Category Archives: Consumer Product Goods

LL Bean to move away from legacy of customer care king?

LL Bean, a privately owned outdoor clothing and equipment company, has always prided itself not only in well crafted products but in having extremely generous policies when it comes to exchanges. The Maine based retailer had a “no questions” asked return policy…. with no time limits. Bought a pair of their outdoor boots in 1983, you can exchange them today. This was a brilliant policy of the company. It demonstrates outrageous customer care, no worries about receipts or time constraints. It implicitly told the market that they were confident in their product. That LL Bean was confident that the design, workmanship and supply chain was robust to create products that would last. Hopefully the vast majority of customers would never need to return their items!th

Unfortunately, it appears that this policy might no longer be feasible, read article here. Why? LL Bean, similar to a plethora of other retailers are undergoing a change when it comes to how they manage their business. With their business faces a number of daunting headwinds, LL Bean is trying to find ways to keep their employees happy, continue to produce quality merchandise and compete in an ever chaotic world. But for a company that was a pioneer in focusing on the customer, it would be ashamed to see them cut the very service that more retailers are starting to slowly come around to.

Is this move also an indication of a greater issue that will grow in the retail supply chain? That of returns and reverse logistics? Retailers from LL Bean to Walmart have a growing area they must focus on – what happens to product post sale. By some estimates up to 12% of retail inventory is in the returns channel at any moment, for pure play eCommerce retailers that number might be as high as 50%.[1] That represents a tremendous opportunity and challenge for retailers. They have to plan for possibly having to re-slot some of this inventory, inspect and possibly refurbish product, and then possibly having to discount the product if it comes back too late in a season. I have seen some examples of retailers not even wanting a customer to return the item, they just refund the price and tell them to keep it. Costs too much to re-slot. It is also an opportunity. Can retailers become more sophisticated with their returns channels? Actually reallocated that inventory dynamically to go to other consumers rather than back to a distribution center? Can the returns channel as a whole become a discount/outlet styled extension for the retailers? Have the inventory in the returns channel create an after market for goods. Rather than taking them back into their normal supply chain, allow the purchase of this inventory to take place in a secondary market.

This future state for retail is possible but starts with greater visibility into the overall network, a network that must extend beyond the customer purchase. But retailer networks need to catch up, otherwise we will see more retailers putting a handbrake on customer service levels like LL Bean is rumored to be contemplating. That would be unfortunate.

 

[1] According to UPS presentation at RILA 2017.

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Remodeling your kitchen – rather than granite think smart counter tops

In a report we recently published we looked at how the Internet of Things (IoT) would impact the retail world. One area we focused on was the food and grocery portion of retail. An idea we explored was how IoT could allow grocers and other players within the food supply chain to extend their reach beyond the store shelf and into the shelves in our pantries and refrigerators. Eventually grocers and manufacturers could leverage this connectivity to better understand demand patterns, usage and even correlations between different items. This use case has taken another step closer to becoming a reality.

Companies like Orange Chef have started to market and sell “smart counters.” Granted the one offered by Orange Chef is more of a chopping block sized device for your kitchen, but let us project out into the future. These counter tops aren’t so much about whether or not you want black granite, Azul Macauba or a fine Italian marble, but how many sensors, beacons and connected nodes your new kitchen counter tops will contain. The smart counter top will be able to identify what you are placing on it. For example you may place on it a nice

About to get a whole lot smarter!

About to get a whole lot smarter!

salmon steak or some lamb shanks. The smart counter will then be able to offer you ways to prepare the food offering you recipes and other items you may want to include. The counter will also be able to tie back into your wearables as well as other applications. Training to run a marathon and using your smart phone to keep track of your progress – maybe that bacon isn’t what you should be eating this close to race day – your counter top will tell your phone or wearable, which will tell you. Trying to cut back on red meat – the smart counter will keep tabs on what you are preparing for your dinner. This is a great example of the kitchen becoming smarter and more interactive.

