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“The Cyber Five” is here and it’s mobile!

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No, it’s not a new super hero movie or this season’s hottest toy, but rather what industry insiders are calling the busy online shopping period after Thanksgiving when shoppers can expect to find the best deals from their favorite retailers.  More specifically, Cyber Five is the week-long shopping holiday defined as the five consecutive days from Thanksgiving through Cyber Monday which includes Black Friday, Small Business Saturday and Super Sunday.

The combination of growing online sales as well as mobile friendly shopping sites means that consumers no longer need to wake-up at the crack of dawn on Black Friday to wait in line for that uber cheap 46” LCD TV, but instead can order from the comfort of their home using their iPhone and still take advantage of great deals not just on one or two specific days, but throughout the entire weekend and up until Cyber Monday.  Some online retailers offer the same deals all five days, while others are constantly changing their offering to keep consumers coming back to see what’s new.  It’s from this extended holiday shopping phenomenon that the Cyber Five was born.

Let’s examine some statistics behind the Cyber Five:

  • Black Friday 2016 broke the prior online sales record with $3.34 billion in sales, 21.6% growth over 2015. In addition, Black Friday became the first day in retail history to drive over one billion dollars in mobile revenue at $1.2 billion, which was 33% growth over the prior year. The past two years, Black Friday mobile sales have outpaced Cyber Monday which underscores the importance of mobile.
  • Almost 109 million people shopped from their computers and mobile devices from Thanksgiving through Sunday, while 99 million people visited brick-and-mortar stores. That’s compared to 2015, when shoppers were more evenly split (103 million online vs. 102 million in stores).
  • Mobile phones and tablet devices accounted for 57% of visits to retailers online stores and 40% of all sales. Smartphones drove twice as many sales as tablets, at 27% and 13%, respectively.
  • Amazon stated that mobile orders on Thanksgiving Day topped Cyber Monday last year, while Walmart said that over 70% of its Thanksgiving online traffic was mobile. Target saw 60% of Thanksgiving sales from mobile devices.

The online growth trend continues and mobile is playing an increasingly important role.  As recent results demonstrate, spending more time with family over the Thanksgiving weekend while keeping a close eye on your smartphone is quickly become the new shopping norm.  How did you shop during the Cyber Five this year?  Share your experiences in the comments section below.

Thoughts on Supply Chain Trends in the Footwear Industry

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Nike was one of the first companies to breakthrough in the “modern” footwear industry by using the now famous slogan “Just Do It” and selecting Saturday mornings as the universal day of the week when new Air Jordan shoes were released. Since that time, the footwear industry has continued to evolve and has embraced several trends as companies battle to stay ahead of the curve. Let’s examine a few of these:

 

  1. 3D Printing – This technology is now bleeding into the footwear industry. Under Armour recently used 3D printing within the design of its UA Architech This shoe has a 3D-printed lattice-structure midsole which is considered the “secret sauce” of the shoe. It allows the running shoe to be “soft enough and strong enough to protect and provide structure, but with cushioning underfoot”. This shoe sold out online within a few hours after its release. The next step in this evolution will be customized shoes via 3D printing. New Balance, Nike and Adidas will quickly follow suit with the use of 3D printing in the shoe game.
  2. Market Driven Distribution Networks – The rise of e-commerce and increased online orders has left many footwear distribution centers stretched to keep up with nationwide demand. In many cases, footwear companies only have a single distribution center located on one of the coasts in the US. This oftentimes causes customer service issues, slow and/or expensive shipping to customers, and an overall network that is not optimized for the new business reality. We have spoken with several footwear manufacturers who are looking at expanding their footprint to the other coast and/or distributing from the center of the country where overall shipping costs are less due to the closer proximity to customers’ homes.  ASICS America saved millions of dollars when they followed this blueprint a few years ago. Many other footwear companies have followed the same path or are looking to do so.
  3. Faster Speed to Market – Adidas has publicly stated that their goal by 2020 is to take a shoe from idea to store shelf in 45 days. This is a staggering goal that, if accomplished, could finally launch Adidas ahead of Nike as the #1 brand in footwear in the world. The combination of cloud technology, localized production and an open ecosystem will be the three main strategies that Adidas follows to accomplish this goal. It is possible, but it won’t be easy.

