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Strategy and Transformation

2015 Consumer Markets Trend: Delivery

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delivery2Delivery is a bit of a hot topic lately especially when it comes to drones.  It also leads us to our next trend in the consumer markets industry.  As consumers, our wants and needs change at the blink of an eye and when it comes to delivery of products we purchase, we want the immediate need to take it with us that we get when we are at the store, online as well.  Companies have been trying to find ways to satisfy this immediate need to obtain our purchase by shortening the delivery time as much as possible.  Consumers what a process that is easier, flexible, convenient and faster that what they already are offered.
Amazon is a company that has taken the lead in delivery and consumers have become more accustomed to their convenient and fast shipping options when shopping online.  Becoming a member of Amazon Prime enables the consumer to get guaranteed shipping of 2 days or less at no cost and membership perks for a small annual fee of $99.  Due to this, other retailers have had to respond by offering the same options online and in-store.  Just recently Sephora announced their new subscription-based service, Flash, that will offer their customers unlimited two-day shipping for only $10 a year!  According to collected data, this new services she double the speed of the retailer’s shipping time.  Free Shipping is obviously a huge driver of sales for shoppers and a study done by UPS recently reported that 58% of online shoppers said they would add items to their cart just to qualify for free shipping.  Sephora is hoping to see an increased number of consumer loyalty with this added layer of premium services and convenience for online shoppers.  Macys is another retailer that is trying to up their game when it comes to delivery.
In February, Macy’s announced that they planned to expand their test market in same-day delivery to compete against companies like eBay and Amazon who are already offering this service in certain markets.  Reports show that Home Depot had an increase of online sales in the 1st and 4th quarters last year and in order to continue the growth, the company is making faster delivery and available inventory a top priority this year.
Drop Ship:
Drop Ship enables consumers to choose the products they want to purchase on-line and have visibility to what store in their area has the product in-stock to either be shipped to their home from there or available for pick-up.  Motorola recently conducted a survey that reports 39% of retailers offer consumers the option of mobile purchase with ship to home and they expect that number to increase to almost 60% by 2017.  These types of options allow other retailers to compete with online options through Amazon or EBay while enhancing their own e-commerce offerings.  Consumers are now getting the best of both worlds with the ability to go to a store and touch/experience products while still having the expansion of product availability of ecommerce and delivery flexibility of a product.  Leading retailers are integrating front-end and back-end processes with centralized commerce platforms to which provides consistent information and to deliver consistent information and experiences.
Endless Aisle:
When it comes to inventory management, endless aisle has made a huge impact in improving the efficiency of retail space within a store.  The concept of a virtual inventory program allows retailers to retain more stock in the back of the store, with a supplier or at their warehouse.  Brick-and-mortar stores no longer have to worry about finding shelf space for all of their items that they carry.  With a digital extension of shelf space, customers are able to enjoy a better experience with less clutter and an increased amount of product selection.  Leading retailers are integrating their virtual inventory programs with their suppliers decreasing their risk of carrying inventory.  What does this mean?  It allows a store to be able to offer an expanded product line while allowing a customer to view the actual product and purchase it increasing revenue for the retailer that might have otherwise been a missed opportunity due to the lack of visibility.  Consumers are more likely to trust a person or company when they have visibility to things.  This virtual technology helps create a transparency for consumers with the ability to experience online interactive and dynamic product videos and images, pricing, reviews and available inventory.  Similar to ecommerce platforms, virtual inventory or merchandising technology enables large amounts of consumer data to be tracked across multiple touch points.  This data is valuable to the retailer to help improve merchandising, content development and ultimately the customer experience!
Drones have been a very hot topic of the last year but the answer remains unclear as to whether or not these are going to for delivery in retail.  Once used for sci-fi films and military efforts, they are quickly becoming part of a much larger landscape.  Technology is evolving so fast that what seems impossible could easily become the norm in a few years.  Domestically, we are still deciding on what we “can” use drones for while other countries are utilizing them already – DHL in Germany and the UAE is working on a system to utilize drones to deliver government documents.  Drones have the capability of helping retail companies in more ways than one can imagine from store design, site selection, security to logistics.  Drones could eventually be utilized to track shopping movement and patterns helping retailers to collect data that could measure the effectiveness of entrance positioning, signage and the impact of traffic.

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Heather Bowman

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