction fee on every sale. This, in fact, is how Shopify makes its money, offering a low entry feebut generating revenue with every transaction. 

Bottom line, Shopify is probably the best and most cost-effective solution for startups.

 

 

2. BigCommerce

BigCommerce hosts over 55,000 online stores and caters to companies of all sizes. It is probably the best solution for people with little or no technical knowledge.  It includes many add-ons, such as newsletters, coupons, analytics, etc., but unlike Shopify, does not charge extra transaction fees.

Bottom line, BigCommerce is best for those without technical skill who do not want to deal with issues like integrating plugins, plus it costs less because of the lack of a transaction fee.

 

3. Magento

Because of its scalability, Magento is the market leader for bigger brands. With its open source platform, the site is customization-friendly (unlike Shopify and BigCommerce) and offers over 9,000 plugins/extensions to help scale your business.

Magento includes a free Community version, but the real action is with its Enterprise version, which costs a minimum of $20,000 per year. With Magento, you will need skilled developers because of all the customization features.

Bottom line, Magento is best for companies with large volumes of items. Not for beginners.

 

 

Amazon Testing Its Own Delivery Service

Amazon is experimenting with a new service called Seller Flex that will allow it to control shipments from third-party warehouses to home delivery. Currently, Amazon allows third-party merchants to ship however they choose, primarily through FedEx, UPS, or the USPS. Shipments may still travel via these carriers, but it will be under Amazon's direction and on Amazon's account.

The service began two years ago in India and has operated on a trial basis on the west coast this year. It is expected to be rolled out nationally some time in 2018.

Seller Flex offers several benefits to Amazon - greater flexibility and control, more income through improved volume discounts, and less congestion at its own facilities.

 Last year Amazon introduced Seller Fulfilled Prime, which let merchant fulfill under the Prime label as long as they committed to Prime's two-day delivery pledge. Under Seller Flex, merchants will still fulfill from their own warehouses, but Amazon will control the shipping.

This will reduce logjams at Amazon's own warehouses, where merchant ship goods for fulfillment by Amazon.

The bottom line is that Amazon continues toexpand its logistics operations, gaining control over the entire supply chain.

 

 

 

The History of Sears Is the Future of Amazon

In the last two years, Amazon has opened 11 physical bookstores while purchasing Whole Foods's 400 retail locations, and last week, it announced a partnership that will allow returns to be delivered to selected Kohl's physical locations. 

Why is Amazon doing this? If history rhymes, as one philosopher posited, then maybe the best thing to do isstudy the history of Sears, which startedas a mail-order business and evolved into retail. 

It started with mail. After the Civil War several innovations (such as railroads and parcel delivery) made it possible to deliver items directly to people.  Thus was born the catalog,which consumers could browse at leisure at home and then order what they wanted and have it delivered.

The greatest catalog of them all belonged to Sears. There were other catalogs, but none as big as Sears, which, like Amazon today, marketing itself as the place where you could purchase almost anything and have it delivered.

Between 1895 and 1905 Sears revenue grew from $750,000 to $38 million, a factor of 50. By comparison, Amazon has only grown tenfold in the last ten years.

Then Sears moved into brick-and-mortar retail, opening its first stores in existing mail-order warehouses, and then expanding from there, mostly to the suburbs where land was cheap. 

At the start of 1925, there were no Sears stores in the United States. By 1929, there were 300. Like Amazon, then Sears began expanding into adjacent businesses, such as car insurance under the Allstate brand.  The shift from selling products to selling services is analogous to the creation of Amazon Web Services.

Sears, like Amazon, fueled its growth through efficiency and low prices. 

So how does Sears's past predict Amazon's future?

First, the Sears brick-and-mortar business did not diminish its mail-order sales. Just the opposite. Both expanded, and it is probably a safe bet to expect Amazon's e-commerce business will only be helped by a brick-and-mortar presence.

Second, its gargantuan size will make it a target. 

Third, will it be able to evolve when technology and the economy change? Sears could not make the transition to the digital age? Will Amazon be able to adapt to whatever comes next?

 

Amazon's 1-Click Patent Is Expiring, Good News for Mobile E-Commerce

Amazon’s patent on 1-click ordering has expired, creating opportunity for mobile ordering on apps and websites - specifically in the area of consistency.  The patent forced other e-commerce sites to pay Amazon a licensing fee. 

It will now be easier for retailers to implement their own 1-click ordering systems and streamline the purchase process and potentially reducing cart abandonment. 

Mobile commerce continues to grow at a rapid pace, with U.S. sales forecast toincrease more than 50% this year. Shopper conversion rates, however, are not keeping pace and many think the culprit is a difficult checkout process. Mobile shopping cart abandonment hovers around the 78% mark, while desktop abandonment is 70%. 

Mobile payment technology has continued toimprove. There are now many competing systems, such asWalmart Pay, Apple Pay, Android Pay and Samsung Pay. 

High Delivery Expectations for the Holidays

(This article was written by Daphne Howland for RetailDive).

Dive Brief:

  • Two-thirds of frequent online shoppers have used Amazon Prime in the past year, and that has fueled expectations that shipping should be fast, free and trackable, according according to new research from public relations firm Walker Sands. A massive 81% say that free shipping is a primary motivator for shopping online more frequently, according to the report, which was emailed to Retail Dive.

  • For retailers that, unlike Amazon or Walmart, don't have a vast fulfillment network of their own, shoppers are open to getting their packages from third parties. A majority (57%) are willing to pay at least $5 for next-day shipping while another quarter (24%) would pay between $6 and $20, according to the report.

  • Frequent online holiday shoppers are demonstrating other intriguing behaviors, like a willingness to buy bigger ticket items without seeing them first. Nearly a third (30%) reported having spent more than $500 online without seeing an item first, and 13% have spent more than $1,000 without seeing an item first.

 

Dive Insight:

Shoppers are using their phones, voice assistants and other online searches to find items at the same price anywhere, and they want to ensure timely delivery of their gifts, according to Walker Sands. That makes high-quality images, up-to-date inventory and transparent delivery tracking critical.

Last-mile delivery — that great separation of online and in-store shopping that is eating into many retailers' margins — can be rationalized somewhat if retailers take into account consumers' willingness to pay for super-fast delivery and leverage their stores for pickup services for online orders, Walker Sands' research suggests. 

"Shoppers are more concerned with timely delivery than a reasonable delivery charge," according to the Walker Sands report. "Other options to consider include in-store pickup and third-party delivery services such as Uber or Deliv."

