Customization: more than monograms and pant hems.

We as consumers have demanded and started to expect that our brands and retailers provide us products that are personalized. Beyond simply adding our initials to the sleeves of our Ralph Lauren shirt or having to hem our new Hugo Boss suit, product customization is moving towards a place where the consumer can dictate what they want from the brands and retailers.

All one has to do is look at how we can customize our automobiles – BMW’s Spartanburg factory could run a full year worth of production and never produce the same car twice. Or how we can call up our sneaker companies such as Adidas, New Balance or Nike to create customized footwear for our enjoyment. The market is also seeing the rise of brands looking to create bespoken clothing such as Indochino, Suit Supply or MTailor who look to create suits, shirts and other items simply by taking your measurements over their apps. Of course these services are not without some growing pain issues…I have two Indochino suits that both have a sizing story associated with them!

Indochino suit…looks good. But it took some work to get here…

While customized products are becoming more of the norm, what brands and retailers need to starting thinking about goes beyond simply products. Customize the entire experience for consumers. The inventory is only a part of the overall retail ecosystem. Consumers expect greater information about their purchase, flexible fulfillment and friendly return policies.

• Greater information, greater insights expecting by consumers. The experience for consumers starts much earlier than it did 20 years ago. Brands and retailers need to be there when that journey begins. That means rich data, entertaining information and deeper knowledge sharing. Where did the product come from? How was it manufactured? What was its journey to its final destination? Can I customize this information – shopper A might be more environmentally conscious so give her lots of data on the sustainability efforts, while shopper B is more interested in how others use that product so give him YouTube videos or Instagram pages of how the product is being leveraged.
• 2 Hour fulfillment? Sure as long as it is one option. Retail giant Amazon has trained us that the 2 hour fulfillment window is nirvana. Is it really? While instant gratification, in this case 120 minute, is a driver for consumers, it is not always the right option for fulfillment. Savvy brands and retailers are starting to realize that they need to rethink this, rather than chasing Amazon, set their own strategy when it comes to order fulfillment. It is hard to compete when Amazon’s fulfillment costs, as they have only continued to rise to the tune of $34 billion annually. Fulfillment needs to be seen as part of the customization process. Want it delivered in 2 hours or in a month, sure. Need it shipped to a local pick up locker for you to retrieve after work, okay. Want it shipped to your vacation hotel next week, absolutely. Retailers and brands need to start thinking about customization in this context – when I want it isn’t always within 2 hours.
• Circular life of inventory demands for better returns. Returns and the circular aspects of retail are becoming of greater importance. Rather than viewing this as a cost center, savvy brands and retailers are seeing returns as a way to pull back working capital into their supply chains, as a touch point with customers and as overall good business. Retail giants such as Home Depot still view returns as a cost center, trying to minimize the overall cost of processing the returns as much as possible. A short term cost cutting strategy. While other retailers such as Kohl’s has been willing to take the chance, and dance with the devil, allowing Amazon returns to be processed within their stores. Inviting the biggest disruptor into your store! Smart. Get those customers into your physical store, allow them the ease of returning that Amazon item and yes try to sell them something from your inventory. I have heard customers say, “well I needed to get product A, and had to return this Amazon item, so might as well do it all at Kohl’s.” This is simply the beginning. More retailers will realize that they need to offer simple and customized returns for their products, sometimes it might call upon partnering with other players in the space.

Of course the drive towards greater product customization will continue. Whether it is your BMW X5 or your new pair of Adidas, we expect our brands and retailers to try to amaze us by better meeting our personalized needs. But it is simply not in the product, but in all that surrounds the retail experience.

The biggest challenge in last mile – labor.

Last mile delivery is all the rage. I attend a number of supply chain and retail events on an annual basis, and what is interesting is the explosion in vendors offering “last mile” solutions that dominate these shows. No surprise. Companies such as Amber Road (now part of E2Open) GT Nexus (now part of Infor) or new kids on the block Project 44 and Four Kites, offer some flavor of visibility for long distance movements of inventory. With the continuing evolution of connective technologies such as IoT, the ability to track “where my stuff is” has become much more accessible to supply chains. The challenge today is the last mile. How do I optimize and better route that inventory when it is on its last leg of its journey? Not easy to say the least. But one area that doesn’t get as much attention in this discussion is the labor aspect. What I mean by labor is not the ability to find drivers (we know about the impending labor shortage in the truck driver world) but how to better leverage the labor at that end of the supply chain.

The hidden challenge in last mile delivery lies not only in optimizing how you get the product to the consumer in a timely and cost effective way, but what you do with this customer touch point. As the amount of retail converted online cracked double digits, 10.2%, earlier this year according to the US Census Bureau – click here for report, the importance of how brands and retailers look at the labor that is touching their last mile deliveries will only grow in importance. So what might this look like in the near term?

Photo by bruce mars on Pexels.com

Be polite…delivery people are customer satisfaction ambassadors. Any time you have a situation where a product or good is being delivered to a customer, you are representing that brand. This might be the only time that particular customer ever interacts directly with a person from that retailer or brand. We all have horror stories of poor delivery. I had lunch with a good friend of mine the other day and he was telling me about the fiasco he went through with furniture delivery. I will leave the name of the company out of it to protect the guilty…but needless to say it took three visits to deliver what should have been a routine one time delivery. My girlfriend and I had a recent run in with a moving company – Transworld Vanline – that was some of the worst I have ever experienced. The entire time we felt as if we were being extorted by the driver, felt like we were having to pay ransom just to get our stuff! And it was 2.5 months late!!! (The worst moving experience ever, don’t even think of doing business with these charlatans) Sorry I had to vent a bit. These stories highlight the importance of having the right labor in place for last mile. They are your brand ambassadors. Yes they have to do their jobs. Yes they have to be professional. But most important, you need to ensure you have true brand ambassadors working for you.