It is not a big leap to go from the kitchen and your counter top being proactive in your meal preparation to being tied into a larger network – say in your neighborhood – that would communicate with local grocers and even distributors to better manage what they stock. Maybe the paleo diet is catching on your neighborhood, if the smart kitchens figure this out, the local stores might want to ramp down on some of their processed food orders.

Of course this will also come with the expected questions around privacy and information sharing. Will consumers trust the likes of Tyson Foods, Mondelez, Kraft, Dannon and other large food providers to have access to such data? If these companies or a third party (think Nest for your grocery bill) can demonstrate or help consumers with their spending then consumers will become more at ease with sharing their information. The fact that households in the United States spend on average $166 a month on energy – the target for Nest – yet they spend 30% more a month on their grocery bill (based on U.S. Department of Energy and the U.S. Bureau of Labor Statistics) would indicate that there is an opportunity for enhanced intelligence to be applied to this sector. IoT empowered devices could bridge that last consumer mile for grocers, CPG and food manufacturers.

We wouldn’t just have our mothers and significant others to remind us that late night ice cream isn’t good for us, our smart kitchen will do it as well.

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Filed under Consumer Product Goods, IoT, Retail, Supply Chain, Wearables

Apple Watch – it’s about time, not really.

This past week has been a buzz about watches. Remember those devices? Would sit on your wrist and tell you what time of the day it was, much better than carrying a sundial or an hourglass around. Unfortunately for watches, the emergence of the ubiquitous mobile phone has diminished the primary value of the watch – telling time. With most of us staring at our smart phones between 60 – 90 minutes a day, we can see what time it is with a simple glance to the top of our mobile phone screens. By some studies as many as 50% of mobile phone users have no longer a need to wear a watch. So why is Apple, and by some accounts from Mobile World Congress, so many other technology players coming out with watches? Click here for a good piece on MWC from a fellow Constellation Research member.

Here is why it makes sense – it isn’t about the “watch.” These technology players are all trying to get into this space because they want to make sure they get a piece of the real estate that is being battled over – the wrist. The reality is watch sales (non smart watches) has not gone away and is actually on an upswing.

No one is buying watches? Not so fast...

No one is buying watches? Not so fast…

The fact that mechanical types are growing rapidly would reinforce the notion that watches are not about telling time but about fashion, they are closer to Cartier than to Blackberry. The truth is the best watches for time keeping are the digital quartz watches you can purchase at CVS for $10. An automatic watch from Jaeger-LeCoultre probably doesn’t keep time as precisely as a digital Casio – but if you spend the thousands of dollars on a Jaeger-LeCoultre or an A. Lange & Söhne you aren’t doing it because you look at your wrist for the time. We should not think about Apple and the likes trying to compete in the same space as the Omegas, Baume & Merciers and Patek Philippes are in. Wearables are the next wave of connectivity for consumers and corporations. While we are not about to give up our smart phones, the real estate on our wrists has yet to be fully exploited. Of course we have items such as Fitbits that are already finding their way to our arms. Entertainment giants such as Disney are already leveraging the technology with their Magicband. But what is in play for Apple, Samsung, Motorola etc is getting their platform on us. What is done with that platform depends on where application providers’ imaginations can take us. Some use cases that make this more than a watch:

  • Wellness – think of a Fitbit or a Garmin Vivofit with beefed up computation power. Devices will be able to be even smarter with our health. It will not be just about how many steps we took but how has it impacted our glucose levels or our heart rate.
  • Mobile payment – the wallet is really under increased pressure. Payment can be done by the swipe of our wrist. Since we are wearing the device could we integrate some biometrics to validate that we are the actual user…sure beats remembering all those passwords.
  • Manufacturing efficiencies – Many companies are working with the likes of Google glass to bring a wearable the manufacturing floor. Having a device on the wrist that can be voice controlled opens up the door for an array of manufacturing applications. Adding some valuable functional possibilities in the supply chain.
  • Better pick n pack for warehouse and retailers – Warehouse operations are always seeking to find new labor efficiencies with how they find inventory, pick it and prepare it for shipment. This is also true in retail, especially when more retailers are starting to use their physical stores as distribution centers.

