Direct-to-Customer Commerce

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Strategic insights into the direct commerce industry, including ecommerce, direct marketing and related fields

More on “Same Day Delivery”

Late yesterday, Internet Retailer published a story under the headline:  Price beats speed for online shoppers.  In general, the article sites research on the web site features which are most important to what they buy online.

But the article highlights that for 53% of respondents, price is most important, and they use whatever shipping is the lowest cost or free.

Now there is another 47% for whom shipping cost is less significant.

But I hope it’s becoming clearer to all, that same day delivery is a very limited market.  Limited to the affluent & lazy + the urgent.

Most online buyers do not request “overnight delivery.”  Overnight deliveries probably average 3-5%, at most.  I’ve not seen recent data on that question.  So “same-day delivery” is likely a subset of the overnight number.

It may make a theme for a marketing campaign … and it may even be a profitable segment (because people who want same-day delivery are less price sensitive) … but it’s not a big segment.

Filed under: Direct Commerce, News, Opinion, , , , ,

More on Same Day Delivery

Anyone engaged in ecommerce operations is probably following the trade press reports on same-day-delivery.

It’s a gee-whiz offer, but does it increase sales?  Is it profitable?  Is it cost-effective?

For some merchants, it makes all kinds of sense.  In fact, for some, such as florists, it’s almost a requirement.  It makes sense even for office supply stores, and some high-end merchants — Macy’s, Nordstrom and similar companies.

All of these companies have inventory widely dispersed and can take advantage of local courier services or even, as in the case of most florists, have their own existing delivery infrastructure.

But what about everyone else?

Here’s an interesting story from StorefrontBacktalk.com, reporting on Amazon’s recent experience.  It reports that Amazon saw a conversion increase of 20-25% when they offered same-day-delivery,  but few of customers actually asked for same-day-delivery.

Demonstrating a great point:  Marketing is one-thing, but what customers actually want, need or use may be another.

Now, you just have to figure out where you fit on this new paradigm.

Filed under: Direct Commerce, Ideas, multichannel commerce, Opinion, , , , , , ,

Testing Same Day Delivery

The Wall Street Journal reported, today, on eBay and Amazon testing same-day delivery in a couple of major markets.  Here’s a link to the story.

In the San Francisco area, eBay has hired a crew of people, essentially, concierge shoppers, who will locate the product you want at a local store, buy and deliver it to you within one hour of the time you place the order.  Wow, quite a high level of customer service.

Don’t expect this to be a viable service in Yuma, Arizona.

I’m not sure it would be viable even in all of the top ten markets in the US.  But it will be very interesting to watch it.

Based upon the anecdotes of the article, we can imagine this service being used by customers in major markets (where there may be sufficient aggregated demand for such a service) for whom convenience carries a very high value and who is less price sensitive than average.

I think that’s a pretty limited market … but the beauty of the web / ecommerce, is, in part, it’s ability to aggregate demand in ways we’ve never been able to do under earlier retail models.

The economics of same-day delivery are very difficult to make work.

We’ll know same-day delivery has worked when FedEx, UPS and the USPS begin to offer the service.  But don’t hold your breath!

Filed under: Direct Commerce, Ideas, News, Opinion, , , , , , , , , , , ,

The eighth step to multichannel commerce

Step 8 is marketing & promotion.

What a can of worms that is … or at least can be!  And obviously, in a single post, I’m not going to cover this topic.  This is a topic of unending variables.

I really only want to make a few points.  First recognize the difference between the channel or medium and the activity.  You can advertise by mail, market by mail and promote by mail.  Mail is a medium of communications.  Advertising, marketing and promoting are the activities.

Multichannel commerce, it seems clear, by definition refers to conducting commerce (which means generating sales) thru multiple channels.  So, I’m not taking about advertising, which is just sending a message.  I’m thinking about making an offer to a customer or prospective customer to conclude a transaction with me.

We have more channels than ever, for commerce:

  • brick and mortar stores (fact-to-face)
  • paper mail (flyers, postcards, letter packages, catalogs)
  • electronic mail
  • social media
  • web store
  • smart phone app
  • tablet app
  • telephone
  • direct response broadcast (radio, television)

… and I’m probably leaving something out.

