Direct-to-Customer Commerce

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

5 Things to Put in the Shipping Box

Here’s a link to this post at Practical Ecommerce … click here

Armondo Roggio posted this late last month.  Of course, it’s not just about ecommerce, it’s really about anytime you’re shipping product to a buyer.

Here are his five things:

  • put coupons in the box
  • put free merchandise in the box
  • put a treat in the box
  • put a review request in the box
  • put a catalog in the box

Of course, I can make the case that for specific companies this list should change.  But Armondo makes the underlying point that the box you ship to your customers is very important.

For example … the treat or free merchandise may do more for your customer loyalty than a frequent buyer program

And the follow up question for Armondo is this:  how to you make sure your customer sees all of this material?  Do you put it on top of the purchased merchandise to make sure they see it?  Or, do you put it underneath … because the first thing they should see is what they bought?

And of course, it’s really easy to overthink this stuff, too.

Filed under: Direct Commerce, Ideas, , , , , ,

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, , , , ,

Amazon’s Same-Day Delivery Will Shake Up Retail

The title of this post is the headline of an article posted at Ecommerce Times on Jan 17, 2013.  Here’s a link.

The article points out the very convenient solution Amazon can provide in some high-density markets for customers who are willing to pay for the convenience of not having to actually go to a store themselves for something they need today.

The author then proceeds to describe some of the warehouse systems, which Amazon uses to facilitate their same-day delivery service, including a reference to Kiva Systems.  Kiva Systems provides robots for use in the Pick & Pack process of direct-to-customer fulfillment centers.  It’s a great systems … I met with the founder when he was looking for both initial funding and early clients (back in 2003 or so).

But we need to keep this “same day delivery” thing in some context.

According to data from the Department of Commerce, under the category of Retail Sales, Mail Order and Ecommerce Sales still amounts to only seven percent of total retail sales … yes, 7%.

Now, that’s still a significant number.  And for some retailers, it may even account for a major percentage of their annual profit.

Please take note that in most direct commerce research, “free shipping” remains among the most effective promotions.

But given that same day delivery will only appeal to the more affluent, for whom delivery cost is not as significant as convenience, and given that all direct commerce accounts for only 7% of total retail sales … it’s somewhat of a stretch to say that same day delivery will “shake up” retail.

A bit too much hyperbole, for me

Filed under: Direct Commerce, Ideas, 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, , , , , , , , , , , ,

What’s the impact of the new FedEx rates?

Parcel Magazine has published a piece entitled, Assessment of 2012 FedEx Express Rate and Accessorial Increases.

If you ship via FedEx, this is a worthwhile read … and then adjust your forecasting shipping costs based upon the noted increases.

Filed under: Direct Commerce, News, , ,

New Dimensional Weight Factor to Boost Shipping Costs

Here’s a link to an important article in Multichannel Merchant  — New Dimensional Weight Factor to Boost Shipping Costs.

This is a huge change.  The article documents a coming change by FedEx and UPS to reduce the factor used to calculate Dimensional Weights from 194 to 166.  The article explains the calculation, if you’re unfamiliar with it.

This change is important and noteworthy in both the short-term and the long term.  In the short-term, because it will mean an immediate rate increase on many packages.  And it will also increase the percentage of packages to which DIM weights will apply.

In the longer term, it portends a move towards DIM weights becoming the default or de facto method for rating the cost of shipping parcels.  After all, it’s generally accepted that planes and trailers are most likely to fill up space-wise before they fill up weight-wise.  So carriers will make the most money, if they charge based upon DIM Weights.

An example for comparison.  Let’s assume a 3# packaged being shipped to Zone 5 — the generic average parcel bound for a residential address.  Further, let’s assume a parcel 12″ x 12″ x 8″ — not huge, not small.  This parcel calculates to a DIM weight of 5.938 using the 194 factor; 6.94 using the 166 factor.

Here are UPS Ground rates (without accessorial charges, based upon the current rate table):

  • 3# Z5          = $6.24
  • 5.938# Z5 = $7.10 (an increase of 14% over actual weight)
  • 6.94# Z5    = $7.29 (an increase of 17% over actual weight)

This change by FedEx & UPS should result in a lot of work on product packaging, in an effort to reduce parcel sizes.  And it will put increased pressure on “free shipping offers.”

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

Rising Package Shipments A Sign of Hope

Rising Package Shipments A Sign of Hope.

This is an article in Multichannel Merchant about the increase in parcel volumes at the three major parcel carriers (FedEx, UPS, USPS).  This increase, of course, parallels the uptick in direct commerce sales reported here earlier.

Filed under: News, , ,

New UPS Rates for 2010

Here’s a link to a summary of the rate changes for 2010 from UPS.  Click here.

Nothing new here, except for the details.  Most of the changes are in the arena of accessorial charges, where it seems that UPS seeks to make most of their profit margin today.  The basic rates seem designed to cover costs.

But I confess, that’s pretty much a shipper’s skepticism.

Filed under: Direct Commerce, News, Opinion, ,

Shipping Options for Residential Deliveries

UPS and FedEx are providing new options for residential deliveries.  Here’s the complete story in Multichannel Merchant.

The real news here is that UPS is offering it’s “Basic” service to a broader range of shippers, with much lower volumes.  Up until recently, UPS only offered this service to very large volume shippers, and as they usually do, offered only to clients who also had large volumes of commercial shipments as well.

This simply reinforces the conclusion that there is continuing pressure to find lower cost shipping solutions, especially in the face of increasing rates.  And, the USPS remains the lowest cost solution for “the last mile.”

For some time, it’s been the conventional wisdom that the USPS’ most profitable segment was parcel delivery, but the USPS does not seem to have been able to fully leverage that fact in their own marketing.  Thus, the recent USPS campaign around Priority Mail flat rate shipping.  Which is probably the most sensible advertising campaign the USPS has ever executed — good for them.

Good low cost shipping options remain an important component of direct commerce strategies — driven largely by the near universal attractiveness of free shipping offers.

Filed under: News, Opinion, , , , , , ,

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