 

3D Printing, Market Driven Distribution Networks, and Faster Speed to Market, three trends that are propelling the footwear industry forward and will undoubtedly have significant impacts on the end to end footwear supply chain.

 

What are your thoughts on these three trends?  Did we miss any?  Let us know in the comments section.

The Robots are Coming!

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The robots are coming! The robots are coming! We aren’t talking about Robocop or even the loveable “Wall-E”. These new-age robots are headed directly to the warehouse. There has been subtle usage of robots in the warehouse for years, but Amazon’s purchase of Kiva set the stage for the current landscape of robotics within the warehouse.

There are a number of advantages to warehouse robots:

  • Robots have the capability to work 24×7 without a break.
  • The maintenance cost is relatively low, particularly in the first few years.
  • They move at about the same pace as a human walking at a fast pace.
  • They are incredibly accurate when programmed correctly.
  • And, they can boost warehouse productivity by up to 800%.

Additionally, across the country minimum wages continue to rise and robots have the potential to deliver a more stable labor cost vs. the traditional work force. During the holiday season, retailers and 3PLs alike can be challenged to meet increased demand and associated staffing levels. Robots can help warehouses better meet these requirements while at the same time eliminating the cost associated with interviewing, hiring, and training new staff. Robots also allow current employees to focus on the most important responsibilities of their job, thereby increasing productivity and efficiency. The days of warehouse workers walking 12 – 16 miles per day during an eight hour shift are fading.

Of course robots aren’t cheap, but they’re much less expensive than most people would think.  Typical warehouse robots that can transport products throughout the warehouse generally cost between $25k – $80k, plus the software to manage them, programming, and maintenance.  But even at those prices, the cost per hour is drastically less meaning it’s not a question of if, but rather when will we start to see robots in warehouses across the country.

Are you using robots today?  What will it take for you to make the leap?  Leave your thoughts and feedback in the comments section.  And thanks for reading!

 

 

Free Shipping…The New Normal?

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To offer free shipping or not…that is the question. As the ecommerce space continues to grow and develop into a major shopping portal for consumers, online retailers are left with a decision to make about free shipping. A compete.com survey stated that free shipping would encourage 93% of consumers surveyed to purchase more products online. Shoppers are also reported to spend approximately 30% more when free shipping is offered. 52% of shopping cart abandonment is due to shipping and handling costs. In general, consumers are more at ease when they do not have to worry about paying for shipping. More than half of the past year’s orders from 30 of the biggest e-commerce merchants were shipped free of charge. This is compared to 33% two years ago. All of the data points to free shipping now being a requirement and almost an afterthought for ecommerce orders.

The other end of the spectrum involves the “logistics” of free shipping. When offering free shipping, brands must also factor in the likelihood of returns and the most effective way to manage that process. Outsourcing your order fulfillment is the most logical decision. In many cases this will allow online retailers to save more than the cost of “free shipping”. In addition, the money that a logistics company saves you, will turn the free shipping conversation into an advantage that can help grow revenue.

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The Power of Reverse Logistics

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As the e-commerce movement continues to grow, the importance of an effective reverse logistics strategy is paramount. A flexible and strong reverse logistics strategy helps companies reduce costs, add efficiencies, improve the customer experience and build a sustainable supply chain. The official industry definition of reverse logistics is “the process of controlling the efficient flow of goods from the point of consumption to the point of origin for purposes of recapturing value.” The primary driver of reverse logistics is the massive cost of returns. In 2010, MIT reported that product returns cost manufacturers and retailers more than $100 billion, or an average loss per company of approximately 3.8% in profit. The electronics industry spends $14 billion annually on product returns through reboxing, restocking and reselling.
As more people adopt online shopping companies need to develop a customer-centric return policy which allows them to manage costs and resell products quickly and effectively. Zappos, an online retailer of shoes, apparel, and home goods, has a very liberal return policy (365 days for any reason) which has resulted in 75% of Zappos’ customers returning and increasing profits each year of their existence. By looking at the reverse logistics cost equation, you can learn how reducing costs can have a positive impact on your bottom line. A reduction in any one of the reverse logistics cost equation components will go straight to the bottom line.  A seamless operation with quick turnaround can help retailers re-sell products quickly while minimizing the depreciation on assets. This is crucial within the electronics industry where new devices are released monthly and a product that was purchased a mere three months ago will quickly become obsolete.

