Retail executives are facing a major dilemma. With brick-and-mortar sales declining, how do they adapt and remain profitable?
According to a Fortune magazine report, Nike Chief Executive Mark Parker said the U.S. retail landscape is "not in a steady state" as consumers spend more online and make fewer visits to brick-and-mortar stores.
The Wall Street Journal recaps some of the options that retailers weigh when storefront sales start to sag: trade retail real estate for a warehouse investment and ramp up e-commerce order fulfillment, use brick-and-mortar stores as pick up points, or operate a micro-fulfillment model out of back rooms using labor resources who aren’t as busy with in-store foot traffic as they used to be.
Each of these strategies presents a slew of new challenges, especially for retailers that have been slow to step into the online order fulfillment game and are trying to compete against behemoths like Amazon and Walmart, which are setting the pace for what consumers expect to get in terms of delivery speed and cost.
But retailers can find relief by approaching this new era of retail with these 3 tips for greater e-commerce growth.
1. Fast is good, but smaller is better
When any retailer starts to accelerate its e-commerce business, the pressure to meet lightning-fast delivery times can become acute very quickly. That often leads to practices aimed at getting product out the door by whatever means necessary – an ethos that results in material waste, bloated shipping costs and an expensive “throw people at the problem” labor strategy. Getting orders out on time is important, but these wasteful practices are a drag on profitability.
By focusing on minimizing package size, retailers can unlock efficiency throughout the operation which means packing processes that require less handling time and material, lower shipping costs on every pack, less storage space needed for packaging supplies, and a more sustainable energy footprint.
2. Avoid ship-from-store inconsistency
Prepping and packing orders in back rooms has become a popular way to make use of brick-and-mortar resources, but it can also spell trouble for a retailer’s brand reputation.
Untrained packers working in small spaces with a limited supply of materials are more likely to use too little or too much packaging. When damaged items or wastefully mismatched boxes show up at a consumer’s home, the recipients don’t respond well.
In fact, 38% of consumers say that receiving a damaged item makes them less likely to shop with that retailer in the future, and 32% say that wasteful packaging materials is one of their top complaints about online shopping.
Rather than shoving a ship-from-store operation into any available corner with a one-size-fits-all pile of boxes, retailers should design pack stations that are optimized for efficiency and consistency, using small, affordable solutions that dispense the proper amount of packaging for each order SKU (through inventory management integration technology), and keep the margin for human error to a minimum.
3. Bring the storefront experience to the doorstep
On paper, the appeal of brick-and-mortar shopping is still quite obvious: the elegant displays, the ease of returns, the individualized attention or the serendipity of discovering an in-store sale.
But with consumer browsing now happening on the internet, retailers struggle to recreate that same tactile, immersive, “sticky” brand experience at home.
Most retailers settled for “good enough” e-commerce strategies because it was believed that physical stores would continue to serve as the gold standard for brands, but now companies are finding it hard to count on store loyalty alone to keep customers shopping online.
Most have tackled this challenge with a barrage of deals, discounts, flash sales, and loyalty programs designed to attract those critical online clicks, but those retailers that think the hard work is done when the customer checks out online are missing a critical opportunity to expand the store brand experience into the home.
Custom printed packaging, personalized messages, in-box promotions, effort-free return processes, and unexpected surprises can maintain brand fans who receive most of their purchases at home. Even better? They’ll tell others. Forty percent of consumers say that they’d share a unique packaging experience on social media.