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As e-commerce customer expectations change, they have left many retailers struggling to keep up with industry giants like Amazon. Casey Taylor, a partner in Bain's Retail practice, shares four ways retailers can adjust their supply chain to limit the costs to the bottom line and the environment while also keeping their customers satisfied.
Read the Bain Brief: Retailers' Challenge—How to Cut Carbon Emissions as E-Commerce Soars
Read the transcript below.
CASEY TAYLOR: It's a really exciting time to be an e-commerce customer. But for all the same reasons, it's a really challenging time to be a retailer.
Customer expectations are fundamentally changing with many of the actions that Amazon is taking. Customers expect to be able to buy everything online, increasingly including grocery. They also expect to be able to buy one item at a time, creating purchase patterns where they're purchasing very small baskets, but on a very frequent basis. And finally, the expectations with regards to shipping speed are accelerating. What used to be five days became two, and is now next day or even same-day delivery expectations.
There's several things that retailers can do to both delight customers and also limit the cost to the bottom line and the environment. Firstly, retailers can work with customers to build baskets through incentives and also through add-ons. Our research would show that moving customers from having two shipments with a single item to a single shipment with two items reduces cost by almost half and reduces the impact on the environment by more than 30%.
Secondly, retailers can use the assets that they have close to the customers—their stores—by building compelling, buy online and then pick-up-in-store options. They can offer customers same-day access to delight them, and also limit the costs of last-mile delivery. They can also, thirdly, use those stores as mini-distribution centers shipping from the stores themselves, either through third-party logistics companies very quickly or even same day through partnerships with Lyft, Uber, or even using your own associates.
And then, finally, for when they do need to ship to customers' homes, they can limit split shipments, or the occasions when a purchase with multiple items comes to you separately, by using inventory marrying and also other smart inventory solutions.
The bar is only going to go up from here. The retailers that can build agile supply chains while doing so in ways that are smart and limit costs are going to be those that are best set up to compete with Amazon, delight their customers, and do so in a way that their shareholders are going to be proud of.
Read the Bain Brief: Retailers' Challenge—How to Cut Carbon Emissions as E-Commerce Soars
First published in Dezember 2017