Americans between the ages of 16 and 34, known collectively as the Millennial Generation, are exerting a powerful influence upon the economics of the retail industry and thus, indirectly, upon real estate development and community revitalization. That was the message I got from a presentation by Kennedy Smith, principal of the Community Land Use and Economics Group, in a presentation today at the Congress for the New Urbanism.
Millennials aren’t as interested as their parents are in buying a lot of stuff and accumulating possessions, Smith said. They are more likely to purchase used products or acquire products that last a long time. They are more likely to rent before they buy. Perhaps most significantly, they place a higher value on the shopping experience. They like to know the story behind the product — where the potatoes in Lay’s Potato Chips were grown, for instance. And they prefer unique, authentic and locally owned places over cookie-cutter chain stores.
The changing tastes of this massive generational cohort, which at 80 million strong is as large as the Baby Boomer generation, adds to the woes of the retail sector, which is reeling from the collapse of credit-fueled growth in consumer spending, increased competition from Internet-based retailers and the new possibilities created by the rise of social media.
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Hybris, a leading provider of multichannel commerce and communication software, announced today the results of its U.S. 2012 Multichannel Shopping Survey that examined U.S. consumer behaviors and expectations for a multichannel shopping experience.
The study found the importance of online and mobile strategies continue to increase with more than a third of consumers (39%) reporting that they make more purchases online than in-store. Looking ahead to the 2012 retail holiday season, 46 percent of consumers plan to increase their online shopping during the holidays, while only eight percent will increase in-store shopping.
Even while shopping in a brick-and-mortar store, consumers continue to turn to digital channels with 19 percent reporting that they browse their mobile device while in-store. The vast majority do so to compare prices (66%), with others using mobile to compare product choices (27%) and read online recommendations (7%).
“Consumers are shopping on a variety of channels and devices, often simultaneously, with new technology introduced virtually every day,” said Steven Kramer, President of North America at hybris. “What we have found is that consumers have expectations that their favorite retailers will be accessible to them anytime and anywhere. Retailers who aren’t keeping up with the latest technology will find their customers moving to a retailer who will.”
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When it comes to building a webstore, there are plenty of e-commerce platforms to choose from. This instalment of Power Up will orientate any online retailer hoping to make sense of the muddle.
As a new-to-online retail business, it takes a lot of nerves, time and resources to get to the point where your products are converting consistently online. For most entrepreneur’s, this usually happens after the setup of a marketplace merchant store, or a simple shopping cart.
At the opposite end of the scale, big businesses require more advanced platforms to sell from. These more advanced e-commerce solutions come with enterprise-level price tags, so they’re generally not for a garage-warehouse level merchant. However, if you have a significant bricks-and-mortar retail business, or if it makes sense to you to keep an eye on the horizon (you can never be too prepared), then this article will help to fill in the details.
WARNING: If you do not have the basics of shipping, logistics and fulfillment planned out, or if you are yet to bone-up on the basics of selling online via a virtual marketplace like eBay, then it would be best to read the relevant Power Up articles on these issues first.
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There was a time when Curt Olvey saw the handwriting on the wall, even if the wall was in cyberspace. It occurred during the lead-up to the year 2000.
Curt Olvey |
“We’re an old-school wholesale distributor,” said Olvey, president of Pet Stores USA Inc., based in Cincinnati, Ohio. “We’d been selling pet supplies since the ‘80s. When we saw retail stores being bought by larger wholesalers, we decided we wouldn’t be around anymore if we had to depend on independent retailers.
“We changed our core business to Internet fulfillment. To expand, we offered preloaded shopping carts for trainers, groomers, those classes of trade.”
The result has been deeply satisfying to Olvey’s family-run business. He said sales increased 22 percent last year alone.
“That’s how valid the business model is,” he said.
Pet Stores USA is also a supplier of drop-ship services for the pet industry. Manufacturers fill Olvey’s 75,000 square-foot warehouse with almost everything imaginable for dogs, cats, small mammals and birds, and Pet Stores USA ships its partners’ products directly to consumers, with the companies’ own labels on them. Pet Stores USA charges its partners a monthly fee; introductory rates range from $39 to $69.
In regards to Internet fulfillment, Pet Stores USA also will set up a small-business client with a personalized website showing all its products, and then will take care of the purchase transactions.
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A few weeks ago the big news was Amazon’s purchase of Kiva Systems – see “In Astounding Move, Amazon.com Buys Robotic Material Handling Provider Kiva”. This move on the part of Amazom.com continues to have a ripple effect throughout the logistics industry.
One of the most immediate and positive effects of this surprising acquisition has been to shine a laser beam of light focused directly on how order fulfillment is accomplished in distribution centers throughout the industry. Why? Because the adoption of new methods and technologies by a major player is always an attention getter, and because when it comes to improving order picking, packing, and shipping strategies, most companies are not sure what solution(s) are the best for their operations.
For many logistics managers the question is – what’s so unique about the Kiva system that caused Amazon to buy the entire company. Understandable, many are now wondering if a “Kiva type” solution, or perhaps some aspects of it, may be right for their order fulfillment operations. It’s a very good and appropriate question to ponder.
Because picking orders is the most labor intensive and expensive part of the order fulfillment process, it is appropriate that thoughtful consideration be given to choosing a picking strategy before deciding on the type of equipment and system design. It’s not a matter of what has the most bells and whistles.
