By Frank Poore, CommerceHub
As the holiday season takes off, record numbers of consumers will go online to purchase gifts and check them off their shopping lists. With industry experts forecasting online holiday sales to grow by 13% this year, retailers have to rise to the challenge and make sure they’re giving customers exactly what they want, precisely when they want it.
Heading into Black Friday, retailers should be laser focused on two primary growth drivers: Expanded product assortment and rapid delivery. Even more than price, these two factors will determine how much of the record $89 billion in expected holiday sales a retailer will be able to snag over the next couple months.
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Every holiday season, I see many retailers fall short in delivering the desired customer experience as they choreograph an increasingly complex omnichannel dance. By coordinating all the pieces of the puzzle related to product selection and delivery, retailers can exceed customer expectations for the upcoming shopping season and achieve record sales.
Extended Product Assortment
It’s becoming clear that product assortment is an important new growth metric for retailers. Following Amazon’s lead, other retailers grew their online listings by 82% in the first three quarters of 2014, according to the CommerceHub Product Assortment Index. And while the other mass merchants, department stores and marketplaces in the index haven’t all caught up with the e-Commerce giant yet in terms of product volume, they’ve caught onto one of the secrets to Amazon’s success — expanding assortment.
But online product assortment goes well beyond the physical inventory sitting in warehouses. In addition to fulfilling online orders through distribution centers, retailers should be building out extended product assortment in the following ways to work in tandem with each other:
- Third-party fulfillment: Whether through drop shipping or marketplaces, competitive retailers are building out a network of third-party suppliers to fulfill orders and ship on their behalf. Not only does this instantly expand product selection without an investment in inventory, but it also gives retailers the ability to route orders to the location closest to the customer for cost savings.
- Ship from store: While Amazon has built out its fulfillment capabilities by establishing a network of 80 distribution centers, brick-and-mortar stores like Walmart have thousands of locations that put their products within miles of most customers. By unlocking this local inventory and making it available for online purchase, perhaps through a local courier service, retailers can start offering same-day shipping without a major investment in infrastructure.
- Pick up in-store: Even Amazon has awoken to the importance of this model by opening a brick-and-mortar store in New York City that primarily will be a place where customers can pick up purchases they make online. According to a survey conducted by JLL Retail Group, more than 40% of retailers plan to offer consumers this option during the 2014 shopping season. For retailers that can coordinate their online and in-store inventory, this small but growing portion of online orders reduces shipping costs and gets customers through the door.
The Importance Of Rapid Delivery
With an extended product assortment made up of physical and virtual inventory, the next challenge becomes coordinating shipping and delivery so a customer receives the same level of service regardless of channel or fulfillment method.
Whether a retailer is using a traditional delivery service like UPS, experimenting with couriers or taxis, or eventually opting for drones, there should be no difference for the customer. This means retailers have to have a sophisticated online order system in place that optimizes fulfillment and delivery based on customer preferences. So if a customer wants same-day delivery, that online order might get routed to a physical store for fulfillment through Google Express. But if the customer chooses five-day delivery, the order might go to a traditional distribution center for ground shipping.
The point is that retailers must have all of these options at their disposal and choreograph them seamlessly. There’s no one-size-fits-all solution for e-Commerce these days. It’s a complicated waltz that retailers must learn to keep consumers engaged and spending.
Frank Poore is Founder and CEO of CommerceHub, a merchandising and fulfillment platform for online retailers.