Some 41% of shoppers say they want hyperlocal delivery and 38% would pay for it, according to the "State of Shipping in Commerce" survey released earlier this year from fulfillment software company Temando. Just 24% of retailers offer it now, though 18% of retailers would like to offer it in the next 12 months. Almost 100% of shoppers also say they would like delivery date estimates, yet more than half of retailers currently don't offer this feature.

Voice has also emerged as a powerful ordering tool among frequent online shoppers. Nearly a quarter (24%) of self-identified frequent online shoppers 'often' or 'always' purchase through voice-controlled devices, and that could rise further this year, Walker Sands said. Some 44% of total survey respondents said they are 'somewhat' or 'very likely' to make a purchase through a voice-controlled device in the next year.

Amazon's Echo is dominating in that space, but Google Home is fighting hard with new retail partnerships. Amazon devices like the Echo and Dot speakers, along with apps in mobile devices, could provide some $10 billion in revenue by 2020 and be a "mega-hit," according to a note published this spring by investment bank RBC Capital Markets. That said, Google has been working hard to add features that Alexa doesn't have and enjoys a wide-open ecosystem.

The Home Depot said last week that it's joining Google Express this fall, adding Google Assistant's voice shopping ability for customers via the the Google Express website and app. Last month Walmart similarly announced its partnership with Google to bring voice shopping to Walmart customers. Some 35.6 million Americans will use a voice-activated assistant device at least once a month this year, according to research released in May from eMarketer. If that forecast proves correct, it would be a 129% jump in voice engagement with virtual assistants over last year. 

The battle is just getting started and will be fueled by the upcoming holiday season, according to Luke Starbuck, vice president of marketing at customer care automation platform Linc, who notes that the perception of voice assistance as futuristic has become a reality. A huge majority (87%) of retailers expect to be using AI for customer service and engagement within the next 24 months, while 41% are using it or experimenting with it already, according to Linc's research.

"This increasing popularity, coupled with retailers' desire to partner with voice platforms, will continue to snowball until voice platforms are the norm and an essential asset for any brand," Starbuck told Retail Dive in an email. "Especially following the announcement of the Walmart's partnership with Google Home just a few weeks ago, [Home Depot's] latest move indicates that there will be an ongoing battle for market control between Amazon Alexa and Google Home, especially as we head into the 2017 holiday sales season."

Amazon Predicted to Triple in Value Within 8 Years

This article was written by Tae Kim for CNBC).

One Wall Street firm predicts Amazon will be worth significantly more than $1 trillion in the coming decade.

MKM Partners reiterated its buy rating for the internet giant, saying Amazon will continue to dominate the e-commerce and cloud computing markets.

We think Amazon "should continue deploying all available capital until reinvestment opportunities become more limited or more risky," analyst Rob Sanderson wrote in a note to clients Thursday. "Our detailed scenario analysis implies that AMZN could exceed a $1.6 trillion valuation over the next 7-8 years."

Amazon has a market value of $465 billion through Wednesday, according to FactSet. Its shares have rallied 29 percent this year, compared with the S&P 500's 10 percent return.

Sanderson reiterated his $1,275 price target for Amazon, representing 32 percent upside from Wednesday's close.

He said Amazon's market share of U.S. retail spending rose nine times from 2008 to 2016, to 5.1 percent. He predicts the e-commerce company will reach 15.5 percent retail spending share by 2025 and "surpass Wal-Mart over time."

Sanderson is also bullish on the growth prospects for Amazon Web Services. He forecasts the company's cloud computing business can grow its sales 20 percent annually for the next eight years.

"We agree that cloud is the largest redefinition of computing since the PC-era and will significantly redistribute value across the tech food chain," he wrote. "AWS is growing much faster than Microsoft did on its path to PC-era dominance."

The analyst noted that Microsoft was able to grow its sales by more than 20 percent annually for 23 years after first reaching its leading technology position.

Post-Modern Nordstrom

(This article was written by Phil Wahba for Fortune).

Nordstrom is trying a smaller store on for size.

The upscale department store on Monday announced that it was opening a tiny 3,000 square foot store—a small fraction of its typical 140,000 square-foot emporia—in Los Angeles that will not carry any clothing merchandise but instead offer services like personal stylists as well as refreshments like beer and wine. Nordstrom, which operates 121 full service department stores along with a chain of Rack discount stores, said the move was a reflection of changing customer tastes and behavior. The Nordstrom Local store, as will be called, is set to open Oct. 3.

"As the retail landscape continues to transform at an unprecedented pace, the one thing we know that remains constant is that customers continue to value great service, speed and convenience," said Shea Jensen, Nordstrom senior vice president of customer experience, in a statement.

Nordstrom is just the latest major retailer struggling with declining sales at its physical stores, a particularly acute problem at department stores, and looking to smaller format stores as way to reach more customers - comparable sales at Nordstrom's full-service department stores fell 7% in the first half of the current fiscal year.

Such retailers include the likes of Target, which is focusing those efforts on city centers, and Kohl's  and Sears  which are shrinking many existing stores. Amazon.com has opened a number of bookstores with a far more limited selection than a Barnes & Noble  store on the bet that shoppers don't want to be overwhelmed by a physical store and that an e-commerce site can fill any gap.

This isn't to say Nordstrom will not continue to focus on its department stores- it is opening a new location in Toronto this week. Nor will one store, a small one at that, move the needle. But what it does show is Nordstrom's efforts to test out formats and services to anticipate where shoppers are going in terms of habits.

The Nordstrom Local will have eight dressing rooms to allow shoppers to on clothes and accessories like shoes, even though that merchandise will not be stocked at the store. Personal stylists will instead collect goods from nine area Nordstrom stores or via nordstrom.com. That harkens back to the more traditional approach of selling luxury goods, where a shopper trusts an expert to help select items. Still, that is not without risk at a time shoppers have ample tools at their disposal to figure out what trends are hot and appealing and are more likely to trust Instragram influencers that a store employee.

The store will offer services like manicures, as well as wine, beer, coffee or juice from an in-store bar in the hopes of turning a trip to Nordstrom into an outing. The notoriously tight-lipped company didn't say whether it had plans to expand the concept to more location. But Nordstrom Local would certainly provide a boon in terms of getting into new submarkets and providing new points of pick up for customers, crucial as the e-commerce wars heatup. Any orders placed on Nordstrom.com by 2 p.m. can be pick at the Nordstrom Local, and the store will also accept returns of items bought online or from other Nordstrom stores. What's more, Nordstrom Local will staff tailors to provide alterations.

