On Sunday, Amazon entered into an agreement with the US postal service to deliver packages to Amazon Prime customers on Sundays, signaling a broader shift into more e-commerce as companies take advantage of the postal service’s existing delivery capabilities. The cash-strapped USPS aims to own Sunday shipping, a day currently devoid of all but the most expensive shipping options, and hopes to take back some market share from FedEx and UPS. These companies could, in turn, be forced to expand their shipping options.
Per the agreement, the postal service will start delivery in the Los Angeles and New York Metropolitan areas for the Christmas holiday season, expanding service to other regions in 2014. The deal marks the first time either Amazon or the USPS will provide Sunday deliveries and is a shot across the bow for physical retailers.
In order to compete, physical retailers need to be more aware than ever of in-store customer behavior, consumer preferences, and areas where the shopping experience needs to be improved.
Shifting Consumer Preferences and Logistics
Recent studies by Forrester Research illustrate that shipping cost is the biggest factor for consumers when they’re considering whether to make an online purchase, with 53% saying that low-cost shipping has caused them to switch online suppliers.
According to Forrester’s Sucharita Mulpuru,”Delivery on a Sunday would be very compelling for consumers. There are certainly people who decide not to make an order on a Friday because it won't get there until Monday.” The battle for consumers’ dollars is increasingly being fought not only over price, but also over delivery speed, cost, and logistics.
Sunday’s partnership is the latest evolution in this ongoing battle. Historically, retail has had the advantage of “right now.” If consumers wanted a product today, the only way they could get it was by driving to the store. However, new services like Google Express are focusing on same-day delivery with free shipping; and Amazon’s rush to build logistics centers around the US has been focused on decreasing the time from click to front door.
Physical retailers need to take note of Amazon’s moves. Technology companies like Google, Amazon, and Facebook use profiles, cookies, advertisements, and data analytics to build profiles of their customers, enabling targeted advertising and aligning pricing and supply with consumer preferences. Moreover, this agreement increases the value of an Amazon Prime membership, with the long-term goal of pulling more customers into their ecosystem and creating repeat customers. With this agreement, Amazon is moving into Sunday, a day historically reserved by the physical retail store.
Implications for Physical Retailers
Given these recent developments, it is critically important that physical retailers focus more than ever on understanding the customer’s in-store behavior and on improving the customer experience. With the latest developments in in-store analytics, retailers are finally armed with the tools to create actionable insights that were once only available to e-commerce platforms:
- In-Store video analytics allow retailers to analyze what products attract customer interest, where customers dwell within a store, and what the conversion rate is for different products and different locations.
- Kinetic heat maps allow retailers to understand customer interaction with displays and the flow of traffic throughout their stores to optimize product placement and customer experience.
- Integrating traffic and net sales analysis allows retailers to optimize staffing to peak traffic hours, improving customer service and conversion while also identifying the most effective sales associates.
- Queue analytics allow retailers to streamline the purchasing process and identify potential for sales abandonments.
- Opt-in Wi-Fi technologies allow retailers to recognize unique customer visits and understand website visits and durations during customers’ time in the store.
Modern analytics provide physical retailers with a toolkit to understand the in-store customer experience as never before. It is of utmost importance that retailers use all these tools to create actionable insights for stores. To this end, it is critical that corporate and regional managers have a platform with which to quickly compare and analyze different performance metrics both among and within stores.
The RetailNext platform allows regional managers to conduct real-life tests in order to produce an optimal customer experience based on each store’s products, layout, and customer demographics. It allows both regional and local managers to analyze and optimize employee staffing to better align top traffic hours with staffing that uses their most effective sales associates. Finally, new developments in demographic technologies and opt-in Wi-Fi allow retailers to create an omnichannel picture of their customers and to begin to fight back against the e-commerce encroachment.