Of course we are still in the early stages of these types of wearables and their use cases. Adoption will be tied to the price, not sure if the $10,000 Apple Watch will be the driver for adoption (if I had that kind of disposable

I would take one of these with the $10k

I would take one of these with the $10k

income for a wrist device, it would be a real automatic watch!). The $349 price point for the Apple Sport Watch should be low enough to get some traction  with consumers.

For the business uses the price point will have to come down further. Much like tablets, when the iPad came out the $500 price tag was too high for much industrial adoption, it was only when Android tablets at lower price points did the tablet become more ubiquitous.

Apple once again has created a disruptive device. Question remains will it, like the iPod, iPhone and iPad, have the same level of adoption for both consumers and business usage? But let us not compare what Apple and others are putting out as a “watch.” It is the correct first letter but it is closer to an Apple Wearable. Just like the iPhone is really more than a phone. It became a canvass for application providers to express their creative services.

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For retailers and CPG, it is all about the edges.

A common thread I heard last week at the NRF Big Show, was the importance of the edges of the network. I wrote in my #NRF15 recap about the importance of pushing data, insights and decision making to the edges of the network, click here for post. There is another aspect of the network edge that wasn’t prevalent last week in New York, but probably isn’t ready for prime time yet, and that is an enhanced ability to execute at the networks edge. When it comes to that extended level of execution, think 3d printing, better usage of hardware and software to better service customers…at the edges of the retail network.

The one advantage brick and mortar retailers have over the likes of Amazon and Alibaba is also what has been seen as their weakness – their physical stores. Stores offer a host of issues that are well documented – inventory carrying cost, limited SKUs due to the physical constraints of a store, overhead associated with labor as well as having real estate. However this disadvantage may have a silver lining – face to face interaction. The challenge for retailers is how to make that face to face more attractive to consumers than their laptops or mobile devices to transact. That is where being able to offer greater personalized and flexible solutions is paramount for retailers. How can retailers address this?

  • Greater personalization…kind of like your online experience! We all know that the power of transaction online, other than being able to do so in your pajamas, is how customized the experience is tailored for us.  One reason Amazon is so entrenched in our consumer life is that they know what we want…sometimes before we are even aware of it! The power of Google is that they will place those banner ads based on what they know we have been looking at and interested in. Online experiences with the likes of Nordstrom or Banana Republic are littered with suggestions on what else we need. Looking for a a new Peacoat? May we suggest these styles and brands. Oh and if you like that item…you might like this other item that compliments it. Of course this is possible because in the eCommerce world our digital finger prints are everywhere and can be captured with much more ease than in the physical world. This is starting to change. Slowly. As more service providers are focused on helping retailers capture, analyze and provide insights on all the consumer related data sources, physical retail stores will have the potential to be “smarter” in their customer interactions. Companies like Oracle look to offer their retail customers the ability to empower the edges of their network, with the data and consumer persona necessary to transform the in-store experience more on par with the online world. Oracle, like other service providers, realizes for retailers to protect their brand must understand how customers want to research – interact – transact. This can only be achieved with a more complete view of the customer. There is also the need to perform greater levels of analytics at the edge of the network – brick and mortar retailers cannot afford the potential latency associated with having to push data back to a centralized location. For example, Cisco is working on providing the communication hardware, platform and necessary analytics at the edge of the network. Don’t move the data unless you have to. That ensures that the data, and the analytics, are done as close to the customer and execution point as possible. Again, when we transact online there is not much latency when it comes to our profiles and what is being suggested. Retailers are striving to bring some online shopping experience to the store front. But what about getting your product?
  • Fulfillment moved out of the traditional channels and pushed to the edges of the network. Having greater understanding of your customer and more insights at the edges of the network is 3d Key Shows Three Dimensional Printer Or Fontwonderful, but if you cannot offer the inventory diversity or fulfill at that node, what have you gained? If retailers cannot fulfill better their stores not only become showrooms, but your store associates also become pitchmen. Not what you want in the brick and mortar world! I expect retailers to continue to focus on more flexible and intelligent manners to fulfill their customers’ demand. The first step for better fulfillment is being more savvy about your inventory. I was speaking with a former P&G executive while I was at NRF and the one issue he stated is still a headache is understanding inventory positions within a store – what is on the shelf, what is in the stock room and what item is about to have a stock out? All classic issues CPG and retailers struggle with. But to fulfill better, these need to be solved, and they cannot be solved by just looking at inventory data from your POS or warehouse system. Retailers must have greater and more reliable view of their inventory. That means being more digital with the in store management of the inventory. Service providers like Panasonic are bring such shelf level visibility to the market, something I wrote about in my last post. But it is not just about greater visibility of what is available to your customer – what about greater flexibility on delivering the customized product your customer wants? The story of how Coca Cola has rolled out their Freestyle machines, that puts a tremendous amount of control at the edge of the network, with the consumer. Other CPG companies like Maille mustard and vinegar has stores that allow you to come in and fulfill your mustard and vinegar condiments in the store. These are examples of more flexible inventory and product mix being provided at the edge. There is also the infusion of digital technologies such as 3d printing. Confectionery companies like Hersheys are rolling out 3d printing – need a special chocolate for your kid’s birthday party, have it printed in the store. Luxury retailers, such as jewelry stores, can offer on site 3d printed pieces – for customized jewelery. American Pearl is offering consumers the ability to have customized pieces created via their 3d printers. Granted they are doing this via their online channel, but brick and mortar channels could offer consumers the ability to have a design rapidly prototyped in the store and then produced. That would certainly make events like purchasing a wedding ring less stressful…well maybe not.