Should You Fear the Robot Apocalypse?

(This article was written by Kevin Drum for Mother Jones).

People  need to be very clear on the difference between automation and artificial intelligence. You can’t just casually refer to “the job-destroying potential of robots, artificial intelligence and other forms of automation.” These are totally different things.

Plain old automation does indeed usually produce more jobs than it destroys. This applies to more than just steam engines and electricity, and an ATM is nothing special in this regard. It’s ordinary, old-school automation even though it relies on microchips and communications networks. Of course ATMs can’t do relationship banking. How could they?

Artificial intelligence is entirely different. If you don’t believe we’ll ever get it, that’s fine. Make your case. But if you do believe it’s coming in the near future, then you need to treat it as a completely different thing. Pretty much by definition, true AI will be able to do anything a human can do. So no matter what new jobs you think AI will create, then by definition AI will be able to do those jobs too. If true AI is in our future, the robot apocalypse is very much something we should worry about.¹

 

 

Google and Walmart Partner Against Amazon

(This article was written by Daisuke Wakabayashi and Michael Corkery for The New York Times).

SAN FRANCISCO — Google and Walmart are testing the notion that an enemy’s enemy is a friend.

The two companies said Google would start offering Walmart products to people who shop on Google Express, the company’s online shopping mall. It’s the first time the world’s biggest retailer has made its products available online in the United States outside of its own website.

The partnership, announced on Wednesday, is a testament to the mutual threat facing both companies from Amazon.comAmazon’s dominance in online shopping is challenging brick-and-mortar retailers like Walmart, while more people are starting web searches for products they might buy on Amazon instead of Google.

But working together does not ensure that they will be any more successful. For most consumers, Amazon remains the primary option for online shopping. No other retailer can match the size of Amazon’s inventory, the efficiency with which it moves shoppers from browsing to buying, or its many home delivery options.

The two companies said the partnership was less about how online shopping is done today, but where it is going in the future. They said that they foresaw Walmart customers reordering items they purchased in the past by speaking to Google Home, the company’s voice-controlled speakerand an answer to Amazon’s Echo. The eventual plan is for Walmart customers to also shop using the Google Assistant, the artificially intelligent software assistant found in smartphones running Google’s Android software.

Walmart customers can link their accounts to Google, allowing the technology giant to learn their past shopping behavior to better predict what they want in the future. Google said that because more than 20 percent of searches conducted on smartphones these days are done by voice, it expects voice-based shopping to be not far behind.

“We are trying to help customers shop in ways that they may have never imagined,” said Marc Lore, who is leading Walmart’s efforts to bolster its e-commerce business. He came to Walmart last year after the retailer bought the company he foundedJet.com.

Google is a laggard in e-commerce. Since starting a shopping service in 2013, it has struggled to gather significant momentum. Initially, it offered free same-day delivery before scrapping it. It also tried delivery of groceries before abandoning that, too.

If Amazon is a department store with just about everything inside, then Google Express is a shopping mall populated by different retailers. There are more than 50 retailers on Google Express, including Target and Costco. Inside Google Express, a search for “toothpaste” will bring back options from about a dozen different retailers.

Google said it planned to offer free delivery — as long as shoppers met store purchase minimums — on products purchased on Google Express. Google had charged customers a $95 a year membership for free delivery. Amazon runs a similar program called Amazon Prime, offering free delivery for members who pay $99 a year.

The partnership with Google represents one of several steps that Walmart has taken over the past year to strengthen its online business.

Walmart’s app. Walmart said last week that its online sales increased 60 percent in the second quarter from a year earlier. CreditGoogle Express

In January, Walmart began offering free, two-day shipping on more than two million items — a move that takes direct aim at Amazon Prime, whose members who pay an annual fee for fast shipping and other services like movie streaming.

Walmart has also been trying to integrate its digital business with its vast network of more than 4,690 stores.

Many brick-and-mortar retailers are struggling with what to do with their increasingly empty stores, but Walmart is partially repurposing its stores into e-commerce fulfillment centers.

Customers can now order their groceries online and then pick them up at hundreds of stores. For some items that they purchase online and pick up in a store, customers receive a discount. In-store pickup reduces shipping costs for Walmart, but offers a similar level of convenience to the shopper as home delivery.

The efforts seem to be paying off. Walmart said last week that its online sales — including online grocery — increased 60 percent in the second quarter from a year earlier. It was a big driver in the company’s overall increase in quarterly sales.

Efforts like online grocery seem to be gaining traction, but Walmart hopes the benefits of other moves — like its $3.3 billion acquisition of Jet.com, an online retailer focused on urban millennials, and its purchase of the boutique clothing businesses Modcloth and Bonobos — will come down the road.

Some analysts question how Walmart will add to its core low-price retail business at the same time it is trying to manage bolt-on acquisitions. While the company’s sales were up, its profit margins in the second quarter slipped, in part because of its spending on e-commerce initiatives. With this new partnership, Google Express will offer items only from Walmart.com, and not from Jet.com or Walmart’s online clothing sites.

“Walmart can’t lose on the low-cost proposition,” said Erich Joachimsthaler, chief executive of Vivaldi, a brand consulting firm. “But convenience, convenience that is where the game lies.”

Walmart has a long way to go to catch Amazon. Walmart’s website sells 67 million items, up from 10 million early last year. Amazon sells hundreds of millions of items.

In July, about 83.6 million people visited Walmart’s website, nearly half as many visitors as Amazon had, according to comScore, a media measurement company. Jet drew an additional 10.9 million visitors.

“I am not saying Walmart is ever going to catch Amazon online,” said Craig Johnson, president of Customer Growth Partners, a retail research and consulting firm. “But instead of being embarrassed by Amazon, it can be a strong No. 2.”

Larger Orders and Mobile Traffic Fuel E-Commerce

(This article was written by Glenn Taylor for Retail Touch Points).

It’s not exactly news to note that more consumers are shopping online more often. What is different is that this growing group also is spending more on their purchases. For the first time, shopper spend growth (8%) has outpaced traffic growth (6%) as the primary driver of digital commerce growth (14%), according to the Q2 Salesforce Shopping Index.  

Mobile is playing a role in this growth, with its traffic share jumping to 57%, a 23% year-over-year increase. An even higher percentage of consumers (59%) reported using their phones while shopping in a physical store within the last three months.

