3 Ways Retailers Are Keeping Up with Amazon
Amazon’s share of e-commerce sales reached 49.1% in the U.S. in 2018, representing 5% of total retail sales, according to eMarketer. With massive scale and over 100 million Amazon Prime members (it’s estimated that 82% of U.S. households have a Prime account!), only 11% of online retailers can match its delivery SLAs, according to a recent study by Pulse Commerce. It’s hard to keep up. And, it’s expensive.
Despite Amazon’s scale, their shipping and fulfillment costs as a percentage of net sales have increased every year since 2009. In 2018, fulfillment (14.6%) and shipping (11.9%) represented nearly 27% of net sales (Source: Amazon Annual Report) — and as they continue to grow, the cost of logistics skyrockets. If one of the most cost-efficient companies on the planet is having trouble holding post-sales support costs in check, what does that mean for the rest of us?
How can merchants with online and offline operations compete? The savviest are using the one thing Amazon doesn’t really have much of— brick and mortar stores. The most advanced are bringing together online and offline capabilities to serve their customers how, when, and where they want to be served. They’re also using advanced analytics to make the buyer’s journey more personalized—including personalized offers across multiple channels. And they are creating seamless post-sales support and service experiences across various contact channels.
We refer to this approach as omnichannel commerce. At Keste, we subscribe to Salesforce’s definition of omnichannel: “a cross-channel business model designed to optimize the customer experience — whether customers are on desktop computers, mobile devices, conventional advertising channels, or inside actual brick-and-mortar retail establishments. These merchants have integrated their commerce and communications to deliver a seamless customer experience, from shopping through post-sales support.”
Omnichannel Shopping — A seamless online-to-offline experience
Today’s consumers shop across multiple channels before making a purchase. Smart retailers are alongside those shoppers at every step possible, with consistent experiences across media (store, mobile device, tablet, computer, call center, and catalog). It doesn’t end there since shoppers are doing much of their research on properties that are outside of retailers’ control. For example, shoppers seek advice on social media, find inspiration on Pinterest, or compare ratings—even using Amazon reviews for non-Amazon purchases. When planning a trip to the store to make a purchase, some shoppers will only go if they have checked online first to ensure the item is in stock.
Retailers are enabling these capabilities with cloud-based solutions that level the playing field and bring big box capabilities to mid-market merchants. The common thread running through these solutions is the capture and distribution of a unified view of commerce across a number of dimensions.
- A single source of product and pricing information ensures shoppers can find the same product information whether on a tablet, in store or using a desktop computer.
- Holistic and centralized views of inventory across channels providing online shoppers with information about store inventory — such as whether a particular item is in stock locally.
- With one repository containing all customer interactions, Crate and Barrel’s wedding registry stays up-to-date as the couple shops online, in store, and on their mobile devices. Solutions such as Salesforce Commerce Cloud can even incorporate a customer’s social media interactions into an omnichannel single view of their interactions.
- A comprehensive view of inventory across stores—for example, one back-end commerce and product information management solution connecting store inventory, order management, and POS systems—and warehouses enables shoppers to find consistent messaging, regardless of the shopping channel.
Seamless shopping across channels is just one piece of the larger omnichannel commerce puzzle.
Omnichannel Fulfillment — Use stores to create new advantages
In the early days of online shopping, there was only one fulfillment option for online purchases — delivery. With a single view of orders and inventory across all stores and warehouses, retailers have options that can increase customer satisfaction, increase overall sales, and cut costs.
Shoppers can buy online and pick up in store, also known as BOPIS or Click & Collect, when the need for instant gratification arises. The retailer and the consumer both save on shipping, and the retailer wins in other ways, too—typically increasing the order size by about 20% while the shopper in store picking an item up. Increasingly, shoppers can also online and return their purchase to a brick and mortar store.
And don’t forget the retailers who are increasingly choosing to ship from their stores, instead of a warehouse. For example, GameStop tripled its available inventory for online purchases by shipping from stores. Profits were the big winner, increasing online sales and lowering working capital requirements by increasing inventory turns and reducing overstock. With this method, retailers can deliver faster and with lower shipping costs because they’re delivering from the location closest to the consumer. It’s a win-win.
Omnichannel Post-Sales Support
I’ve talked about the importance of delivering personalized customer service and support while providing customers the ability to resolve issues 24/7 before. The key is to maintain a single, persistent record of all customer interactions — from pre-sale, to purchase, to post-sale — regardless of the channel.
With a holistic view, a customer can call the contact center for assistance with their product, the CSR can determine the exact product model that was purchased, and the retailer can therefore give the right advice to resolve the issue. Or, post-sales marketing emails can focus on the right upsell and cross-sell opportunities, like special offers on camping-related gear for someone who purchased a tent. Or more baseball gear for someone who bought a glove.
Stay tuned, in the coming weeks I’ll be diving deeper into the world of omnichannel commerce, and the innovators who are giving Amazon a run for their money.
Cheryl Cade is Senior Marketing Director at Keste. Keste implements scalable, modern monetization strategies and technologies that support complex B2B selling models. We believe that in the era of go digital or go home, a great idea isn’t enough — your sales process must be as frictionless as possible. From the front to the back office, and everything in between, our methodical, 360 degree approach to improving your top and bottom lines brings fast returns.
