Monday, November 23, 2015
Thursday, November 12, 2015
I have to say, I didn't expect Walmart to move towards lockers. Walmart has approximately 4000 stores in the US, compared to 7-Eleven's approximately 10000, but one would think that Walmart's existing network is extensive enough. I suppose the difference is that Walmart's stores are not in the dense urban areas where ecommerce volumes are growing fast, while 7-Eleven's most definitely are.
I'm also surprised that Amazon does not have an exclusivity agreement that prevents 7-Eleven from partnering with other companies. This raises many interesting questions. Are we going to start seeing competition for locker space within 7-Eleven? Are other companies with networks of many urban locations going to start hosting lockers? Are we going to have locker banks, where many different retailers can deliver stuff to individual lockers?
Friday, November 6, 2015
Roughly 1 trillion pounds of "stuff" is sold to consumers every year in the US. This includes food, apparel, electronics, health and beauty stuff, household goods, etc. Roughly 6% of retail sales in the US is ecommerce; in terms of weight, let's be even more conservative and say 5%. That's about 50 billion pounds of stuff per year, or 136 million pounds per day. Say a single drone can deliver one 5 lb. order in 30 minutes, and is delivering for about 12 hours a day (with the remaining 12 hours for charging, maintenance, loading, etc.). That equates to a little over 1 million drones doing deliveries at any point of time. For comparison, at any point of time in the US, there are between 1000 and 5000 airplanes in the air, and about 250 million cars in the US.
[--- With research assistance from Megan Graham and Sujay Shetty.]
Tuesday, November 3, 2015
How Do You Want Your Product? An article on the different ecommerce supply chain approaches that companies use to get more of their products to their customers.
Customer Value from Pickup at Locker:
We classified the customer benefit from this arrangement as “medium”. The lockers are placed in convenient locations, so the trip to go retrieve the product is not normally an extra one. Another benefit for the customer is the fact that they can pick up the package on their own time. Where this differs from regular package deliver is the freedom of time allocation that the buyer receives. They are now able to go about their day and simply pick up their package from a location convenient for them at a time that is also convenient for them. The downsides for the customer in this situation is that they may still be waiting for relatively long periods of time for the arrival of their product, and they have to leave their residence to receive the product.
We classified the company benefit from this arrangement as “medium”. For the company, the last mile of delivery is the most expensive one. The reason that having the customer pick up their items at the store is so beneficial is the fact that it does not cost them anything for the last mile. An employee must simply go and pick up the package and get it ready, which does cost time. The last part that makes it overall beneficial for the company is the impulse buying aspect. When the customer picks up the item curbside or buys offline, it ruins the possibility of impulse buying. However, when the customer has to come inside and get their item, they are more likely to purchase something that beforehand they had no intentions of getting. However, the company still has to divert employees or specifically assign employees in filling ecommerce orders, which can get expensive in a store not optimized for filling ecommerce orders.
Company Value of Delivering Items Themselves:
We classified the benefit of company delivering items through their own delivery systems as “low”. There is much extra cost and time involved in this vector. The company must purchase a fleet of delivery vehicles, hire workers, and plan an affect delivery system. In the extra time this costs on the company's side, whether it is analysis on the process, working with employees, or simply delivering the products- the time compounds quickly. Since other companies, such as UPS, specialize in delivery and have convenient options for large companies, that is normally a better option due to the ease and convenience of service.
We classified the benefit to the customer of delivery by contractor as “medium”, with the caveat that this depends largely on the relationship and delivery systems contractors have with the companies whose products they are delivering. This system of delivery is faster than delivery by the company or by a delivery agency, as a contractor is able to be more flexible with it’s delivery times and can implement more customized delivery schedules. With the possible increase in delivery speed, however, prices may be more unpredictable with possible events such as “surge pricing” occurring during high volume periods.
--- Megan Graham and Sujay Shetty
[Megan and Sujay are freshmen at UM, and are working with me on ecommerce research via the Undergraduate Research Opportunity Program. As always, everything published on this blog is my responsibility, so please direct questions to me. ---Amitabh]
Monday, November 2, 2015
Twenty pounds for $1.50 in half an hour would be extremely economical! As the article says, these robots don't have to be dispatched all the way from the store; a bunch of them can be dispatched from a mobile van that arrives with multiple orders in a neighborhood. Of course, this technology has its own challenges in terms of what kinds of locations it could operate in, etc. However, in terms of economics, I think it will beat drones pretty handily, simply because of the carrying capacity.The co-founders of Skype, Ahti Heinla and Janus Friis, are building an autonomous, self-driving robot that will deliver up to 20 pounds of groceries for $1.50 in under half an hour, starting in 2016.
Wednesday, October 28, 2015
One way for retailers who have both an online and physical retail presence to grab a slice of that pie is to offer a buy online, pickup in store option this holiday season for online purchases. 43% of shoppers surveyed say they’re likely to use the perk, with 67% citing the ability to save on shipping charges as a key reason for doing so and 35% saying they’ll shop for other items when they go to pick up their online purchase in store.What I find interesting is that the article calls Buy-Online-Pickup-In-Store a "perk". I think of it more as a cost-saving and competitive-edge-gaining move by the retailers: the expensive last mile of delivery is shifted to the customer, while the ability to have the product available quickly offers a competitive feature against Amazon.com's fast delivery methods. It's also noteworthy that such a large fraction of customers expressly state their interest in buying more stuff when they go inside to pick up items.
Wednesday, October 21, 2015
“The U.S. is a car-based country. Convenience for many Americans isn’t waiting at home for something to show up,” said Bryan Gildenberg, chief knowledge officer at Kantar Retail, a research and consulting firm.I couldn't agree more. Amazon, are you listening?