“For years, we’ve been thinking that mobile is purely digital, but it turns out mobile actually has more of an impact on the store environment,” said Rick Kenney,Head of Consumer Insights at Salesforce Commerce Cloud in an interview with Retail TouchPoints. “We see that as a massive opportunity. It’s clear that mobile is the most disruptive force on retail — not just digital — since the onset of e-Commerce in the 1990s, but the investments thus far have primarily been geared towards the digital side of the experience.”

While there remains a gap between mobile’s traffic share (57%) and its order share (33%), the latter figure has steadily increased from the 20% in Q2 2015. Kenney believes integrated mobile payments are going to be the next step that drive increased order shares and “cuts the entire second half of the sales funnel off.” He noted that Salesforce customer Deckers experienced significant improvements last holiday season after introducing Apple Pay, including reduced fraudulent orders and increased conversion rate.

“85% of the people that used Apple Pay did it prior to starting a checkout,” Kenney said. “They either used Apple Pay on the cart page or the product detail page, and didn’t need to see a checkout. That’s the friction-reducing hope of that single-tap experience, that you can buy without having to fumble through a credit card or fill out form fields.”

3 Ways To Improve The Shopper-Product Connection

The Index highlighted three areas of investment that will lead towards improving the shopper-product connection:

  • Findability;

  • Personalization; and

  • The Brand Connection.

Findability is important because today’s consumer is so engrained in site search, particularly through channels such as Google and Amazon. Site search accounts for 10% of site visits and 23% of all revenue. But Kenney argued that the most important part of findability is what happens when shoppers receive search results. This findability goes hand-in-hand with personalization, which retailers must use beyond the product page if they want effective campaigns.

“Shoppers are starting to use personalization in site search results,” Kenney said. “You and I can search on the same exact site and both type in ‘blue jeans,’ but perhaps I tapped around in the sales section before I made a search while you came in through a paid link or a new arrival. You, as the full-price shopper, might see the full-price jeans at the very top at that site search set, whereas I’m going to see the sale jeans at the top of my search set.

“It’s the same terms with different shoppers, different result sets, and that’s a great spot to impact,” Kenney added. “Bringing personalization into a productive setting such as a site search increases the likelihood of connecting the shopper with a product they’d be interested in.”

The third investment area, the brand connection, may seem obvious for retailers, but differentiation is often difficult in a market oversaturated with companies selling the same products. Retailers must elicit specific feelings that shoppers want to experience throughout their journey, regardless of where or what they are purchasing.

Kenney pointed out American Giant as a brand that successfully uses storytelling on its web site and within its product pages to emphasize its premium apparel, which is entirely manufactured in America.

“If someone may be turned off by the price point, by the time a shopper reads through that story, they may say, ‘I get it. I want to try this out.’” Kenney noted. “There is an educational aspect of storytelling that exists to actually connect with that shopper.”

The Shifting Winds of Retail

(This article was written by Beth Corby for Business2Community).

JCPenney is down to its last cents. In March, the company announced it would close 138 department store locations, and its stock hit an all-time low price of $4.73, less than its opening day price in 1978. Its sales figures have shown a desperate downturn, down 37% from 2006. All roads lead to bankruptcy for the once-respected retailer.

What went wrong?

After the financial crisis, JCPenney was poorly positioned to adapt to changing consumer behaviors. They were dependent on foot traffic from suburban malls, which were failing because too many had been built, people were buying less, and online shopping was gaining momentum. They were loath to build a satisfying e-commerce experience because their core customers skewed older and less tech-savvy. Even now, search “JCPenney mobile” and the first result is a physical store location in Mobile, Alabama.

The fall of JCPenney marks the end of an era of American shopping, one that relied on customers seeking a particular kind of convenience — a one-stop destination where you could get everything you needed, from big-and-tall suits to BBQ brushes, at middling prices. As the megastore dies out, however, new modes of shopping are taking its place.

Welcome to the ‘Death of Retail’

The demise of JCPenney is part of a larger phenomenon that has grim reaper analysts announcing the “death of retail.” With Amazon and other online shopping outlets offering a greater selection of goods than ever before, customers no longer need the bundled convenience of department stores and shopping malls. A forecast from Credit Suisse predicts that by the end of 2017, 8600 stores will close, and by 2022, 25% of American shopping malls will no longer exist. As of March the report seemed to be on track, with 3571 closures announced. JC Penney sits in the troubled company of its competitors, including Sears, Macy’s, Dillard’s and Nordstrom, who are all downsizing. In May 2016, 6,000 in-store retail jobs were lost.

On the other hand, Amazon is seeing enormous growth. In 2015, Amazon announced $82.7 billion in sales, compared with Walmart’s $12.5 billion. Amazon has quite literally eaten other retailers with acquisitions of Whole Foods and Zappos. In an incredible statistic, half of U.S. households have Amazon Prime subscriptions. Industry standards are being reset in Amazon’s image. In order to survive, retail brands have to offer free shipping and returns, lower price points, instant checkout and delivery everywhere.

Consumer preferences don’t indicate that Amazon should be the only shopping option on the planet, however. Buyers still want the personal care and attention that specialty shops offer and the prices that big, efficient businesses do. They want to identify with brands. And finally, they want the shopping experience to be stress-free. The changes in shopping are only making the retail industry more democratic, competitive, and crowded than ever. Yes, the so-called “death of retail” is a misnomer. In fact, where JC Penney reported its worst holiday season ever in 2016, the overall sector saw the best numbers in recent history.

Survival of the Stylish

The best and brightest retail brands have bet big on technology, employing cutting edge methods for more personalized service. Their dedication to modernization has earned them the trust and admiration of a new generation of buyers, who are used to having everything at their fingertips. And while businesses are sweating to keep up, shopping has never been breezier.

So without further ado, let’s look at some of the downright Darwinian adaptations companies have made to stay alive in the face of doom, gloom, and Jeff Bezos.

The best and brightest retail brands have bet big on technology, employing cutting edge methods for more personalized service.

Urban Outfitters – Think big, stay local

Urban Outfitters speaks authentically to millennial customers through hyper-local marketing efforts and behavioral analysis. In early 2017, they sent out a series of push notifications directed at women in cities who like going out. The notification about finding a party dress linked directly to a page in the Urban Outfitters app where users could buy one. The campaign was hugely successful, resulting in a 146% lift in revenue and a 75% increase in conversions.