Whether it is better visibility and greater analytics or being more savvy in product delivery at the edges, retailers must focus here to maintain relevance for their physical stores. Simple truth – at the edges is where you find the customer. Retailers must make sure that they meet customers needs: eliminate the friction between demand, relationship, fulfillment and after sales.

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Demand – it is a fickle beast

Understanding customer taste and their buying patterns remains a tricky exercise. The story of L.L. Bean and their snow boots is a great example of how challenging it is to accurately predict demand. The Maine clothing and outdoor company is already sold out of their iconic boot. According to the Yahoo report, click here, there is already a 100,000 name long waiting list for the boot. Wow. Talk about a good problem to have, well maybe.

L.L. Bean cannot just ramp up their manufacturing, well in the long run they might be able to, but not fast enough to meet this pent up demand. Based on their meticulous manufacturing process, it takes half a year to train someone to manufacture the product, you cannot just bring on seasonal labor or outsource to a contract manufacturer to bolster your assembly line. So what should L.L. Bean do? It isn’t as if these shoes are a new product that vastly exceeded the expected demand. These shoes have been around, for what seems…forever.

No...you can't wear this LL Bean boot

No…you can’t wear this LL Bean boot

Their popularity is clearly back. I remember my classmates wearing these when I was in high school…and that was a long time ago. I never looked at them as a trendy item, not like what UGGs did or other brands. But clearly the product has regained popularity with the “younger people.” Meaning it is appealing to the 15 – 23 year old segment where trends can truly go viral. When you do a Google search for “L.L. Bean boots” you get sub searches “women,” “men,” “frat,” and “preppy.” Clearly it has mass appeal for the kids!

Should L.L. Bean have had better demand sensing? Could they have anticipated this upswing in orders months ago? Granted, based on the lead time they need with regards to adding manufacturing capacity, it might not have mattered. And how should they monitor this demand moving forward? Will there be this level of demand next winter? Or will some other brand become the cool footwear on campus next winter? This is one area of Matrix Commerce that calls for a high degree of digital sophistication as well as some good old fashion intuition.

Clearly this season is over capacity and there is very little L.L. Bean can do to accelerate the production. Moving forward, L.L. Bean needs to apply some savvy digital monitoring to better gauge the demand for 2015 and beyond. For example – what is the reaction of the shoes? Are they trending on social channels? How are they being discussed on social channels? Are the returns on pace with historic returns? Or are there more or less? L.L. Bean should monitor the fake and knock off products – imitation is the sincerest form of flattery. Companies that can produce a similar product will rush into the market if they believe the pent up demand cannot be met or if there is another layer of demand at a lower price point. These are all digital data points that L.L. Bean will have to pull back into their planning and forecasting engines to better manage their supply chain. Of course there is the other strategy of potentially keeping the supply low, to create exclusivity of the product. Hmmm makes one wonder.