So, in the ideal world, your marketing & promotion efforts will generate commerce transactions with your customers.  And it should be your customers choice to use any particular channel.  Your offers, products, promotions should all be visible to your customers across all channels.  And that takes no small effort.

Here’s the next important point:  If you can’t measure it, consider not doing it.  The beauty of direct marketing, direct commerce, whatever you choose to call it, is that it’s measurable.  And with technology you can almost measure everything.  But not everything is worth measuring.  But if you’re not measuring anything, you’re wasting a lot of time and money.  And if you’re measuring so much you can’t comprehend the data or analyze the data, you’re still wasting a lot of time and money.

So, be deliberate about what you measure.  The most basic and most useful things to measure are:

  • customers who got an offer
  • customers who bought
  • how much they bought
  • how many they bought
  • what it cost to make the offer
  • what it cost to fulfill the offer

You’ll know a lot, if you keep these six data points for every channel and every promotion.

Think about this … it’s a lot to think about.

Filed under: Ideas, multichannel commerce, , , , , , , , , , , , , , ,

The fourth step to multichannel commerce

Step 1 = a single, unified product master

Step 2 = a cross-platform, multi-channel order management system

Step 3 = a single view of inventory, updated in near-real-time.

Step 4 = a warehouse management system capable of item-unit-picking and parcel shipping (fulfillment processing)

More and more warehouse operators are coming to an appreciation of the differences between shipping to stores and shipping to consumer.  For those who don’t, the most typical problem is that both processes use similar terms, but the definition of the term varies with the environment within which you’re working.

Picking for a shipment to a store, is often at the case level.  Picking for a consumer is almost always at the unit level.  A case contains multiple units of a single item.  Pallets contain multiple cases, which may be of a single unit or mixed units — but all in cases.

Fulfillment of consumer orders usually requires:

  • more complicated picking instructions
  • variable picking strategies
  • more difficult packing (read “slower”)
  • slotting optimization (to reduce picker travel time)
  • more sensitive cut-offs for picking orders
  • coordination with multiple parcel carriers (USPS, UPS, FedEx, DHL and others) for pick ups based upon class of service (ground or expedited)
  • near-real-time updating of order status and inventory status

These are just the highlights … the actual list goes on much longer.  I’m only trying to highlight the differences between retail fulfillment and consumer fulfillment.

More and more Warehouse Management Systems (WMS) are capable of handling both retail and consumer fulfillment.  So, the more difficult matter is personnel management and scheduling.  In a typical retail operation, staff peaks in August-September for shipping Christmas inventory to stores.  And the staff increase is 20-30 percent over base levels.

However, for consumer fulfillment the increase in staff may reach 200-500 percent and run from early November thru mid- to late-December.  This dramatic increase puts a premium on the ability of Human Resources to hire quickly and well; plus the ability to train new people on any specialized tasks.

Filed under: Ideas, Opinion, , , , , , , , , , , , , ,

Perfecting the Perfect Order

Kate Vitasek and Karl Manrodt wrote, in the May 10 issue of Operations & Fulfillment Advisor, a weekly electronic newsletter under the headline, Perfecting the Perfect Order. Essentially, their article advocates a new customer service measure which attempts to measure fulfillment execution against the customer’s expectations.
I like much of what they say. However, as they point out, most of the applications systems currently used to fill orders don’t allow us capture all of the information necessary to actually calculate this new “perfect order” metric.

There are really two typical shortfalls.

[1] Our systems don’t always capture what the customer wants. For example, do we know when the customer needs or wants delivery? Most consumer-oriented fulfillment systems don’t even allow for future ship-dates, much less future “receive-by” dates. And the most important date is when the customer wants to receive their order.

[2] Most of our systems do not capture actual delivery dates. Certainly, some do. And as Vitasek and Manrodt point out, the data is available from most carriers (even USPS captures this on most parcel shipments). But generally, we don’t get the data and don’t compare it to what the customer wanted, because we don’t even ask the customer what they want, we just assume they’ll be happy with when we ship it and when they get it.

Vitasek and Manrodt also wax philosophical about the definition of a “complete order.” My only disagreement is they make too much out of it; even while pointing out that their own definition is almost impossible to measure.

Overall, they make good points about how to measure real performance of order fulfillment activities. They’ve moved the ball forward.

Filed under: Direct Commerce, Uncategorized, ,

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