How did they do it? They:

  • Created segments of women who had checked into nightclubs or bars from their phones in certain cities. To ensure the data was accurate, Urban Outfitters partnered with location marketing specialists at PlaceIQ and mobile marketing wizards Appboy.
  • Sent out a personalized push notification with an emoji for added fun
  • Deeplinked to the dresses page in the app so customers didn’t have to search once they swiped open the notification

The notification was the opposite of disruptive to those who received it. Rather, it provided a brief message in a familiar SMS-like format. It proved that the UO app was worth the download, offering relevant information that was unavailable elsewhere, without sounding like spammy brandspeak.

PacSun – It pays to be social

Once a mallrat staple for surf bums and wannabes, Anaheim-based PacSun has proven that they can keep pace with a new teenage demographic by showing a deft understanding of what makes compelling social media content. In particular, they’ve leveraged the power of Instagram. Through evocative filters, recognizable faces, and crowd-sourced photos, PacSun has amassed over 1.8 million followers on the platform. To get young ‘grammers’ attention and stand out in the feed, they:

  • Invest in famous influencers – PacSun has partnered with Kendall & Kylie Jenner since 2012 on a clothing line, which they promote heavily on Instagram.
  • Invest in microcelebrities –They’ve smartly picked up on the rise of lesser-known influencers, who amass followers on Instagram through a combination of looks, personal style, and je ne sais pas. PacSun always tags models in posts, like Sophia Gasca, who has 45K followers herself.
  • Started a multi-dimensional hashtag – #mygsom stands for “My golden state of mind” and centers around the theme of California cool. The tag has amassed over 206k Instagram posts of surfers, skateboards, sun-drenched afternoons, music festivals, palm trees and mountains from users around the world. The company also launched a content-rich site around the tag, complete with a contest to win a trip, and a rewards program for buyers of PacSun goods.

A strong online identity has the power to shape real-life consumer behavior, especially for young buyers who spend tons of time on social media. PacSun has struck gold with a true-to-its roots, nostalgia-tinged brand identity, and the real people who live out its free-spirited dream. Teenagers naturally want to be a part of it.

Fabletics – Site to store, without breaking a sweat

At first glance, it seems Fabletics is reverse-engineering the death of retail by turning its online business into brick-and-mortar shops. Kate Hudson’s subscription-based athleisure brand charges consumers $49.99 monthly for discount athletic apparel. They recently opened 22 stores with the aim of providing shoppers with what e-commerce cannot: the ability to try before they buy, and an opportunity to bump into other shoppers who embody the fit lifestyle they aspire to.

Their site-to-store strategy is based on a few key factors:

  • Syncing online with reality – “We want to completely mirror the stores to the online experience,” parent company JustFab CEO Adam Goldenberg told Forbes. He also mentioned that 40% percent of Fabletics’ in-store purchases have been made by online shoppers who wanted to try things on in person. If they’re not ready to purchase, or something’s out of stock, customers are able to record what they liked about a product and access that information from the Fabletics site or app anytime.
  • Selling subscriptions in person – Fabletics store employees are encouraged to recruit shoppers to the online VIP program, making the most out of face-to-face conversations.
  • Compare and contrast – Fabletics positions stores next to its more famous (and more expensive) competitors, Lululemon and Athleta, making the association between the brands more apparent.

An e-commerce-first brand like Fabletics may already be a step ahead of other retailers, but by adding stores, the company is committing to its longevity. No matter where the point of sale happens, Fabletics knows that customers crave the personal interactions they have with sales reps, the sense of belonging to a community of healthy people, and the thrilling feeling of finding the perfect fit.

Starbucks – that’s a latte loyalty

Like Fabletics, Starbucks aims for a seamless and personalized digital-to-real life experience. Its strongest digital asset is its industry-leading loyalty program, Starbucks Rewards, which rewards customers not only with free beverages, but also more personal convenience as use increases. In 2016, Starbucks Rewards had over 12 million members and surpassed the $1 billion mark in funds uploaded by users to their loyalty cards. In Q1 of 2017, rewards customers accounted for 36 percent of the company’s U.S. revenues.

 

 

Walmart's E-Commerce Acquisition Spree

(This article was written by Yuyu Chen for Digiday).

Amazon poses a threat to brick-and-mortar stores that are having trouble getting shoppers to visit their stores. For Walmart, that means fighting back against Amazon by beefing up its digital portfolio. The chain has been on an acquisition spree lately, snapping up Jet.com, Bonobos, Moosejaw, ShoeBuy and ModCloth, and it is now reportedly in talks to acquire Birchbox. Here’s what you need to know about Walmart’s recent e-commerce acquisitions.

The key numbers:

  • Walmart’s e-commerce sales have increased 63 percent in the first three months of this year, compared to 29 percent last quarter. (Walmart doesn’t disclose overall e-commerce sales in its quarterly report.)
  • Acquisition spending: $4 billion, including Jet.com, which Walmart bought in 2016
  • At $3.3 billion, Walmart’s purchase of Jet.com could be the most expensive e-commerce acquisition in history.
  • On average, e-commerce preference for Walmart has dropped by 2 percent year over year from 2011 to 2016, compared to around 15 percent year-over-year increase for Amazon, according to research firm Prosper.
  • On average, only 10 percent of Walmart consumers shop online, according to a survey of 2,750 U.S. consumers ages 18-74 by marketing consultancy Magid Associates.
  • Amazon agreed to acquire Whole Foods for $13.7 billion, with $13.4 billion in cash and the remainder in debt.

What Walmart is buying
Under the leadership of Marc Lore, head of e-commerce for Walmart and former CEO of Jet.com, the retail giant has made bold moves in snapping up e-commerce startups across footwear, men’s fashion and potentially subscription boxes. Jim Cusson, president of retail branding agency Theory House, said that through those acquisitions, Walmart is buying a new consumer base — upper-middle-class people who normally wouldn’t shop at Walmart — and these new relationships would bring higher margins.

Meanwhile, Walmart is acquiring knowledge, as each new e-commerce acquisition brings new talent on board with startup mentality and bravado that can accelerate learning and decision-making. “I’d argue that Lore is making decisions with more speed and decisiveness than your ‘homegrown’ Walmart executive would traditionally make,” said Cusson.

Wells Davis, chief strategy officer for agency David&Goliath, also said Wall Street rewards Walmart’s strategy, as the company sees an immediate return on those investments. “It would be very expensive for Walmart if it just invests in its in-store experiences, and it would take a long time for the company to see the results,” said Davis.

But brick-and-mortar stores are still Walmart’s major focus. As Doug McMillon, CEO for Walmart, described in the earnings call in May, while those acquisitions have received a lot of attention, the company’s plan in e-commerce is not to buy its way to success. “The majority of our growth is and will be organic,” he said.

