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Will Peak 2023 Be a Season of Structured Flexibility in eCommerce?

Blog Post
eCommerce retailers are taking a closer look at how extreme eCommerce fulfillment flexibility brought on by the pandemic may be untenable.

By Matt Barr, VP Marketing & Product, Radial

We’re entering Peak 2023 with a bit of wait-and-see uncertainty. Retailers have ordered less inventory for the holiday shopping season amid continued speculation over an impending recession. Shoppers are expected to hunt for discounts and promotional perks, and overall be more mindful in their spending. So far, consumer spending continues despite high inflation and interest rates, in-store and eCommerce omnichannel shopping remains steady, and we see stores finally out from under their excess inventory. So far, so good… fingers crossed…we’re optimistic for holiday sales!

However, as costs continue to rise and margins shrink, eCommerce retailers are taking a closer look at how extreme eCommerce fulfillment flexibility brought on by the pandemic may be untenable. Fast shipping, free returns, multiple payment options, numerous order fulfillment options — omnichannel now means online shoppers can buy what they want, when they want it, pay for it how they prefer, and get it delivered or picked up at their sheer discretion. eCommerce retailers must scramble to keep up.

What’s the right balance between flexibility and profitability?

I’m not sure there’s an easy answer; every retail business needs to do its own data-backed soul searching. I am convinced, however, that now is the time for retailers to take a step back and rethink their eCommerce fulfillment operations strategy in light of the upcoming eCommerce holiday season and the long game.

Customers Love Multiple Order Fulfillment Options; CFOs Do Not

eCommerce fulfillment solutions cost money, time, and resources. Returns management is expensive. Multiple payment solutions can be costly. Customers have grown accustomed to free and easy — and while this is great for customer experience, it takes a toll on profitability. Additionally, there is a continuing concern about overburdened retail employees who must shuffle multiple roles in an understaffed environment. I’m the dad of a 16-year-old working retail, so I see it first-hand. Store fulfillment has numerous advantages, but it still requires humans to run it. Wages have gone up, adding to the cost of eCommerce fulfillment.

Overall, online retailers are caught between a ground swell in customer expectations for omnichannel experiences, free and easy shopping and returns — with little space to pause and consider if they should be offering every option available. And if not, how do you offer restrained flexibility?

Rethinking Free & Easy

Take easy returns. Customers are used to free and easy returns; it reduces risk and increases buyer confidence. But brands are reconsidering their returns strategy; either charging restocking fees, no longer offer free shipping for returns, and/or setting shorter timelines around return eligibility. Easy returns are good for customers; bad for the business — to the tune of $816 billion in lost sales in 2022. Retailers must find ways to make returns more efficient, but what should that return policy look like? These are questions retailers must grapple with for peak season 2023 and into 2024.

What’s the best way to create parameters around how flexible you are in your eCommerce order fulfillment? What is absolutely necessary for a modern positive omnichannel experience today and what can be redefined?

There are some core must-have CX expectations that you must deliver:

  • Convenience
  • Right pricing
  • Frictionless, omnichannel shopping process
  • Honest, transparent, proactive communication and notifications
  • Clearly outlined expectations for product availability, shipping, and delivery times
  • Fair and transparent returns policy
  • Available, friendly customer care

Those are the basics. Customers are often willing to adapt to different policies and experiences if the brands they love keep meeting these fundamental expectations.

Meeting Basic CX Needs Buys Room for Parameters

At Radial, we work with customers to help them shape their omnichannel experience within the boundary of core CX expectations. The following are key areas where you can either reshape your policies and best practices, or partner with us to help reduce costs while still delivering a great customer experience:

  • Be Selective in eCommerce Fulfillment. From traditional order fulfillment, to store fulfillment, to dropship — evaluate every option you are using and what is available to you to determine how much it costs the business, the key impact on conversion rates, and where fulfillment options might be modified but still available to customers. For example, you may eliminate BOPIS curbside pickup (saving staff the time and cost of running orders out to vehicles) and offer instore pickup only, which brings customers into the store and usually increases basket size. Consider partnering with a 3pl fulfillment solution provider like Radial for full eCommerce fulfillment solutions.

  • Redefine Shipping Speeds and Delivery Costs. If you have strong negotiations with carriers and can get the best rates (something Radial Transportation Management helps our customers do), you may be able to offer multiple shipping options, rates, and timelines and let the customer choose. Or, it may be best for you to limit shipping to a couple of options and lump free shipping into your rewards program — covering the added costs through membership dues.

  • Narrow Your Payment Solutions. Many retailers we consult with feel they need to offer as many payment options as possible to capture every sale, i.e., tenders, wallets, buy now pay later, etc. This typically overwhelms the customer. Radial Payment Solutions experts advise eCommerce businesses on the best payment solution options that will meet their needs and provide just the right amount of flexibility for customers. Payment solutions are complex and come with varying costs — retailers can often cut costs by eliminating some solutions and focusing on those that will meet their needs.

  • Reduce Transportation Costs. Inflation has driven up transportation costs and carrier rates. Reducing final mile costs by shifting to regional fulfillment centers, store fulfillment options, and negotiating the best rates with carriers can help minimize costs. Radial walks customers through ways to mitigate transportation costs while improving efficiency.

  • Deploy Omnichannel Technology. I see many retailers frustrated that their legacy ecommerce platform is limiting or inhibiting omnichannel advances. Or that they cannot access the data they need to make better decisions in real time. Evaluating your tech stack and making sure you have real-time inventory visibility, modern omnichannel order fulfillment solutions, and integrations with supply chain technology will reduce costs, improve efficiency, and create a more streamlined customer experience.

These are just a few of the ways retailers can modify flexibility to reduce costs while still delivering a great customer experience during Peak 2023. If you’d like to learn how Radial eCommerce fulfillment experts can help you evaluate your order fulfillment, reach out today.

As VP of Marketing and Product, Matt Barr guides Radial’s marketing strategies and product innovations to align with our organizational vision. A seasoned professional, Matt has over 15+ years of deep immersion in the logistics sector. 

Throughout his career, he has donned various hats, giving him a comprehensive understanding of the industry and the brands we serve. He also repeats the terms ‘pain points’ and ‘value’ a lot, but we kind of like that.

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