The evaluation of alternative picking strategies demands a thorough business and operations analysis. The right solution may be the one providing the most flexibility, adaptability, and scalability. While these are desirable features for all companies, for some they may come at an unacceptable ROI.
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Nestlé closed 2011 with some notable developments in China, including two huge partnerships with Chinese powerhouses, Yinlu Foods Group and Hsu Fu Chi. These coups will deepen Nestlé’s commitment to the Chinese market and widen its portfolio. Tobie Gordon, Vice President of Supply Chain for the Greater China Region’s F&B Division, sat down to talk with us about her insights into managing the supply chain in China after over two decades of experience.
Can you tell us about your role and background with Nestlé?
I started with Nestlé pretty much right out of university in 1985 in the US, and I was in Finance and Control. In 1994 they asked me to take a temporary assignment to help set up the sales and distribution control systems for an ice cream business under development. So I came here in 1994 and found it such an interesting challenge that I never worked in Nestlé’s operations outside of China since then. After stints in Finance and Control, I moved into Sales, eventually looking after the warehouses and customer service operations, and some of the planning operations. And now I am the VP of Supply Chain for Nestlé’s Food and Beverage Division for Greater China. Food and beverage, until recently, it was the majority of our business. But then we partnered with Yinlu and Hsu Fu Chi in 2011, and these businesses dramatically increased our scope and size.
What are the major goals in incorporating these new partnerships into Nestlé?
Well we bought our partnership stakes in these organizations because they’re very competent and capable operations. And we need to assess what are the complementarities or the synergies that exist. There are some things that we know s and y do better than Nestlé, and some areas where we expect that we can provide some benefit for them. In fact, I spent all of this Saturday with the Yinlu supply chain team taking a look at exactly this. Where their strengths are, where our strengths are, to figure out how we can successfully take advantage of all the strengths of these 3 companies, so we deliver best value to the consumers.
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Social media tools like online portals and instant messaging are helping retailers more effectively share with their suppliers such information as consumer demand and on-time delivery performance, resulting in happier customers, fewer out-of-stock products and lower fulfillment costs, Aberdeen Group says in a new report.
“Many retail and consumer markets supply chain professionals are turning to social networking to help communicate and collaborate within their supply chain,” Aberdeen, a unit of Harte-Hanks Inc., says in the report, “An Emerging Social Paradigm in the Retail and Consumer Markets.”
The report adds: “While many are still uncertain of the real value of social networking within the supply chain, our data indicates that companies using social networking to support their supply chain operations perform better.”
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Logistics and materials handling are key parts of all online retail businesses. In announcing Amazon.com’s acquisition of Kiva Systems Inc, a leading innovator of material handling technology, Dave Clark, Amazon.com’s vice president of global customer fulfillment commented that:
“Amazon has long used automation in its fulfillment centers, and Kiva’s technology is another way to improve productivity by bringing the products directly to employees to pick, pack and stow. Kiva shares our passion for invention, and we look forward to supporting their continued growth.”
“For the past ten years, the Kiva team has been focused on creating innovative material handling technologies,” said Mick Mountz, CEO and founder of Kiva Systems. “I’m delighted that Amazon is supporting our growth so that we can provide even more valuable solutions in the coming years.”
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The level of control merchants have over inventory is not the only distinction between drop shipping and order fulfillment, so to help you determine which option may best suit your business, here are four tips to consider.
Determining the best way to store and ship products is a crucial part of your business. There are a number of options for doing so, and two of these are becoming increasingly popular: drop shipping and third-party order fulfillment.
These two options are often compared to one another given their similarities, but there are key distinctions, so let’s start with a brief definition of each.
Drop shipping is the process whereby a merchant’s ecommerce or mail orders are handled and shipped directly by the manufacturer or distributor to the end customer. Order fulfillment is the process whereby ecommerce or mail orders are handled and shipped by the merchant or a third-party fulfillment provider.
In the case of drop shipping, manufacturers or distributors ship products directly to consumers. For merchants, this means little to no inventory costs. It also means less risk, as merchants aren’t sitting on a pile of inventory that may or may not sell. A downside, however, is that it comes with less control. By not managing your inventory, you have less knowledge of what’s available, and you will ultimately be held responsible for any errors made by your suppliers that may lead to back orders.
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 by Kim Turner
There are many voices in the market calling 2012 the “Year of the Customer”. At ForeSee, we see every year as the “Year of the Customer”. It is our business to help organizations measure the voice of the customer, analyze the information, and identify the improvements that will have the biggest impact on business results.
However, in a recent ForeSee study, between 8-40% of consumers reported they were not likely to purchase from a retailer again based mainly on their experience of a website purchase or fulfillment process with the company. The painful reality is this: when an experience does not meet or exceed expectations, consumers move on and businesses are negatively impacted . Retailers not only lose current sales due to the negative experience, they – and possibly more importantly – lose out on future sales due to poor recommendations by an unhappy customer.
The Lifecycle View
ForeSee takes a “lifecycle” view of customer experiences, recognizing that overall loyalty requires satisfaction at each stage of customer engagement. We understand that each website experience has unique elements that impact satisfaction and a company can measure those to better manage the customer experience.
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