• Respondents place an average of 15 online orders
per year, a 50 percent increase over our 2012 survey
• Respondents said they were more likely to order just
about anything online, even large products that they
previously wouldn’t buy without first inspecting in a
store, such as appliances and furniture.
• Consumers want faster delivery. Sixty percent of
respondents said they are willing to wait five or more days
for a delivery, down from 74 percent in our 2012 survey.
• Nearly 75 percent of respondents said that free
shipping options “greatly a;ect” their ordering
decisions, up from 64 percent in our 2012 survey.
These changes in expectations and behavior — in a
relatively short time — have
put an enormous strain on
traditional retailers as they look
to close the gap with online
competition and compete with
other e-commerce options. In
response, many retailers have
started o;ering subsidized
expedited shipping, which
has heightened consumer
expectations but eroded
profits for retailers that lack
infrastructure and scale.
For many traditional retailers,
“ship-from-store” concepts have
o;ered promise but have proven di;cult to execute.
For ship-from-store to succeed, two elements need to
be in place. First, the store needs to possess the desired
inventory, which requires real-time visibility at the store
level. Second, the store needs available labor to pick,
pack, prepare to ship and tender to a carrier — while still
serving in-store customers.
When ship-from-store is executed well, it can relieve
stores of surplus inventory, decrease transit time and
reduce distribution costs driven by origin-to-destination
distances. However, poor execution (which appears
to be prevalent today) can wreak havoc with inventory
management, disappoint customers and require costly
DELIVERY DATA NEEDS
Alongside — and a key part of — the growth of
e-commerce is an explosion of data, both in content and
frequency. On the delivery end, this goes beyond knowing
street addresses and such package specifics as origin,
weight, dimensions and service level. Today, companies
must also factor such considerations as:
• Customer contact details like a mobile phone number
and email address to confirm or communicate changes
• Alternate addresses for instances where mobile
consumers may require a change to the delivery plan
while the package is en route
• Delivery instructions, which can be unique or complex
in more densely populated areas, where leaving an
unattended package on a porch may pose a higher risk
of loss or damage.
Retailers, carriers and distributors need the preceding
information to manage each delivery’s flow, whether to a
residence, business or other location. Executing without
complete, accurate and timely information increases
the risk of failure, which leads to increased cost and
decreased customer satisfaction levels.
The study also shows that consumers don’t have a
preference as to who delivers a package if it arrives
quickly and at little or no cost.
Traditional retailers are embracing this
trend as they look for new, lower-cost
means to meet changing consumer
However, this creates challenges for
WIN OR LOSE WITH BIG DATA
the legacy logistics service provider
(LSP) community that has long
supported the retail supply chain.
New entrants to the e-commerce
fulfillment and delivery market
provide competitive pressure to
these traditional LSPs: They are
nimbler and are not encumbered by
legacy organizations, infrastructure
and IT systems. Online competitor
investment in logistics capabilities also is disrupting the
traditional delivery landscape.
Ultimately, as consumers continue to increasingly
embrace e-commerce, the winners and losers in both
the retail and logistics industries will be separated by their
mastery of advanced analytics.
Those that collect, manage and leverage data — and the
comprehensive data life cycle — associated with deliveries
and consumers will be able to provide more options and
manage customer expectations. They also will be able
to execute more reliably and more e;ectively control
costs of e-commerce transactions (not to mention
other transactions across traditional and evolving retail
Conversely, those that struggle with managing data
— which is at the heart of e-commerce — will find
themselves at a competitive disadvantage. ISM
Foster Finley is a managing director and co-head of AlixPartners’
operations practice, which includes supply chain, transportation,
logistics and manufacturing consulting, in Atlanta. James Blaeser
is a vice president at AlixPartners’ New York o;ce.
FOR MANY TRADITIONAL
HAVE OFFERED PROMISE
BUT HAVE PROVEN
DIFFICULT TO EXECUTE.