Let’s face it, shipping is a part of the online commerce process most retailers would prefer to ignore. That’s why most don’t spend nearly enough time strategizing about how to deliver when it comes to delivery. This often results in the use of tactics like free shipping or free returns that can eat away at profit margins and ultimately hurt business.
As one single company, Amazon, becomes an increasingly dominant force in retail -- Amazon enjoyed nearly 25 percent of all retail sales growth last year -- the time has come for every retailer, large or small, to re-examine its logistics processes in order to keep up with the pack or, better yet, move ahead.
Long before Amazon came on the scene, Walmart was the iconic American retailer. In 1997, the year that marked Amazon’s initial public offering (IPO), Walmart first surpassed $100 billion in sales. Today, Walmart is still flexing its competitive muscle, investing heavily in its online business to compete directly with Amazon and other omni-channel retailers.
But despite its past successes, Walmart has stumbled recently with its efforts to copy Amazon. Its rival sales days, the introduction of Shipping Pass -- Walmart's version of Amazon's Prime club membership -- and price-matching have all seen mixed results.
This is not unique to Walmart. In order to compete in this new age of ecommerce, retailers large and small are wondering whether to take a page from the Amazon playbook or try a different, unique, more tailored approach.
That’s wise, because like other market leaders, Amazon isn’t invincible -- at least not in the long term. Despite Amazon’s ever-growing sales figures and market cap, its current shipping methods are ultimately unsustainable -- it lost at least $1 billion on shipping in 2015.
Amazon’s returns practice also continues to leave some customers unsatisfied, and its backend shipping processes continue to increase in complexity, often resulting in Amazon sending a different package for each item ordered.
As omni-channel players struggle to evolve their logistics practices, here are four recommendations to stay competitive in today’s crowded retail environment.
1. Focus on customer experience.
The reason Amazon Prime is so successful is it considers the total customer experience. Amazon Prime isn’t just one service -- it is a cadre of services rolled into one wonderfully addictive package. Amazon Prime is seamless and attractive, making the purchase process easy, reliable and fun. Takeaway: develop a holistic customer experience that is unique to your brand. Name it, commit to it and market the heck out of it.
2. Unify distribution solutions into a single program.
Walmart is starting to offer great new services like curb-side grocery pickup and local grocery delivery, but each Walmart program is marketed separately. Instead, create an umbrella program with options that make it easy for customers to buy from you -- and receive their purchases when, where and the way they want them.
3. Capitalize on local returns.
Physical locations offer a major competitive advantage that pure-play ecommerce brands can’t take advantage of -- the ability to accept in-store returns. Last year, Nordstrom Rack began accepting returns in-store for items purchased online at HauteLook, a flash sale site it owns, and nordstromrack.com.
The result was one million more trips to Nordstrom Rack stores in 2014 -- each providing another sales opportunity for the company. Remember, every interaction with a customer is a selling opportunity. Make returns and tracking part of your sales strategy.
4. Embrace the local community.
A staggering 90 percent of the U.S. population lives within fifteen miles of a Walmart store and 70 percent within five miles. This represents an enormous opportunity for the company to build an efficient local delivery model, serving both online and phone order customers, where inventory can be delivered quickly and easily -- as it does in its grocery deliveries.
Smaller retailers without the brick-and-mortar reach of a Walmart can leverage Postmates, Uber or dozens of other options to provide low-cost local delivery to customers -- some of which even offer after-hours and late-night home deliveries.
Far from being an Achilles’ heel, effective shipping and logistics can be turned into a competitive advantage that will delight customers and boost profit margins. In today’s Amazon-dominated ecommerce environment, the key to planning a successful shipping strategy isn’t just to imitate -- but innovate.