understanding & reaching the consumer consumer motivations: –is the product available? –can...
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Understanding & Reaching the Consumer
• Consumer motivations:– Is the product available?– Can I get it when I want it?– Is the selection suitable?– Is the buying experience memorable?– Is the transaction price competitive?
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Shipping
• 3/4ths of consumers abandon their electronic retail shopping if shipping is not free!
• “Membership” to a lower cost shipping “club” increases orders and decreases abandonment.
• Offer value to repeat customers to electronic sites– Upgrades for faster services.– Free shipping on minimum purchases.– Bundle eligible products and limit purchase
timeframes.
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Other Commodities are Rapidly Growing in the U.S. E-Commerce market, including: Auto parts, Hardware, Home Improvement and Toys/Hobbies
44.6
28.9
22.821
19.317.7
15.512.9 12.4 11.7 11
0
5
10
15
20
25
30
35
40
45
50
% Increase in Revenues by Commodity
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Logistics Matters
• 68 - Amazon FCs• 4 - Walmart FCs• 1 – Macy’s FC
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U.S. Locations
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Lehigh Valley, PA
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Lehigh Valley, PA
Haslet, TX
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Lehigh Valley, PA
Haslet, TX
Atlanta, GA
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Lehigh Valley, PA
Haslet, TX
Atlanta, GA
Phoenix, AZ
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Source: Establish, Herbert W. Davis and Company
Logistics Cost Breakdown
50%
22%
10%8%
4%3% 2% 1%
Transportation
Inventory
Labor
Customer Service
Admin
Supplies
Other
Transportation is generally the greatest cost in the supply chain and often not considered in the site selection or elimination process
Rent
10
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Packaging and Shipping
• Dimensional weights are based on the dimensions of the package, not the actual weight, reconfiguring packages to ship so that the actual weight is “charged” by the carrier can save substantial shipping costs
• FedEx and UPS changed their dimensional/size package configuration requirements
• New trucking regulations may impact distances between warehouse and retail and fulfillment capability (and driver availability)– Hours of Service– Compliance, Safety and Accountability
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The Accelerated Growth of the Global Internet Population and E-commerce Outside the U.S. will
Drive U.S. Retailers to Engage in Cross-border Internet Trade
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Global Users and Shoppers
China
U.S.
India
Japan
Brazil
0 100 200 300 400 500 600
558
254
213
101
99
Internet Users In Millions
Source: Credit Suisse
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Going Global
• Need to define and deliver “total landed cost” during the course of the transaction with the customer
• Need to manage pricing, payment terms, taxes, fees and intermediary fees as well as manage tariff/classification of goods shipped to global customers
• As countries “sold to” increases, so do the number of custodians in the supply chain increase and the number of variables in the transaction that must be accommodated
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E-Commerce Impact on Industrial
• One-third of all demand for big-box space in the US in 2012 was tied to multi-channel retail or E-Commerce. (Area Development Magazine, 2013)
• The E-Commerce generation of industrial is up to 5 times more labor intensive than traditional retail/distribution: more parking, mezzanine build-outs and increased automation are some of the features difficult to retrofit to older buildings, but many can be converted. (Area Development Magazine, 2013)
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What’s Ahead?
• Facebook, Apple, Google and Amazon lead this century’s information technology and entertainment industry.
• In the next decade, they will compete in the market for mobile phones, tablets, applications, social networking, advertising and transaction management.
• “These companies do not recognize any borders and are marching into retailing, advertising, movies, television, commercials and finance” (Manjoo, Fast Company).
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Questions?
Thank You!Mac Forehand
Director, Performance Team
704.996.7039
www.performanceteam.net