By Adam Forrest, Director of Product Marketing
As we get closer to the start of the holiday shopping season, we’re seeing an uptick in discussions around order fulfillment and logistics. With the adoption of new logistics capabilities, it will be interesting to see how promotional activities shift to accommodate these changes this year. (If you missed it, check out these tips to manage delivery schedule expectations.)
Here are some of the top items I read to help inspire new thoughts for you this week.
Summary: As consumers eagerly await the announcement of the next iPhone – scheduled for today, September 9 – rumors are increasing around the mobile wallet functionalities the phone will include. Visa, MasterCard and American Express are all said to be in an agreement with Apple. This, combined with NFC and the iPhone’s Touch ID, could increase adoption of mobile payments.
My thoughts: The rumors around the new iPhone’s mobile payment capabilities have been swirling around for weeks. So let’s talk about it for a minute as it relates to the retail world. Yes, the number of iPhone users out there is substantial, so this could encourage a boom in mobile payment adoption. But I don’t think that’s the only factor here. The big thing for adoption is, in my opinion, the fact that NFC is already built into the hardware. This means retailers that already have NFC-enabled payment terminals don’t need to go through additional updates to enable mobile payment capabilities. This final step will really turn mobile devices into the one thing that enables a seamless shopping experience for consumers. As a result, I believe that in the coming months, we’re going to see a renewed focus on mobile strategies from retailers.
Summary: UPS is taking steps to ensure items ordered for the holidays arrive on time, including adding cargo and aircraft flights, increasing the number of new facilities and adding more loading doors for vans (a 10% increase in capacity over the last year’s holiday season).
My thoughts: The popularity of online shopping has certainly helped UPS in the past. But as consumers increasingly adopt pick-up in-store capabilities, it has the potential to threaten some of the company’s successes. This holds particularly true around the holiday shopping season. I think we’ve all been there – order something online and choose to ship it to your house on a specific day, only to find that you weren’t home when the package arrived. If you’re lucky, you’ll get a little green slip on the door that tells you where to go and who to call. If not, you start the hunt, and often end up in a creepy location where the UPS facility is. It’s a hassle. But if UPS makes it more convenient for people to get their deliveries when they need it – like providing pick-up points and locations, similar to what Amazon does with Amazon lockers – it could provide the company with some unique growth opportunities.
Summary: Last year, Amazon secured a patent for an algorithm-based anticipatory shipping system. And this year, the company opened 15 sortation facilities across the U.S. to get a better grasp on the final mile of delivery. For the end-consumer, this means later ordering times for Prime shipping, and even the possibility of Sunday deliveries.
My thoughts: Obviously, fulfillment and distribution are Amazon’s biggest differentiators, and the company continues to invest in these areas because, let’s be honest, getting the products you want when you want them is an area of particular interest to consumers. Just look at the previous article on the investments the UPS is making for the upcoming holiday shopping – and shipping – season. And Amazon just keeps reinventing the standards for the market. The idea that the company will be able to support late-day order times to still get products to you for free in 2 days (with a Prime membership) is just amazing. And offering Sunday delivery could completely change the dynamic of late-in-the-week shopping. For example, right now, if I want something over the weekend, I’m more likely to go to a store to get it right away, rather than order it on a Friday and know I’ll either need to pay extra to get it on Saturday, or wait until Monday to get it.
Summary: Though the ecommerce channel continues to present great opportunities for retail organizations in the U.S., these retail organizations should not overlook the opportunities associated with global operations. eMarketer predicts that global B2C ecommerce sales will rise 20.1% in 2014 to $1.5 trillion, and in 2015, increase 17.75% to $1.77 trillion.
My thoughts: It’s becoming increasingly more competitive for retailers to grow at the same rate – never mind an even faster one – year-over-year. One great place to look for new growth opportunities is to go global. There are a few ways to do this. One option is to explore international shipping capabilities with partners that help manage taxes and other cross-border fees. Another option is to explore an outsource model and work with organizations that help open distribution and call centers in the region of interest, like some of our LINK End-To-End Partners. Or another option is to open a new store, whether it’s a digital commerce presence and/or a physical location, localized to that region. But it’s important not to overlook the challenges associated with international expansion. Take a look at our 7 tips to prepare for global expansion for some additional ideas and guidance.
Summary: Staples recently announced a number of updates to its omni-channel experience, including the ability to buy products online and pick them up in-store, new in-store kiosks and the company’s first iPad app.
My thoughts: My colleague Rob Garf wrote about why retailers need to reinvent the box, and he’s absolutely right. It’s so great to see large retailers evolving to meet changes in the market, whether it’s to make finding products in the store easier, or make it easier for consumers to receive products. Staples has always had a good B2B business model, but to increase its B2C capabilities, the company needs to compete with Amazon, and I think the best way for the retailer to do that is to use its stores as fulfillment channels to get products to customers faster.