13 Apr How eCommerce Retailers Can Compete with Amazon: Start with Data
A recent Wall Street Journal article, “Amazon’s Free Shipping Pushes Small Retailers, Delivery Firms to Compete”, highlights several actions eCommerce retailers are taking to compete with Amazon. There is no doubt that given Amazon’s scale, their domination in eCommerce is indeed daunting.
Partnering with carefully selected service providers with strategically placed fulfillment operations will help locate inventories closer to key markets. Then, working with these 3rd party logistics providers (3PLs) to engage an optimal mix of delivery carriers (balancing reliable service and cost) can help eCommerce retailers get closer to Amazon’s fulfillment capability, at least in key markets.
The question that is often tough to answer is: “where do I start?” The answer is to do what Amazon does: start with the fulfillment data. You don’t need to invest millions of dollars to make a measurable impact, if you are smart. One way to quickly determine your company’s distribution needs is to look at the destination of your customer shipments as well as the services that have been utilized. GrandCanals’ Fulfillment Intelligence Cloud (FIC) can quickly provide the required insight that is the foundation to improving service and cost of your fulfillment shipping.
In the example below, for this West Coast shipper, the majority of shipments are destined for delivery in domestic zones 6, 7, & 8.
This would indicate that consideration be given to locating inventory in the East to reduce not only shipping cost but transit time. This allows for better and more cost-effective shipping options to be listed in the shopping cart. And that leads to an Amazon-like customer experience that is proven to increase sales conversions.
Starting from this broad view is just the beginning. Once you understand the scope, eCommerce retailers can drill down easily to find more opportunity to provide better services at less cost. Further analysis of just the 2,200 shipments destined for zone 2, accessorial fees (residential fees in this case) of $6,487 were incurred suggesting that perhaps a service such as USPS Priority Mail or Parcel Select could be used to eliminate this surcharge. It also appears that there were 47 shipments sent via an air service to destinations under 150 miles from the origin (and in some cases with 2 and 3-day delivery commitment) when ground or USPS service would have provided overnight delivery.
These are just 2 examples that provide insight into inventory location and carrier selection, resulting in a much better fulfillment process and, ultimately, a better customer experience. But as I mentioned above, some eCommerce retailers may not know where to begin. After all, analytics isn’t their core competency. Further, they may think they have to boil the ocean to get any value. With big data, analytics, and cloud computing technologies readily available, that notion couldn’t be further from the truth. If you approach the problem thoughtfully, being like Amazon doesn’t require large investments in technology and resources. Of course, there are many more aspects of an operation that can and should be analyzed to identify how eCommerce retailers can better compete. Doing so can be the difference between a sale and a lost customer. To learn more about how eCommerce companies are profitably meeting customer expectations for fullfillment in this new eCommerce world, contact GrandCanals.