A significant challenge for retailers today is finding the formula for satisfying customer expectations while maintaining profitability in an increasingly omni-channel world. This means looking at their logistics and fulfillment strategies and ensuring their systems can make the complex decisions needed to decide where to pick, pack, and ship profitably, whether that’s from a distribution center, fulfillment center, store, or dark store. Regardless of the profitability issues, customers expect retailers to deliver on their promises: delivering what they ordered on time and undamaged, having the item in stock whether in store or on their website, and if picking up in store, having a trained associate available in a reasonable time to help them. Retailers who fail to meet their customer’s needs risk losing their business, especially at the peak holiday shopping season.
In the JDA 2015 Consumer survey unveiled today, one in four customers experienced an issue with an online shipment in the last 12 months, and 50 percent of those impacted said they were unlikely to shop that retailer during the peak holiday season. This retailer profitability/customer satisfaction tug-of-war is evidenced in our survey, which begs the question, ‘Is Black Friday already over for some retailers?’
BOPIS Highlights In-Store Challenges
The physical store has become an important part of today’s omni-channel strategy with Buy Online/Pickup In Store (BOPIS) and Buy Online/Ship From Store growing in popularity. Customers increasingly view BOPIS as a convenient and cheaper option to home delivery, especially from retailers who charge for shipping and returns.
This convergence of digital and physical commerce creates a new set of challenges for retailers. In our survey, almost 35 percent of respondents have used a retailers BOPIS offering, but unfortunately, 50 percent experienced a service issue, primarily slow service from associates or missing orders. Retailers need to account for store labor needs and scheduling as part of their omni-channel planning as this has now become a significant point of failure for customers.
Convenience and Cost are Important Differentiators
Consumers expect great execution no matter if it’s a peak season or not. For example, 35 percent of those surveyed who have experienced a negative delivery issue with an online order say they are not likely to shop with that retailer again – period. That number jumps to 51 percent for those who won’t shop during the critical holiday season at retailers who disappointed them. It’s clear that failing to deliver omni-channel excellence could have a direct impact on many retailers’ bottom lines this year.
Frustration with Returns
Returns should be another area of concern for retailers as their returns policy often impacts whether consumers will shop with them. In fact, 88 percent say that the ease of returns is an important factor in their decision on who they shop with on-line. The profitability problem for retailers is evident in the fact that 30 percent of online shoppers say they regularly order two or more of the same item in different sizes or colors with the intention of returning the ones they don’t want. At the same time 62% say their main frustration with returns is having to pay for return postage and packaging.
Black Friday and the Bottom Line
The shift in channel preference for Black Friday/Cyber Monday shopping is seen throughout our survey results. 23% of those who expect to shop on Black Friday/Cyber Monday plan to shop primarily in-store, with 52% shopping primarily on-line and 25% shopping equally in store and on line. This shows a 7% increase in online shopping compared to how our respondents indicated they shopped in 2014.
Overall, the JDA Consumer Survey highlights several key findings that retailers should consider as they prepare for this year’s Black Friday/ yber Monday shopping season:
- Consumers are still very price conscious, but not just for product pricing. Consumers also consider the cost of delivery and returns in their purchase decisions.
- Although there are still many loyal customers, they’re frustrated. They are frustrated by service problems both with home deliveries and BOPIS services. And they are frustrated with returns that are costly and inconvenient.
- Consumer choices for how they shop during peak season and throughout the year are changing, with more emphasis on purchase paths like buying online with home delivery or pickup in store that can be more complex and costly for retailers to fulfill, putting pressure on margins.
However, the biggest concern retailers should have is that consumers who have experienced issues with a retailer’s omni-channel services in the past are likely to put them on their “naughty list” and potentially not shop with them at all this holiday season.
Have some retailers lost the battle for Black Friday and Cyber Monday financial success? The JDA Consumer Survey 2015 indicates that this may be a very real possibility.
To learn more about the issues addressed in the report, access the full report. To hear my comments on key planning and execution issues and how JDA can help, watch this brief video. For a look at the key charts and graphs outlining the findings of the report, access the infographic.