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Same Day Delivery – Here to Stay or a Passing Fad?

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Same day delivery has developed into a legitimate fulfillment model that appears to be gaining traction with consumers. By 2018, the value of merchandise delivered via same-day delivery in 20 U.S. cities is expected to reach over $4 billion. Many big-box retailers have already implemented same-day delivery options. Target currently offers rush delivery (same day) in Boston, Miami and Minneapolis, with expansion to other cities likely coming soon. Macy’s offers same-day delivery to 17 cities including Atlanta, Honolulu, and Chicago. Walmart, one of the first retailers to offer same-day delivery in 2012, now uses same-day delivery for its online grocery shopping service in San Jose, San Francisco and Denver. Keep in mind that 56% of Walmart’s U.S. sales came from food ($161 billion per year) which makes it the largest U.S. grocer.

The debate among retailers is the cost vs. the certainty of the order. The average cost for same day delivery is an additional $5 – 10 above normal delivery fees. Orders generally must be placed by 2pm to ensure the delivery arrives the same day. Retail consulting firm McMillan Doolitte states that retailers need to have a minimum 90% order fulfillment rate for same-day delivery to be consistently successful. Anything less renders the same-day delivery service unprofitable. The logistics behind same-day delivery is quite complex and takes streamlined warehouse processes and increased automation. Read the rest of this entry »

Brick and Mortar No More?

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Have you noticed that the stores of your youth are slowly disappearing? The growing trend of brick and mortar stores fading away into oblivion is real. However, the better question that needs asking is:  “Are these stores closing permanently or will they continue to exist but in a different form?”

Retailers have an opportunity to evolve the store to better match the purchase behaviors of the much sought after millennials, consumers between the ages of 20 and 35. As the millennials and to a large extent, the general public seek “experiences” over “things”, brick and mortar retailers are struggling to stay relevant. Six in 10 Millennials would rather spend money on experiences than material things according to a survey completed by MMGY Global. This growing trend has had an impact on traditional retail stores as evidenced by recent store closures announced by Macy’s, Sports Authority, Sears, and even Wal-Mart. At Macy’s, in-store traffic the last two months of 2015 dropped 6.4% and all store traffic declined by an average of 9% during the holidays.

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Retail Supply Chain Trends to Watch in 2016

Screen Shot 2016-02-03 at 4.13.09 PMIt’s our first ever blog post and we wanted to share our thoughts on the upcoming year and some of the key trends we believe will impact the retail supply chain in 2016. We are already seeing these trends impact our customers and know they will have a broader and more significant impact within the retail supply chain space in the coming year.

  • Order Online/Pick-up from Store – It is predicted that the percentage of consumers that expect to order online and pick-up from the store will rise to well above 50% during 2016. Every week we continue to see various types of brick and mortar stores add this service to their list of delivery options. The next step in this process is curbside delivery of an online order which Nordstrom has been piloting for the past eight months.
  • Omni-Channel Inventory – Today’s consumer is expecting an unprecedented level of integration across a retailer’s various channels.  Retailers must have accurate inventory visibility across the supply chain to truly enable an effective omni-channel experience.  Consumers want to be able to pick-up their order in a store or request same day in-home delivery, and of course return it to any location. Is it possible to manage all product supply and returns seamlessly from one physical, if not virtual inventory?  We’re seeing our customers do just that and with significant success.  And studies show that omni-channel consumers have more than 30% higher lifetime value, than those that shop via a single channel.

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