But this latest Christmas season and fashion trend story reminds all of us, that accurately predicting future tastes and demands remain a fickle beast. The digital world allows us to cast a wider and more detailed net of what is going on, but we are far from being able to create an precise map for demand.

Now where are my boots…we are having a Nor’Easter here in Boston!

 

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Oracle OpenWorld 2014 – focus on the decision makers to empower your supply chain

I just returned from a successful week spent at Oracle OpenWorld in San Francisco. A nice perk for being in the Bay Area at this time of the year was summer was in full swing! While it was raining buckets back in Boston, I was enjoying the close to 90-degree sunny weather…as I ran between meetings. The conference revolved around Oracle’s push into the cloud, talk of the importance of mobility, smarter access to big data and the demotion of Larry Ellison to CTO…okay the last item was some good humored self deprecation from Mr. Ellison himself while on stage for his keynote Tuesday. He even apologized for missing last year’s main

Not a bad trophy to have at your event...

Not a bad trophy to have at your event…

stage demo since he had been pulled into watching some boat race. Anyways, the area I was focused on was what Oracle was doing in the supply chain and retail/CPG spaces. Oracle did not disappoint with the large number of sessions dedicated to these spaces. So let’s look at 3 things I took away from both the CPG/Retail sessions and the Supply Chain sessions –

The shift in power in the CPG-Retail spaces means a change in how we address it:

  • In the retail space Oracle discussed a persona-based approach for their offerings. Clearly traditional retail sub segments are not behaving the way they once did – the customer persona is becoming the driving force not the retail sub vertical. Retailers need to approach personas when it comes to how they best address the consumer need. It is the consumer that will dictate what the rules are. The retailer, with help from their service providers, need to focus on addressing the different personas they are servicing and build the software and solutions around this. This is what we are seeing with Matrix Commerce – as the number of intersections between the consumer and commerce supply chain grows, so does the need for the solution vendors to offer more nimble solutions. Oracle provided an example of how they could work with retailers to equip the retailer with an enhanced view of the customer. They designed a system that allowed the retailer to associate a persona to the way the consumer interacted with the retailer – pulling information from all possible channels. Allowing the retailer to more effectively address the consumers’ needs. Oracle Retail, staying true to what was being discussed on main stage, highlighted the fact the solution had a mobile aspect. Why is this important other than following the buzz? It places the information and analytics in the hands of those working on the retail floor. The mobile delivery of data and analytics means the people at the store level can make better decisions and service the customer in a much more personalized and effective manner. Getting the information closer to the decision makers.
  • We are all aware that consumer influence has increased vis-à-vis retailers and CPGs. Oracle highlighted how their solutions are helping CPG companies to be even more efficient and effective in their relationship with the retail channels. Once again it boils down to focusing on better usage of retailer data and the subsequent enhanced collaboration that allows an effective partnership between CPGs and their retailers to meet increasingly savvy consumer requirements. Sony discussed working with Oracle to overhaul their managing of sales and promotions for their PlayStation products and how it was sold through retail channels such as Wal Mart, Gamestop, Target, Amazon and Best Buy. At the core Sony and Oracle worked to harmonize and ensure they had the most reliable data and a system of record from which to build upon. From this they worked on putting together an S&OP process that allowed for Sony to do greater analysis of the insights they were getting from the retailers and how Sony could do a more cost effective and smarter job in marketing and selling the PlayStation. Sony was able to look across all their channels, coupled with other sources of data, to improve their planning cycles for the PlayStation. As they stated – they have a very large competitor, with very deep pockets…so Sony has to do it smarter and more efficiently. Focusing on the fundamental blocking and tackling with the help of Oracle gives Sony a competitive edge in the space.
  • Finally, and this was something I heard through many of the sessions for CPG and retail, but there is a real emphasis on how to take advantage of the confluence of mobile – big data – analytics – cloud and focusing on how to drive down more intelligence closer to consumer touch points. This is really about empowering all the players that are close to the consumer, the best data and analytics to make the right decision on the ground. Think about it, you and I as consumers have gained tremendous power in the past decade. Between the transparency the internet has given us to the ability to carry that internet everywhere we go – we as consumers have suddenly put intelligence and insight right into our purses and pockets. The Oracle solutions targeting CPG and Retailers are looking to give the same level of intelligence to the store associates servicing these smarter consumers. The reality is the large systems used to drive CPG and Retail businesses are vital for running the businesses at a macro level. But the trick is how to empower those that are “on the front lines” to have a similar impact on the process.