Would e-commerce acquisitions help Walmart compete with Amazon?
Yes, at least from a search perspective. Most retail purchases — even if they take place in store — started with online searches that Amazon typically owns. So acquiring more e-commerce retailers is a game of trying to win consumers’ online searches, said Cusson.

“We know that Amazon is currently capturing much of that traffic, so if Walmart can introduce a great number of opportunities to be found, it will help in its battle with Amazon,” he said.

Davis also believes that e-commerce startups can help Walmart become a more upscale brand and offer shoppers more customized experiences.

But it’s still too early to tell how successful Walmart can be with those acquisitions. After all, driving the lowest price is still a core value of Walmart, but that is not the foundation of the e-commerce brands Walmart has purchased. And company culture could be a big challenge. For instance, Walmart reportedly doesn’t allow in-office drinking, so Jet.com had to move its regular Thursday evening happy hour out of the office.

“Some of those brands are favored by niche consumers. But when Walmart puts its hand on them, it bends their customer loyalty,” said Cusson. “There is a real possibility that some of these acquisitions may disappear within five years. But with no risk comes no reward.”

The History of Digital Rights Management

(This article was written by Ernie Smith for Tedium).

Digital rights management seemingly came out of nowhere to define our relationship with technology in the modern day. Popularly, it seemed like its birth had come as a direct response to the growth of piracy in the film and music industries, but what’s interesting—and perhaps not properly contextualized—is that it existed for years prior to Napster, and had a technical component before the Digital Millennium Copyright Act gave it a legal component.

“We felt that this would be impractical and inconvenient for users and expensive for IBM. We also concluded that any single-machine locks and keys, or special time-out and self-destruct programs, would be onerous to our best customers and not effective against clever thieves. Because we could not devise practical physical security measures, we had to rely on the inherent honesty of our customers. Our hope was that legal protection and criminal prosecution would limit the piracy problem.”

— Watts S. Humphrey, an IBM employee in the late 1960s, discussing the decision by the company to move away from any effort to heavily protect its software through encryption. The issue came up for the company in 1969, after the firm decided to unbundle its software from hardware. Decades later, IBM would produce its own DRM technology called Cryptolope.

The roots of modern digital rights management came from the world of libraries

The word “middleware” isn’t sexy. Nor is the word “container.” And “encryption,” while slightly more sexy than the prior two words, just isn’t the kind of phrase that rolls off the tongue.

“DRM”? Now that’s a sexy phrase—a memorable one that sticks with people. But the terminology didn’t come about right away, and a big part of that has a lot to do with the fact that the problem of securing copyrights online was something that engineers and researchers were initially focused on.

Specifically, one company, made up of a whole lot of academically minded engineers, lined the roads on which a lot of secured content would drive down. That company was called Electronic Publishing Resources, Inc.—a firm that used the words “middleware,” “container,” and “encryption” to describe its earliest attempts at the creation of DRM.

The firm was founded by a guy named Victor Shear, who built his name in the information management sector. In the ’80s, he was the head of a Maryland company called Personal Librarian Software, which produced a database management system that could effectively manage historic information. This company, which mostly served large corporations, exposed some of the earliest roots of digital rights management, as it Shear’s company pondered ways to limit access to different kinds of information.

A 1986 patent, credited to Shear, explained the issue as one of “return on investment”, in which methods of “tamper-proof” protection, such as a self-destruct feature, were added to the software to limit how much access a user had based on their payment. A 1989 article for Online noted that the goal of the software, which was literally called ROI, was to allow for access to CD-ROM databases both within libraries and outside of them, while ensuring the creators of those databases got paid. Per the article, the method was described as such:

PLS believes that libraries, as centers for subscription-based CD-ROM usage, would “seriously undermine potential CD-ROM publishing subscription revenues by providing users with an alternative to contracting for expensive subscription licenses.” PLS believes that ROI would lessen the need for reliance on libraries and information centers “while providing a level of convenience and real-time response with which libraries can not compete.”

This model clearly wasn’t long for this world—as I noted recently, encyclopedias were very much a race to the bottom once CD-ROMs came along—but it did inspire Shear’s follow-up company, Electronic Publishing Resources, later renamed InterTrust. By the mid-1990s, InterTrust had strongly advanced the ideas around the monetization and security. And they did so with some of the most complex patents you’ve ever seen. This one, for example, is 178 pages long (in tiny type), and includes 100 separate patent illustrations.

In the paper “DigiBox: A Self-Protecting Container for Information Commerce,” three of Shear’s colleagues—Olin Sibert, David Bernstein, and David Van Wie—explain, in depth, the process of creating a secured container around a piece of information, with the goal of protecting the object’s commercial value.

“Without rules to protect the rights of content providers and other electronic community members, the electronic highway will comprise nothing more than a collection of limited, disconnected applications,” the authors argued.

The technology, called DigiBox, was perhaps the first, and most important, piece of modern digital rights management software. It would soon have many imitators—but none of them would be able to compete in quite the same way.

120+

The number of companies involved in the Secure Digital Music Initiative, a group formed in 1998 with the goal of creating an open framework for sharing encrypted music—an unusual goal when you explain it like that. The group tried to balance the interests of both the music industry and the average consumer: “SDMI’s work is based on the core principles that copyrights should be respected and that those who wish to do so should be able to use unprotected formats,” the group explained in a fact sheet. SDMI ultimately failed to give us a universal DRM standard, but its concepts did create a framework for a technology that’s still heavily used today: The Secure Digital memory card.

Big companies suddenly become interested in DRM’s potential value

In the early ’90s, idealists like Electronic Frontier Foundation founder John Perry Barlow saw the internet as an opportunity to fix the status quo of information exchange. Rather than keeping information locked away, the digital revolution, particularly online, would radically reinvent copyright.

“Everything you know about intellectual property is wrong,” Barlow explained at the beginning of one essay on the topic for Wired.

Another digital visionary, a Xerox PARC research fellow named Mark Stefik, tried his hardest to prove Barlow wrong. In a 1997 essay for the Berkeley Technology Law Journal titled “Shifting the Possible: How Trusted Systems and Digital Property Rights Challenge Us to Rethink Digital Publishing,” Stefik specifically references Barlow’s comments, then calls them short-sighted, emphasizing that copyright did have a role in the digital revolution. He then, in a lengthy, technical essay, described the ways that digital rights management could work in practice.

