Why Retail eCommerce and Transportation Teams Must Join Forces
We are barreling towards retail “peak season” and it has been an incredibly busy couple of weeks. Last week the Pivot Freight team attended the supply chain focused CSCMP event in San Diego. This week all the digital thought leaders across retail converged in Philadelphia for the annual Shop.org Digital Summit. It was interesting to see the following recurring themes from both the retail operational and customer engagement perspective:
- The new omnichannel reality
- The new expectations of the modern shopper
- The impact of machine intelligence and predictive, big data oriented technology and analytics
Today’s ultra-competitive retail environment means survival of the fittest. This battle is forcing upstarts and established brand named retailers to reinvent themselves. They’re rethinking their customer engagement models and the types of experiences that they deliver. Although eCommerce, digital marketing and merchandising are heavily reliant on supply chain innovation to be successful, these groups are still worlds apart.
This observation was confirmed by conversations on both sides. eCommerce and the customer facing sides of the organization have historically viewed operations and transportation as a “cost center” for the business. Also, nearly every leader in transportation mentioned goals based on massive cost elimination targets. Their focus was to “get items on trucks to DCs or stores as quickly and inexpensively as possible” with carrier performance considered second.
The new buy anywhere, anytime shopper expectations are forcing these two worlds together. A recent study stated that 93% of holiday shoppers expect shipping options and rewards, but 80% of retailers reported they were unprepared for this new reality. Now is the time to seize the opportunity to get ahead of the competition.
A Greenfield Opportunity to Truly Differentiate
To revisit a theme from one of our previous posts, I truly believe that innovative and groundbreaking approaches to fulfillment (which ultimately means supply chain models and transportation execution) is the new competitive battleground. This was reaffirmed with the launch of Amazon Flex at CSCMP and Jet.com. Jet.com built a successful marketplace model with a customer driven check out experience where the customer directly impacts the price by making check out choices (around fulfillment in particular) that tie to the retailer’s profitability.
Retailers have recognized that sustainable growth of the business through aggressive acquisition marketing is no longer possible. This has led them to invest heavily in technologies that allow them to differentiate the customer shopping experience. After years of investments in personalized recommendations, better site search, and enriched product content with user generated solutions, the next level of gains will be incremental. Truly innovative retailers that are going to weather the current competitive storm have to look to greenfield areas to innovate. One area they are turning to is offline engagement (i.e. pure plays launching brick and mortar models that are rich in technology) or rethinking the traditional approach entirely (i.e. Gilt’s “by appointment” model).
I believe that personalized and predictive fulfillment will be another big focus. A recurring theme I heard from the Shop.org Summit was that every customer wants to be treated like a VIP. We are reaching a level where many shopping experiences feel that way. However, this is glaringly untrue when it comes to fulfillment. We have all jumped into the “free shipping” promotional mode and it has now become table stakes. When it comes to actually receiving that product, there is opportunity to exponentially improve the experience.
Introducing Personalized and Predictive Fulfillment
We imagine a very different reality for retail fulfillment. Maybe it’s due to our unique DNA of technology, eCommerce, freight, and data science experts. We envision a real time infrastructure for transportation execution, big data, and machine intelligence. This will enable both fulfillment execution and in transit inventory communication that makes each shopper feel like a VIP.
Not All Free Shipping Needs to Be Created Equally
Jet.com has tapped into the willingness of the shopper to opt out of free shipping if other things are more important to them. We believe that there is an even better approach where big data can be used to make decisions programmatically.
Two Data Sets That Work Great Together
Retailers have worked hard to develop 360 degree profiles of their customers and loyalty plans that allow granular customer segmentation. What if that information could be used to make a real time decision? For example, I know your lifetime value, how long you have been a customer, your average ticket price, and your past delivery preferences, so let’s make a smart decision about shipment execution based on that data. Our data across retail shipments shows that the cost to save 1 transit day on a $240 freight bill is only $44. Would you elect to spend $44 more dollars to preserve that hard earned customer relationship? Making those decisions programmatically and at scale is now possible.
My Shipment Is Stuck in a Weather Delay in Tallahassee
98% of shoppers expect tracking ability. Retailers have tried to meet this expectation, but are reliant on the carrier to communicate. Not all carriers are great communicators. What if you could predict a problem like a weather delay or understand when a product is sitting too long on a dock waiting for the carrier to make an appointment with the customer? There is a black hole of communication that is hurting your customer relationships. In a recent 1000 shipment sample, 5 LTL carriers reported exceptions via their tracking API. However, Pivot Freight was able to improve exception reporting on an additional 13% of shipments (average). We predicted weather delays, items sitting on docks and other events that change the shopper expectation. Nothing says you’re a VIP customer more than proactively reaching out before the problem has even been identified by the carrier. In some circumstances, these issues could also be prevented.
We Are out of That Item but There Is One on the Way
Out of stock events are devastating to the retailer, the holiday season is infamous for this. What if the retailer had visibility into all in transit inventory as a type of “virtual stockroom”? They would have confidence to make in transit items available for sale before hitting the store dock or DC.
Transportation’s Moment in the Spotlight
Transportation teams, especially around peak season, are the unsung heroes of the retail world. We believe transportation will be the most strategic area of a business. New technologies are unlocking volumes of transportation data and real time communication and execution. We believe transportation intelligence will start to impact all areas of the modern retail enterprise from marketing to merchandising to executive strategy. We are focused on building this technology and creating an entirely new model of collaboration between transportation and the rest of the retailer organization. We are passionate about enabling our retailer clients to have a truly unfair advantage.