The overarching theme for CPG and retail was to provide the complete end-to-end solution and platform that will allow for this transformation. Overall they touched many aspects of what we are seeing in Matrix Commerce. The ability to push data and analytics down to the closest touch point of the consumer is vital to reducing the friction that often flares up at those levels.

Supply chain continues to be about better planning…but also easier access to improved execution

  • My kingdom for a better plan! Clearly planning remains at the heart of supply chain…really at the heart of business and dare I say life? Yet for some reason it has a bad connotation at times. Yes we all know that all plans carry one similar trait: they are WRONG. But the reality is we really cannot do much without those plans. What was interesting in the discussions of planning was not that Oracle was professing a 99.9% accurate plan, or a faster plan but looking at offering a more responsive planning method. Since being responsive is different that being efficient. Again pulling on the themes of big data – cloud – analytics, they discussed continuing to work on their planning engines that are digging deeper into the data as well as making them more accessible within the planning organization. Panasonic Avionics (they are the division of Panasonic that builds and maintains many of the in flight entertainment units you may leverage when you are flying) for example, has a very challenging supply chain to service. With long component lead times, capacity constraints, high demand volatility and a large array of materials to service (they mentioned that they still need to support some systems that use video tapes!), Panasonic Avionics really needed a system that was able to rapidly identify where the plan would impact the product. In order to properly achieve this, Panasonic and Oracle needed to ensure the planning engine could truly understand the complexity of the BOM and identify where each part of that BOM could be impacted by any fluctuation in the plan. They highlighted the ability to improve the granularity of the information being pulled into the planning process, as well as the ability to run multiple plans to provide the most robust scenarios. The speed at which Panasonic Avionics was able to refresh their plans allowed for rapid insights into potential issues.
  • Embracing the cloud – but not just for lower TCO and faster implementations. Like many vendors, dare I say most vendors; there was a strong message around putting solutions up in the cloud. Good. I agree with this thinking. What I also agree with, and what Oracle made clear was this does not mean you have to ignore continuing to offer on-premise solutions. When I sat through a session on Oracle’s transportation and global trade solutions being moved into a cloud offering, what was refreshing was the fact that they made a point to discuss continuing to offer the solution on premise. And that both would maintain the same high level of functionality. The same was true for the discussion around supply chain planning functionality and its migration to the cloud. What was evident was that Oracle seems to grasp the notion that while the cloud is important; it does not prevent them from continuing to offer and support on-premise offerings. I do think that the strategy to give a choice is important and will allow them to target mid-market and individual business units in larger enterprises. Long gone are the days of massive system overhauls and implementations. Supply chains need nimble solutions to keep up with their ever-changing environment.
  • Making supply chain solutions even more business friendly. Let’s face it, when it comes to the supply chain function within business, it is still fighting for a place at the big table. Yes we hear of more companies with CSCOs, but I would still wager that number is small compared to CMOs, CFOs, CIOs and yes CEOs. But my last take away from the supply chain discussions is the way Oracle appears to be addressing this issue. For example, they spoke of better tying in what is happening in the supply chain to the marketing side of the house. The solutions stressed the need to drive analytics and better information down the planning stack – get as much rich information where it matters. Decoupling the financial flow from the physical supply chain to better understand how the two interact. Individually these are all nice efforts, but put together they indicate a view of the importance of the holistic supply chain – one that starts on a solid platform where the right data is leveraged. This mirrors what was spoken about on main stage Tuesday, and the overall drive by Oracle to ensure cross channel and cross identity customer experience. How true that is at the core of supply chain – being able to ensure the best view of the customer’s needs and orders.