Last mile delivery also means first mile service. Last mile delivery is, as the term states, the last part of the journey for the item that you are delivering. Those pair of sneakers might have started out their journey somewhere in Southeast Asia, made its way across the Pacific, been unloaded in San Diego, traveled by rail to Mexico City and finally delivered to the customer eagerly waiting their new pair of tennis shoes. The product has completed its long journey. But the first mile of the experience with the product has just started. Can retailers and brands leverage this opportunity to help launch the first mile of service, the first mile of experience with this new product? Think of it, when we first get that item we are quite possibly at our happiest moment, it is like Christmas morning for a 5 year old. The opportunity is for these brands and retailers to take advantage of this positive emotion to build “stickiness” with that consumer. What value add can you bring to the experience? Retailers such as Lowe’s and Home Depot try to do this when it comes to installing large appliances, with moderate success. Fashion brands such as Louis Vuitton are contemplating using their own labor to provide true white glove delivery. Not only would they take charge of delivering that Neverfull tote bag, but they would want to ensure the customer is satisfied with the product. Was it damaged in transit? Is it the right size? Might they want some tips on how to care for it? Louis Vuitton would want to be there for the first mile of usage of the item, demonstrate to the consumer that they are there for her with this product and hopefully others in the future.

Turn last mile into a stage for the circular life of retail. Another aspect of retail that is starting to gain more steam is the importance of returns and the circular flow of inventory. While retailers and brands see the “last mile” as the last step for the flow of inventory, it is becoming simply the midpoint of that inventories’ journey. As consumers are throwing away an ever growing amount of goods and products – North American consumers jettison over 70lbs of textiles a year, the importance of how we handle end of life for products is becoming a priority. While we traditionally do not see this part of the supply chain as a responsibility of the brands and retailers that produced the item, this trend is reversing. Consumers are beginning to demand that products are sustainable and governments are starting to ask that products can be disposed of in a sustainable fashion. No longer will the last mile be the last time brands and retailers care about that item. Savvy retailers and brands will get ahead of this trend and start thinking of how they can be proactive when it comes to helping with the end of life for their goods and products. Can the last mile delivery be leveraged to also assist with the end of life for other products? I mentioned Home Depot and Lowe’s who are delivering appliances, they are also offering to take back the old appliances. Why couldn’t this model be expanded to other products? We already see Madewell encourage clients to bring in used jeans to receive discounts on a new pair. What if they delivered jeans, and could use that packaging to encourage clients to send back some jeans for the Do Well program. Could last mile carriers FedEx, UPS, USPS or DHL begin to offer taking back items from customers for retailers and brands who develop a similar model? Truly empowering the circular life-cycle of inventory.

The last mile remains a hot topic. But we need to go beyond simply trying to optimize and manage the delivery aspect of inventory (still a challenge I realize). Savvy retailers and brands need to think about how they can take advantage of this customer touch point. What other services and experiences may they offer their customer? How can empower the labor at the delivery end to best represent their brand? Can third party service providers enhance their offering by working with these retailers and brands to ensure their delivery people offer value added service? The retailers and brands that begin to rethink the labor and services for last mile will find new opportunities to ensure customer satisfaction and repeat business.

We all love the convenience of eCommerce, but sometimes what we order shouldn’t simply show up in a brown cardboard box, unceremoniously dropped off on our front porch.

Future hardware that impacts your supply chain – think V2V.

I wrote a post earlier this week about a number of hardware trends that will impact your supply chain, those are all in place today, already impacting supply chain and will only grow in significance. But here is one that is futuristic – V2V (vehicle to vehicle).  Why would  a driverless vehicle impact my supply chain you may ask?

Of course the biggest impact will be on making road safer, make cars more energy efficient, reduce congestion to name few. But this enhanced hardware also has the potential to impacting your supply chains. For example – last mile package delivery. Driverless vehicles will bring to delivery the same advantages as companies like Kiva have to warehouse management. Companies like Fedex, DHL and UPS could leverage a fleet of driverless vehicles to make

Coming to you…without a driver.

small parcel, last mile deliveries. With greater overall visibility of traffic patterns, other vehicles and tied into overall grid would allow greater optimization of package delivery. There are already applications such as Route4Me that look to provide optimal routes based on the errands or destinations the consumer has to run. There are a number of these apps that are being baked into the smart cars. Add to this routing software the ability for vehicles to drive themselves and you open up great possibilities when it comes to logistics. Private operators could “rent” out their vehicles for delivery purposes….just like Uber drivers do with their cars when it comes to the chauffeur business.

Supply chains need to think about how this could impact parts of their business models. We are already seeing some retailers like Footlocker offering same day delivery from their stores. They are doing so using services from Deliv (think Uber for small parcel delivery). What if instead of having to use Deliv, they could dispatch driverless vehicles? What if the consumer could use the driverless vehicles for returns? What if the retailer use the driverless vehicles to bring back returns to other locations? This potential delivery channel could truly transform the consumers’ home into an extension of the brick and mortar store.

I realize that V2V technology remains in the future with regards to becoming a reality in our day to day lives. Unlike the other hardware changes, V2V is not going to impact your supply chain today. But think about the potential it may have once it becomes a reality – which is closer than you may realize.