holiday 2016: fulfillment tips of the...
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Fulfillment Tips of The ProsHOLIDAY 2016:
STEFANY ZAROBANDirector of ResearchInternet Retailer
WILLIS WEIRICHVP of Logistics
Neiman Marcus Group
PAUL STANLEYManager, Global Products and Market
DevelopmentFedEx
What’s at stake in Q4
The bad news about retailers’ holiday shipping strategies
The good news about retailers’ holiday shipping strategies
What to expect this holiday season
What retailers are doing to get ready
Agenda
What’s at Stake in Q4: Big Sales
37.2% Portion of annual online sales transacted in Q4 for key publicly traded e-retailers.
Retail sales (in trillions)
Source: Internet Retailer, U.S. Commerce Department
Q4 Matters More in Online Retail
2014
E-commerce sales (in billions)
1st-3rd quarter 4th quarter
$3.459
$1.249
$234.8
$108.231.5%26.5%
1st-3rd quarter 4th quarter
Some Retailers Get More than Half of Sales in Nov. and Dec.What percentage of annual orders are placed from November 1 to December 25?
Source: Internet Retailer’s 2016 Holiday Delivery Survey
8%
50%
32%
6% 4%
10% or less 10% to 25% 25% to 50% 50% to 75% More than 75%
Shipping Speed MattersHow important is being able to offer fast delivery to your holiday shopping business?
Source: Internet Retailer’s 2016 Holiday Delivery Survey
64%
27%
4% 5% Very importantImportantSomewhat importantNot important
The Bad News: Amazon Prime
markets whereAmazon Prime Same-Day is Available
27
The Good News
Slice Intelligence tracked the number of days
between order and delivery across index of 238 U.S.
merchants tracking 45,961,989 packages from
January 2014-January 2016 and found that retailers
shaved 2.9 days off delivery in two years.
6.3
3.4
Jan. 2014 Jan. 2016
AVERAGE MONTHLY
FULFILLMENT SPEED IN DAYS
Source: Slice Intelligence
Getting the goods faster
Source: Slice Intelligence
Source: Slice Intelligence
Leading retailers steadily increase delivery speedNo. of Days for Delivery
0
7.9
5.9
9.3 9.7
87.3 7.8 8
6.7 6.8 6.5
0
6.3 6
76.5 6.5
5.86.5
5.5 5.3 5.3 5.5
0
4.9
5.9 65.1
5.6
4.44.8
5.5
4.23.3
4.1
Apr-14 Apr-15 Apr-16
What to expect this holiday seasonU.S. Retail and Retail E-commerce Holiday Sales Growth 2010-2016 % change
Source: eMarketer.com
7.3% 6.3%
3.4% 2.9% 3.6%1.7% 1.8%
19.4%17.5%
13.3%12.1%
14.4% 13.4% 13.3%
2010 2011 2012 2013 2014 2015 2016
Retail Holiday Season Sales Retail E-commerce Holiday Season Sales
Expect another strong holiday season for e-commerce but a sluggish one for total retail sales.
E-commerce sales growth will maintain its 13%+ growth rate for the upcoming season.
Mobile is playing a bigger role in holiday season salesPercent of Nov/Dec web sales on mobile
Source: IBM
5.3%10.4%
15.7% 17.8%22.6%
31.0%
2010 2011 2012 2013 2014 2015
Smartphone traffic is on the riseShifting holiday traffic patterns
Source: Adobe Systems Inc.
56%50%
14%11%
30%
39%
2014 2015
Desktop Tablet Smartphone
In 2015, U.S. mobile holiday sales grew 59% year over year to $12.65 billion, which accounted for 18% of U.S. online retail sales during the season According to comScore data. Mobile traffic to retail. Sites outpaced desktop traffic every day during The 2015 holiday season.
Source: Internet Retailer’s 2016 Holiday Delivery Survey
Peak ordering timesDuring which of the following time periods do you get most of your holiday-related sales?
1%
3%
12%
16%
26%
32%
8%
2%
Wednesday before Thanksgiving
Thanksgiving
Black Friday
Thanksgiving weekend (Saturday and Sunday)
Cyber Monday
First week of December
Second week of December
Third week in December
Customers are ordering later
During the 2015 holiday season, did your customers place more orders closer to Christmas and expect delivery by Christmas Eve, than they did during the 2014 and 2013 holidays?
62%
38%
Yes No
Source: Internet Retailer’s 2016 Holiday Delivery Survey
Source: Internet Retailer’s 2016 Holiday Delivery Survey
Late ordering will accelerate this year
Last minute orders mean last minute shipping and Retailers have adjusted delivery windows by shipping later to accommodate.
More than two-thirds of the retailers surveyed plan to ship orders later in the season this year than last year to keep customers happy.
67%
33%
Yes No
WILL YOU SHIP ORDERS LATER INTO
THE HOLIDAY SEASON THIS YEAR?
Source: Internet Retailer’s 2016 Holiday Delivery SurveySource: Internet Retailer’s 2016 Holiday Delivery Survey
Percent of holiday packages shipped for freeWhat percentage of all holiday packages are shipped free?
Source: Internet Retailer’s 2016 Holiday Delivery Survey
29%
17% 17%15%
22%
10% or less 10.1% to 25% 25.1% to 50% 50.1% to 75% 75.1% to 100%
Free purchase thresholdWhat is your minimum order threshold for offering free shipping?
