E-commerce is a runaway train with no slowing in sight. Nearly eight in 10 Americans now shop online to the tune of $453 billion in sales.
Clearly, Amazon.com has been the biggest catalyst here. Free, two-day shipping has completely reset consumers’ expectations around the realities of speed and cost of delivery, a big reason why 100 million products were sold on its recent Prime Day.
While the “Amazon Effect” has reshaped the consumer mind-set, it has also put immense pressure on e-commerce sellers to follow suit and out-Amazon Amazon.
Fast-Growing Retail Segment
Parcel delivery pressure is very real; however, there is one area of e-commerce where online sellers can still compete logistically with Amazon and others online: delivery of oversized, bulky items like furniture, mattresses, treadmills and more.
Amazon has been less-than-clear about this area of its logistics strategy. Meanwhile, online furniture sales are one of the fastest-growing segments of online retail, expected to reach $42 billion in sales by next year, according to eMarketer. Another source even puts the online U.S. furniture market at $122 billion by 2020. Meanwhile, buyers are now more comfortable making large purchases online sight unseen.
Supermassive Black Hole
Large-item logistics remain a black hole for most online merchants. Shipping a pair of jeans is one thing, but a 250-pound armoire is entirely different with schedules, additional equipment, insurance, and bottom-line transport cost all being key factors.
Until Amazon figures it out, online sellers of oversized goods can ostensibly out-Amazon Amazon if they focus on three key differentiators in their delivery strategy.
While most customers realize larger items take longer to deliver, they’re still heavily influenced by the Amazon Effect. In fact, if the identical item is found elsewhere online, speed of delivery may be the deciding factor. Key factors that dictate speed are item source, consolidation and mode of transport. Online marketplaces, especially those that source items from estate sales or direct from consumers, have to consider the extra time it takes to get an item out of a location and to its final destination.
The challenge: It’s not uncommon for a single piece of furniture to change hands six to eight times and take six weeks to eight weeks to be delivered as it goes through the consolidation process between first mile, long haul and final mile. Furthermore, many traditional transport companies, such as less-than-truckload (LTL) carriers, loathe residential pickups and deliveries due to risk of knocking down mailboxes or power lines and getting stuck on tight streets.
The solution: The trick is finding a white-glove solution that gets deliveries made in as few “touches” as possible. This may mean turning to unconventional solutions. One way to tackle this is to build or find a transporter network of experienced drivers, including drivers of sprinter vans, box trucks, pickups with trailers, and traditional tractor-trailers. By using less traditional carriers, retailers can leverage untapped truck space to help facilitate large-item deliveries through the network.
There’s no such thing as “free shipping” — it’s just a matter of who pays. Amazon knows this all too well, and it shows in its logistics strategy: Own the supply chain. Squeeze out all excess cost. Maximize revenue.
The challenge: Unlike Amazon, online sellers don’t aspire to own fleets of planes, trucks, ships and drones. Merchants must turn to existing logistics networks when shipping furniture and other oversized goods. However, this can come with excess fees, especially when working with LTL carriers, which prefer neatly stacked freight to maximize capacity. Those extra fees only increase delivery cost or get absorbed by the seller, neither of which are great for the bottom line.
The solution: It can be challenging for sellers to know a good rate from a bad one. Without volume, commanding competitive rates from carriers is difficult. We live in a day and age where it’s possible to track delivery rates like the stock market. Big data allows sellers to know how much it costs, with very little margin of error, to get that grandfather clock from point A to point B. Sellers can now access predictable, fixed-price delivery rates that include insurance, and even turn shipping into a profit center by marking up delivery prices.
Trust and Transparency
While customers are now conditioned to speed and low cost, many carriers still work on a “you’ll-get-it-when-you-get-it” timeframe. This can reflect poorly on the seller. In a hypercompetitive e-commerce market, negative reviews and feedback, even if it’s not the seller’s fault, can torpedo online sales.
The challenge: For example, while it’s rumored that UPS is looking into a last mile solution, its drivers won’t carry parcels over 150 pounds into a person’s home, or “threshold service.” Other traditional trucking companies often leave items on the curb and won’t bring them indoors and/or perform assembly or installation. FedEx doesn’t even have a large format solution for e-commerce, but is rumored to be exploring one. Damages are another story. In fact, some sellers face a worst-case trifecta: uninsured deliveries, a high claim rate, and unreliable carriers.
The solution: Consider a fixed-price delivery option that includes insurance, a network of carriers that meet certain criteria and satisfaction ratings, and tracking and delivery notifications for added peace of mind. The thing that can bring it all together for online sellers? Technology, including an API-driven process. When technology is applied, in-home, white-glove delivery costs will drop, transit speeds will decrease by using underutilized truck space, and feedback ratings, similar to eBay’s rating system, will give both buyers and sellers unprecedented transparency.
For online sellers, large-item delivery doesn’t have to remain a head-scratching experience, nor should it be where merchants put all their attention. Those who figure out how to maximize speed, minimize cost, and establish trust with buyers will be the most competitive with their peer sellers, as well as Amazon, Walmart and the like. The race is on.