19 Apr Taking the Shirt Off Their Back: How Apparel eCommerce Companies Can Imitate Amazon.com
I really like dinosaurs (who doesn’t?), so it can be painful to think about that comet slamming into the Yucatan Peninsula 65 million years ago and ending the Cretaceous Era.
Picture the poor dinosaurs: In an instant, their world dramatically and abruptly changed. Only a handful of species, the distant ancestors of birds, survived the cataclysmic transformation of their environment. Everyone else was wiped out.
A lot of retailers can probably relate. The gentler, more circumspect articles about the current situation talk about tipping points; some of the others use words like “apocalypse.” The comet, this time around, is a company named after a giant jungle (one not too terribly far, on a global scale, from the Chicxulub Crater, where the comet hit).
Prospects are perhaps particularly daunting for companies in the business of selling apparel. Amazon.com is projected by investment bank Cowen & Company to become the largest apparel retailer in the United States this year, is growing its apparel business 30% a year and is projected to reach a market share of over 16% within five years.
Part of Amazon’s success is due to its vast selection of goods. Part of its success is due to its vast store of customer data, which can be used to drive sophisticated recommendation engines, steering people toward products they might like. And part of its success – and the part easiest to learn from and imitate – is the customer experience it provides in the shopping cart.
There was a terrific article in The Wall Street Journal recently about companies working to replicate that fulfillment experience, either for themselves or, for 3PLs, for their customers. As Stefan Weitz, chief product and strategy officer of 3PL service provider Radial notes, “There is no universe where you can beat Amazon’s shipping prices . . . I don’t have to beat Amazon. I have to get close enough to provide a service level to my customers.”
But how do you do that? What does it take to survive, much less thrive, in the new environment eCommerce has created? And especially, how do you do it without Amazon-sized resources and AWS-sized subsidies?
It’s a three-step process (it’s always a three-step process):
- First, you need to get visibility into your fulfillment process
- Next, you use what you learn to get control over your fulfillment process
- Finally, building on the first two steps, you can transform your shopping cart by developing a core competence in analytics-driven fulfillment
Start with getting visibility. It’s a truism that you can’t manage what you can’t see. In many companies, fulfillment metrics are highly aggregated and averaged, if they are available at all. In other companies, the task of optimizing fulfillment operations falls to overwhelmed individuals munging spreadsheets in a vain attempt to get a comprehensive view of a highly complex system through primarily manual means. Extracting valuable information requires more than just data; it requires context – the domain expertise needed to be asking the right questions.
The funny thing is, actually getting data on your parcel and LTL shipments is not that hard – your carriers will provide it. The hard part is putting that data in a useful form, especially when it is coming from multiple carriers using different formats, service descriptions, and the like. In order to get everything on the same page, in a unitary view (and this includes information from your internal systems), the data must be normalized and mapped to a standard, canonical form. Good luck doing this with Excel each and every time you need to leverage the data.
Once you have a comprehensive, unitary view of all of your data, you can run the descriptive analytics – think of them almost as diagnostics – to show how your process is actually running. What is your actual cost to ship an individual order or product line? What services are you spending the most on? How much is going by ground, by air? What are you spending on accessorials? What better shipping choices can you give your customers (or even to a certain customer segment)? In fulfillment, the (cost) devil is in the details.
Once you have a clear view of where you are, you can use that visibility to gain control. The data can be used to feed advanced analytics and modeling, to determine where better is possible in your fulfillment operations – whether that means carrier changes, mode shifts, or opening a new DC to serve a fast-growing market more effectively.
Finally, you can build on the work you have done in the first two steps to create a core competence in analytics-driven fulfillment. That is, by infusing intelligence throughout your fulfillment operations, you can internalize the approach that Amazon has used to make its fulfillment capabilities a differentiator in the market. It becomes a continuously improving process, based on real intelligence. This type of “embedded analytics” allows you to make intelligence the foundation of decision-making — even in the shopping cart, in real time — just like Amazon.
We’ve written a few things about this idea; if you want to learn more, here’s a good place to start.
As ever, we’re always delighted to hear what you think. How is your company looking to improve its customer experience online and thus, its market share? What do you see coming down the pike in the online apparel industry?