Source: Internet Retailer’s 2016 Holiday Delivery Survey
5%
16% 17%
13%
34%
15%
$25 or less $26 to $50 $51 to $75 $76 to $100 More than $100 We offer freeshipping on all
orders
Covering delivery costs
Nearly a half of retailers from our survey require customers to pay for shipping while a quarter cover all deliver costs. Based on the importance of free shipping it’s important that retailers make that an option even if it requires building the shipping costs into the price of products sold, and nearly 30% are already using that strategy.
DO YOU PASS ALONG THOSE DELIVERY
COSTS TO THE CUSTOMER?
Source: Internet Retailer’s 2016 Holiday Delivery Survey
Who pays for shipping?
24%
47%
29%
No. We cover all delivery costs.
Yes. We require that customers pay for shipping.
Yes. We offer free shipping, but we build the price ofshipping to our product pricing.
Source: Internet Retailer’s 2016 Holiday Delivery Survey
How retailers plan to expedite holiday shippingWhat are the biggest changes you made to expedite holiday shipping and delivery this year?
49%
15%
12%
11%
9%
9%
8%
24%
Expanded fulfillment staff
Added more national carriers
Integrated order and customer service management system with carriers’ tracking system
We now ship online orders from stores
Added more regional carriers
Leased, built or opened more warehouse space.
We now enable consumers to buy online and pick up in stores
Other (please specify)
Make mobile work
Start holiday promotions earlier
Prepare to ship later into the season
Now what?
Stefany [email protected]
Thank You!
Neiman Marcus
Holiday 2016: Fulfillment Tips of the Pros
Internet Retailer Webinar
October 4, 2016
• Traditional Peak Planning Considerations
• Key Differentiator in Planning
• One Additional Consideration
• Helpful Tips
Agenda
We will look at the following –
• Capacity – Network throughput and provider assets to adequately support volume.
• Contingency – When the unexpected occurs, what options do we have to flex the network.
• Communication – Who needs to be informed of logistics plans and what is the peak season cadence.
Traditional Considerations
Logistics practitioners start with an initial focus –
• Capacity – Is your organization partnering with providers and at what level of detail?
– Neiman Marcus approach is to partner with FedEx to create daily forecasts of volume segmented by service type and location with a focus on individualized variables (i.e. dock space, building configuration, market knowledge).
• Contingency – Do you develop contingency plans in advance or hope for the best?
– Neiman Marcus carefully reviews FedEx contingency plans and makes adjustments to controllable factors in advance and during peak season to mitigate risk.
Traditional Considerations
Diving a little deeper into capacity and contingency.
• Communication is the differentiating factor!
Traditional Considerations
What about communication?
Logistics will share many points, i.e. impact to budget, shipping requirements, problem vendors.
The key is to have reciprocal communication.
• Here are some examples to illustrate the importance.
– Logistics shares budget impacts but ask what demand forecasts exist to ensure aligned metrics.
– We share shipping requirements with vendors but ask merchandising of shipping attributes, i.e. dry ice, package dimensions.
– We give marketing cutoff dates but ask what promotions are being planned to better secure capacity.
– We tell our providers our Holiday plans but do we know their network investments, areas of concern, etc.?
The differences are subtle but can overcome the need for last minute heroics.
Communication
What exactly is reciprocal communication?
• For many, Christmas marks the end of the Holiday Season but for logistics its just intermission.
• Post Christmas Considerations
– Inventory replenishment
– Gift card sales
– Returns (Reverse Logistics)
– Analysis of peak performance
– Review with internal and external partners for next year
Tis the Season
One final consideration – Do not get post Christmas letdown
Christmas 2016 – Sunday Impact
Have you evaluated your plans relative to provider operating plans?
• Identify the gaps. It is the only way to understand your organization’s unique situation.
• Build a realistic plan. If you have never had conversations, it will take time to build structure and understanding. You likely will not solve in one year.
• Start somewhere. Every organization is different. Start where you will have success and build on it.
Helpful Tips
So where do you start?
Willis [email protected]
Thank You!
Meeting Customer ExpectationsPaul Stanley
October 4, 2016
October 4, 2016 32IR Holiday | FedEx
Getting your transportation and logistics implementation right is essential to your success, particularly during the holidays
Fast
Flexible & Convenient
Information Intensive
Retailers need to develop a logistics strategy to meet new and evolving customer needs
2 to 7 days, final mile by USPS
Days in Transit
1 63 542 7
Next day to 5 days (cont’l US)
Next day to 3
0
Same day
October 4, 2016IR Holiday | FedEx 33
SOURCE: Radial and CFI Group’s Q2 2016 survey of 500
customers as part of its annual Holiday Outlook Survey
Fast
• 71% of consumers
expect orders within
5 days
• 17% of respondents
expect delivery within
2 days
FedEx Office
FedEx Express
FedEx Ground
FedEx SmartPost
Customers want to receive packages on their terms – when, where and how they want them
October 4, 2016IR Holiday | FedEx 34
SOURCES: Retail Week, Sep 2015; Bower, Maxham, 2012
Flexible &
Convenient
• 74% would shop more
online if they had more
control over delivery
• Post-return spending as a %
of pre-return spending
following free returns
exceeds 4X
Consumers want information and personalization
October 4, 2016IR Holiday | FedEx 35
SOURCE: FedEx Research, 2015
Information
Intensive
• 43% won’t call if a link
to tracking information
is included in order
confirmation email
Q&A?