Usually whatever 'it' is, is upfront. It's obvious. You can see it, touch it, let your friends ogle it. But this year, it may be something more apparent to those doing the selling than those doing the buying.
This year's 'it' feature is delivery. Yes, that has been a factor for a while now. UPS and Fed Ex have helped drive ecommerce with it and that, in turn, has changed retail, probably forever. They have made it clear to all that they are in the logistics business: they dont just pick up and deliver, they package, schedule, organize and, frankly, take over every aspect of the process. And it has worked well for them.
But everyone now is getting into the game in a big way: eBay, Amazon, even Google. And what is particularly interesting is that some are doing it in-house, creating their own service, taking responsibility for the expense and the operational effectiveness. Others, however, are partnering with to get it done. In-store sales assistants are taking orders over the phone or the computer and then sourcing, picking, packing and arranging delivery with businesses that do this for a living. The stores think this gives them an advantage since they are already close to the consumer - or at least closer than many big distribution centers.
The big issue, however, is that the wall between retail and ecommerce is crumbling. It's no longer a question of who does what and how does that compare, but of who doesnt do everything - in order to survive. JL
Laura Stephens reports in the Wall Street Journal:
Package delivery is becoming a competitive weapon in the holiday retail season.Cameron Holloway, a sales associate at Sears in the Cumberland Mall here, is hard at work helping a customer—a virtual shopper 300 miles away in Semmes, Ala.The Sears website just sent a message to Mr. Holloway's iPhone telling him the customer wants a $145 18-inch Craftsman chain saw, so he retrieves one from the store floor, labels it and loads it onto a pallet next to cameras, tools and other holiday gifts.At 5 p.m. a United Parcel Service Inc. truck will arrive to ship it west, and Mr. Holloway will have successfully kept Sears from losing another holiday shopper to Amazon.com,"If you want to go head-to-head with Amazon, you go out and build a bunch of distribution centers," said Jeff Starecheski, vice president of logistics services with Sears Holding Corp.referring to the dramatic steps some competitors consider to stave off the e-commerce rival. But Sears and its sister retail chain Kmart blanket the country with about 2,000 stores. "We're already close to the customers," he says. Sears just needed a delivery strategy.The success of the holiday shopping season—the difference between winners and losers—usually hinges on factors like the economy, fashion, color, price, or a blockbuster new items like tablet computers or videogame consoles. Increasingly, though, another factor is coming into play: Shipping.Retailers ranging from Macy's Inc. to Wal-Mart Stores I to Office Depot, Inc. have all embraced shipping to compete against Amazon. They are shuttling merchandise on demand from store to store, warehouse to store, store to customer—often both quickly and free. Entering the fray over shipping is viewed as a necessity when online sales are growing at nearly four times the rate of overall retail sales and where people who shop online, on average, plan to spend 20% more than people who shop only in physical stores, according to research firm eMarketer. About a third of all retailers already use brick-and-mortar stores as fulfillment centers for online orders; another 26% plan to do so soon.UPS and FedEx Corp. , which were critical to helping launch the e-commerce boom, are now eager to help traditional retailers deal with it. They have engineered new strategies for jockeying inventory across the country to avoid overstocks and markdowns and to keep customers from defecting to Amazon, a big problem last year. The strategy is also important this holiday season as clothing retailers are threatened with heavy inventories.UPS says it is working with about 40 retailers on implementing these strategies—about double the number a year ago. FedEx said these partnerships helped boost revenue in its ground delivery business 11% in its fiscal first quarter. Both forecast record holiday-season deliveries: UPS with 34 million packages on Dec. 16 and FedEx with 22 million packages on Cyber Monday.In the case of Sears, UPS provided software that shows shipment statuses of all orders across the entire system. It also sends tracking numbers.When a customer in Brooklyn ordered a girl's size-7 pink-and-purple coat—which was out of stock up north—software searched Sears's inventory and directed the order to Atlanta."If a consumer comes to your website and the product's not available, you typically lose the sale," said Alan Gershenhorn, chief sales, marketing and strategy officer at UPS. These methods allow retailers to "pull and display the inventory from both your brick-and-mortar stores and your online inventory, so you're going to run into that problem less and less."Shipping does matter to retailers' bottom lines. Half of online shoppers would consider purchasing from a new online retailer if it offered the lowest-cost or free shipping, and customers often abandon sites without free shipping, according to Forrester Research Inc.Sears piloted its ship-from-store program in early 2012, before rolling it out to 27 Kmart and Sears stores that August. UPS helped the retailer determine which locations should be shipping centers to cover 80% of all customers by next-day ground.At peak season in December, dedicated in-store staff will have the capacity across the 27-store network to fill 20,000 orders a day, with the ability to fill 30% more orders this year.Online sales account for less than 2% of Sears' $40 billion in annual revenue, according to analyst estimates and company filings. Analysts say the real problem for Sears is its stores, many of which are run down and dilapidated after the chain spent about half of what competitors J.C. Penney Co. and Macy's invested in store upkeep. Sears lost $534 million in the quarter that ended Nov. 2, compared with a loss of $498 million a year earlier. Revenue declined 7% to $8.3 billion.Sears declined to comment on online sales. The company has invested hundreds of millions of dollars in improving stores and technology, a spokesman said.Saks Inc. employed FedEx when it decided to fill online orders from its 43 stores a year ago. FedEx is now joining with Saks on an experiment in same-day delivery in Florida. Over the past year, orders processed in store have jumped to 15%, from about 8%."We've always had FedEx software in our shipping departments, but we've worked together collaboratively on how to handle peak workloads," including adding pickup times, said Ed Stagman, Saks' senior vice president of store operations.Some logistics experts doubt the ship-from-store strategy is feasible long term because inventory is often scanned incorrectly by cashiers, meaning it is too difficult to know what's actually available in specific stores.Even retailers say shipping is an added expense that must make economic sense."It's all a balancing act," said Jim Sluzewski, senior vice president with Macy's, which now has 500 stores shipping with UPS after starting in 2011. This requires being strategic to "turn inventory faster—and do it while maintaining margins."If retailers don't get it right, they take a big risk: 89% of customers say they are likely to choose other retailers in the future if an item is delivered late, according to a survey commissioned by consultant Capgemini Group.Back at the Sears in Atlanta, UPS driver Paul Godfrey backs his truck into the loading dock and picks up three pallets of packages, including the chain saw and coat. He drives them to a nearby logistics center, which sorts a quarter of approximately 200,000 packages processed daily by UPS in Atlanta.Workers unload the chain saw, sending it through a maze of conveyor belts before adding it onto the next truck heading to Alabama.
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