Oracle’s overall Value Chain solutions are all rowing in the right direction. When you add to the discussion the continuing evolution of Oracle’s Warehouse Management solution that has added Yard management – clients have the ability to access a full suite of execution modules. When it comes to Matrix Commerce, one key need for the commerce supply chain is to ensure the elimination of friction, friction that arises from supply chain blind spots. Not having the full view of your fulfillment can cause supply chain blind spots to sprout.

Oracle continues to maintain its status as a “mega vendor.” Their breadth and depth in terms of solutions and industries make them a serious contender in most situations on the market. We will continue to watch with intent how they address the area.

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Foot Locker same day delivery – embracing Matrix Commerce

Earlier this week Foot Locker announced it was going to start testing same day delivery for consumer purchases. Click here for the press release. This is an excellent case study of what we at Constellation Research are discussing with Matrix Commerce. It is a prime example of where the consumer voice and needs have converged with the retailer’s supply chain.

Foot_Locker_logo.svg

Foot Locker will be testing the same day delivery in 5 locations between the San Francisco and the Los Angeles area. In order to address the last mile delivery challenges, Foot Locker will be partnering with Deliv for the logistics of getting the product from the stores to the consumer’s location. Think of Deliv as doing for small parcel shipping to consumers as what Uber did for personal transportation – crowdsourcing last mile transportation. A very interesting challenge and service to say the least.

The voice of the consumer continues to grow when it comes to asking for and seeking the ability to get their products where they want it and how they want it. For retailers such as Foot Locker it is imperative that they determine how they can meet these demands from their consumers. They are already addressing their customer’s needs by allowing for online ordering with in store pick up. This new pilot is the natural next step.

As Daphne Carmeli, CEO at Deliv stated, “Foot Locker who surpass their customer’s expectations by giving them the ability to receive their merchandise when they want it, including same-day…” This is one area where the likes of Foot Locker, who are brick and mortar retailers at heart, have an advantage over eCommerce giants like Amazon. Foot Locker already has a number of distribution centers (DCs) that are located close to their customers – the actual Foot Locker stores. With the likes of Deliv’s services, they can now solve the last mile delivery issue that has made such services a logistics headache.

This success of the pilot project will be interesting to observe. Some questions a retailer such as Foot Locker will have to address:

  • Can the staff in their stores be able to not only service the customers that come into the physical store, but also efficiently pick and pack the orders? Store personnel are trained to service a customer in person, Foot Locker will now have to ensure proper training for this staff to have to properly prepare orders for home delivery. Not as easy as it may sound.
  • How does a crowdsource delivery offering like Deliv handle customer interactions? Once you start delivering products to consumers’ home you are exposing your brand – the person doing the delivery represents your company whether or not they are on your payroll.
  • If your store acts more and more as a DC, how do you handle returns and restocking issues? Again, similar to the first bullet point, your staff is trained to sell products to customers who are in the store, now you are adding tasks to their jobs. How ready are they to handle this added demand?

The ability of companies such as Foot Locker to offer same day delivery is a natural progression when it comes to Matrix Commerce (other retailers such as Macy’s and Bloomingdale’s also announced this week they are running same day delivery pilot projects). That does not mean the challenges aren’t there…on the contrary the complexity remains and may become increased as Foot Locker travels down the learning curve. These companies are making the correct choice when it comes to offering such services, but they need to show patience with the process. There will clearly be some growing pains. However, similar to when eCommerce exploded on the markets in the late 1990s, the genie is out of the bottle. Now it is a matter of how well retailers and their partners meet the ever increasing speed for fulfillment.

As the Foot Locker EVP of Operations, Mike Owens, stated, “We want our customers to experience speed in everything they do, from shooting hoops to on the track.” It is all about speed…just make sure you don’t sacrifice quality for speed!

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