“With digital works, it need not be the case that transfer rights are free or universally granted,” Stefik noted in a section about the difference between copying (which Xerox, of course, is known for) and transferring information. “Publishers could charge a small fee whenever a work is transferred between repositories. The same mechanisms that prohibit copying without a right to copy could prohibit transferring without a right to transfer. The same billing mechanisms for a copyright work for a transfer right. The technology itself is neutral on this point. Trusted systems could enforce either policy.”

The work of Stefik and others at PARC eventually came to be known as ContentGuard, a technology that would grow in prominence as the interest in digital rights management grew in the industry.

Not long after Xerox PARC formulated the idea, IBM licensed its own version of it from Xerox, putting its own twist on it, calling it a cryptographic envelope, or cryptolope. (Is “cryptolope” a sexy term?) The idea was part of IBM’s efforts to create “plumbing” online—that is, they wanted to run the internet’s backend, and offering digital rights technology was a small part of it. It sold off its content businesses, but offered its cryptolope as a way to secure online distribution of both content and Java applications.

IBM’s early efforts ultimately failed in part because its technologies asked too much of ’90s computers. But the fact that IBM cared at all showed that DRM would soon become the lingua franca of big business, whether consumers liked it or not.

60KB

The size of DeCSS, the utility that infamously broke the Content Scramble System, a DRM technology that the movie industry had pushed for including in the DVD format. DeCSS, the work of two European security experts, came about in 1999, just three years after CSS was launched, and its creation set the stage for the widely successful digital film piracy industry we have today.

The earliest DRM building blocks have proven most successful in the courtroom

If you look at the InterTrust website today, they look like basically any other enterprise cloud computing player, offering up tools that are clearly designed for large businesses instead of mere mortals.

But InterTrust, as a company, wouldn’t exist today if it were not for an incredibly ballsy lawsuit against Microsoft. In 2002, the company sued over the technologies in Windows Media Player—then expanded the suit to cover every major product line Microsoft had at the time, including Windows XP, Microsoft Office, and the Xbox.

The move came in part after a lack of success selling software—including a failed effort at launching a digital music store named after its encryption technology, DigiBox.

But it also was the result of the fact that InterTrust had created patents so immaculate and well-considered that it would have been wrong not to sue—you don’t create a patent with 100 separate drawings to just put on the shelf, never to use again. And they seemed to know this going in. Of InterTrust founder Victor Shear, one former employee told Fortune: “He never let us forget that we were not ‘protecting music,’ but ‘developing the basis for a civil society in cyberspace.’”

And that civil society in cyberspace paid well. Just a few years after Microsoft agreed to a major antitrust settlement, it agreed to a major InterTrust settlement, with the DRM maker receiving a $440 million payday. The gamble worked.

Years later, InterTrust received a similar settlement from Apple, though it’s not all about litigation for the company. Earlier this year, they launched a partnership with Google called PatentShield to defend small startups against patent lawsuits.

While InterTrust’s approach has proven effective over the years, its best-known DRM competitor, ContentGuard, has had a bit less luck doing the same thing.

It was spun off from Xerox in 2000 at the behest of Microsoft, and the bones of the firm were eventually sold off to a trio of firms—Microsoft, Time Warner, and Thomson—and its technology helped lead the way for Microsoft to produce its own DRM, PlayReady. (It also helped the acquisition took place around the time MS settled with InterTrust.)

But in 2011, the company was sold to Pendrell, a firm that invests in valuable intellectual property.

ContentGuard actually makes new apps with its technology—it built a Snapchat clone in 2014, for example—but it’s better known these days for suing the pants off of companies with DRM interests, like Apple, Samsung, and Google.

Those lawsuits, taking place in the patent-lawsuit-friendly Eastern District of Texas, have not gone well, with courts often finding against ContentGuard.

It’s probably because they didn’t use as many patent drawings.

A decade ago, Apple CEO Steve Jobs famously put a puncture hole into the heart of digital rights management as a consumer platform.

In an essay titled “Thoughts on Music,” Jobs made the case against licensing his company’s FairPlay encryption software, which he noted would have to be hardened up significantly if it were sold to other vendors and made universal. He then made the case that nearly all music was already sold in a DRM-free format, using these old, outdated things called CDs.

“So if the music companies are selling over 90 percent of their music DRM-free, what benefits do they get from selling the remaining small percentage of their music encumbered with a DRM system? There appear to be none. If anything, the technical expertise and overhead required to create, operate and update a DRM system has limited the number of participants selling DRM protected music,” he wrote.

What’s fascinating about this document is that, 38 full years after IBM decided against what became DRM for its business software, Jobs made the case against it with much of the same kinds of thinking that his company’s onetime biggest competitor used: It hurts consumers who play fair far more than it hurts those who steal content; it was frustrating and inconvenient; and it required a large investment of time and money that could be better spent elsewhere.

It was a seed of an idea that proved far more effective than any software-based security system, closer in mindset to John Perry Barlow than Victor Shear.

In just a few years, Jobs’ arguments paved the way for a change in negotiating strategy, and effectively killed digital rights management for the music industry.

Of course, it only came back after Spotify became popular and killed the idea of ownership entirely.

How Shipping Can Give You a Competitive Edge

(This article was written by Devin Johnson for Total Retail).

How many times have you put items in your cart and started the checkout process only to see a $10 shipping charge and close your browser? What about when you look at the options and realize there's no overnight for the item you need right away? More than likely you shut off the computer, get in your car and try to find a feasible replacement at a nearby store.

Shipping cost and delivery options have a major impact on a consumer's decision to click that final "Submit Your Order" button. That's why it's so important to provide the most effective and reliable e-commerce shipping options to your customers.

In the end, satisfying and retaining customers is one of the most vital parts of running a business. Buyers rely on great customer service, and a big part of that is the safety, timing and price of receiving their product(s). Customers that suffer a bad experience when it comes to shipping may choose not to buy from you again. Building an effective and reliable e-commerce shipping strategy will help to set your company apart from the competition.

Give Customers Options They Can’t Refuse

If a customer reaches the payment page and is suddenly faced with a lack of shipping options or high shipping costs, they’ll look elsewhere until they find an acceptable price. It may not exist, but they'll keep looking until they find it. If they can’t, consumers will often decide to abandon that purchase for good. Being able to offer up everything from economy to expedited services both domestic and internationally will stop consumers from having to leave your site for another to find better shipping options.

Fast and Reliable Shipping Will Win Customer Loyalty  

A great goal for any e-commerce business is to continually increase customer retention rates. Meeting and exceeding expectations will win your customers over. The ability to track a package and confirm a delivery is a great way to ensure trust in those buying from you. Furthermore, if you have the ability to get the product to the customer in less time than they expected, they'll likely continue buying from you in the future.  

