“Ask L2” is a weekly series where we answer questions about all things digital.
Question: What fulfillment strategies should my brand consider to compete with Amazon?
As omnichannel capabilities become a critical point of differentiation in a challenging retail environment, brands need to implement various ways to appeal to the consumers needs as well as push-to-store tactics. Brands hoping to provide expedited shipping as the solution will find themselves constantly competing against Amazon, which has rolled out same-day delivery for Prime members in 27 cities—its closest competitor is Macy’s with 17 cities. Currently, 27 percent of Department Store Index brands offer same day shipping in select markets, while 69 percent have invested in providing next day shipping. An alternative shipping option appealing to customer convenience is scheduled delivery, which is offered by 37 percent of Department Store brands.
However, retailers face a potentially costly paradox. Consumers are more likely to purchase online if they can conveniently return items at nearby retail stores. At the same time, online purchases are returned three times more frequently than offline purchases. This dynamic essentially creates a cycle in which retailers can boost e-commerce sales by offering free shipping and in-store returns, but in doing so, encourage customers to return purchases more often. Specialty Retail brands have combatted the inherent costs of returns by continuing to support Free Return Shipping capabilities. While adoption of each of this critical features is up nearly 60 percent year-over-year, the share of brands supporting Free Return Shipping is now double that of brands featuring comprehensive omnichannel capabilities.
Push-to-store tactics drive online traffic into brick-and-mortar stores, including click-and-collect and in-store inventory tracking tools. Sixty-two percent of Department Store Index brands now offer click- and-collect, but overall investment in key omnichannel features on the brand site has slowed. L2 observed no change in the percentage of brands offering find-in-store tools or providing an in-store return policy on the brand site. Only two brands (Kohl’s and Marks & Spencer) provide directions to the store without navigating away from the page. Additionally, picking up in store can become a frustrating experience; customers cite lack of a dedicated pickup area within the store (31 percent) and under trained staff as main causes for long wait times (31 percent).
Kohl’s enables users to check in-store availability at nearby stores, filter results by availability of the selected item, and quickly get directions to the store without leaving the brand site.
Whichever fulfilment approach is executed, brands avoid creating a frustrating customer experience. Investments in store configuration, systems, and staff training are all needed to ensure that omnichannel investments generate desired results.