Finding a Sweet Spot Benefits You and Your Buyers

Shipping is all about price and transit time. The key is finding the point between acceptable transit times and pricing for your customers that still allows you to make money. As companies evolve, they're all trying to find the fastest shipping for the cheapest rate. Right now, everyone wants to compete with “free shipping,” but who can offer free shipping if it eats into their margins? This is why providing things like delivery tracking and transit options will help you to combat this issue.

It's tough for any business to determine the best shipping options for the company and its customers. Set aside time to plan the best e-commerce shipping strategy for your unique business. Research different shipping options, including technologies that can help you determine which carriers will be help you find the shipping sweet spot for you and your customers. Each business is different, and finding the most effective shipping for you will help you to gain a competitive edge in the eyes of consumers.

Retailers Are Struggling to Hire

(This article was written by Jennifer McKevitt for Supply Chain Dive).

Dive Brief:

  • As retail warehouses grow and expand, the need for workers to staff them becomes increasingly critical, Forbes reported Wednesday.
  • The number of people working in warehousing and storage tallies roughly 950,000 in the U.S., though more are needed according to data compiled by the Bureau of Labor Statistics
  •  From 2011 onward, warehouse worker growth has been dramatic, resulting in nearly 40,000 new jobs a year.

 

Dive Insight:

The ongoing battle between Amazon and other e-commerce sites and brick-and-mortar retailers is particularly contentious when it comes to employment. With consumers abandoning retail at a rapid pace, it seems that future employees aren't keen to sign on to what may be perceived as a sinking ship. 

And while Amazon's recent hiring fair in Baltimore saw 20,000applicants when it needed only 1,200, 3PLs like FedEx are also competing with retailers, offering more benefits and usually better pay than retailers. The fact that perks exist for workers who stay on past peak season in December (though hiring starts in August) also indicates that the opportunity for long-term flexible work is more likely to be found at a 3PL than at a retailer, which often requires demanding hours, especially during the holidays.

But there are exceptions: in recent years, chains like Target hired roughly 70,000 seasonal workers, while Walmart, though hiring 60,000 extra hands for the holidays, notably describes them as temporary, meaning that the chance to stay on, let alone receive benefits, is unlikely. Retailers might struggle near peak season as 3PLs snap up workers wanting full-time jobs with higher pay and benefits, unless retailers can offer something more attractive and competitive.

7 Companies to Watch in Sustainable Shipping

(This article was written by Lauren Hepler for GreenBiz).

In the realm of consumer cars, going all-electric today can be as simple as deciding which brand you prefer, how much range you need and the amount of money you want to shell out. For instance, are you shopping Tesla versus BMW or Chevy versus Ford?

The same can't be said, however, for commercial fleet operators looking to electrify their transportation supply chains. Limited range, lacking alternative fuel infrastructure, long charging times and rapid turnover in vendors offering all-electric commercial vehicles are all barriers to more aggressive action. 

"The problem is the industry is just not there yet," PepsiCo Senior Supply Chain Director Mike O'Connell told me earlier this summer. Still, he added, "I’m very optimistic about what’s coming."

That's not to say the sustainable shipping space has stagnated, though. From new types of on-demand trucking models to incremental electrification among large corporate fleets, here's a rundown of seven companies to watch in the delivery space:

1. UPS

Amazon may be out in front when it comes to electric drone delivery, but logistics giants such as UPS and DHL also already are at work on honing new alternatives to traditional gasoline- or diesel-powered trucks.

In addition to testing out designated neighborhood drop-off locations in a bid to cut emissions from driving door to door on multiple delivery attempts, UPS late last year announced an investment in 200 new hybrid electric trucks. Employing smaller vehicles with much lower emissions footprints is another ongoing effort.

2. Workhorse

When big brands such as UPS and FedEx need un-traditional delivery vehicles, truck and drone manufacturer Workhorse is one player they look to for supply.

The company, an outgrowth of a company called AMP Electric Vehicles founded in 2007, sells a range of vehicles with different delivery capabilities, from all-electric pick-up trucks to electric helicopters to bigger electric trucks with up to 120 miles of range.

3. Chanje

Los Angeles-based electric delivery vehicle startup Chanje (yes,  it's still pronounced "change") publically launched this spring with ambitions of cornering the market for electric vans with up to 100 miles of range.

Companies such as e-Tuk are experimenting with even smaller electric vehicles, particularly in dense, urban delivery environments. All told, a recent Research and Markets analysis predicts that the last-mile vehicle industry could be worth up to $792 billion by 2028.

4. Uber

Ridesharing company Uber is best known for shipping customers from location to location at the touch of a smartphone. But as the Uber Eats food delivery venture and more recent forays with Uber Freight illustrate, the company's logistics platform isn't short on potential variations.

How exactly ridesharing providers including Uber and primary rival Lyft might move to further integrate electric vehicles into their fleets is one question across the board. What that effort might look like in an on-demand freight hauling service (with or without a human driver) is another.

5. Convoy

Ironic though it may be, the Uber-for-trucking idea didn't actually start with Uber. On-demand short-haul trucking startup Cargomatic was an early leader in the space before making headlines for reportedly burning through an initial $15 million in funding. 

Now, however, a new crop of intermediary platforms aim to match companies in need of shipping with available truck space. Just look at Convoy, which raised $62 million in a Series B funding round this spring to expand offerings for customers such as Unilever and Anheuser-Busch.

6. Transfix

Also active in the category of tech-enabled trucking is Transfix, a four-year-old New York company that has raised north of $78 million for its software platform designed to connect small-scale truckers to customers in need of freight services.

Like Convoy and other customers, the pitch is that companies can save money and cut emissions by opting for on-demand services instead of maintaining their own fleets. Down the road, one prospect to watch is how Transfix and others in the space might look to integrate hybrid or electric offerings.

7. Walmart

Given the amount of merchandise the world's biggest brick-and-mortar retailer has to move, it makes sense that the company would be testing the waters with delivery alternatives. Light-weighting, aerodynamics and driver training have been priorities of late as the company looked to double fleet efficiency, Director of Logistics Sustainability Elizabeth Fretheim recently told me.

Now, however, Walmart is taking a closer look at alternative fuels and electric options as part of the company's broader efforts to wring 1 billion metric tons of greenhouse gas from its supply chain by 2030.

"To fill the gap, we're going to have to find alternatives," Fretheim said.