WHY IT MATTERS: Digital Transformation

WHY IT MATTERS: shipping remains the last issue to solve in eCommerce IMHO. This report provides some insights into the challenges for 2022, including rate increases labour shortage, increased competition by Amazon.

WHY IT MATTERS: unit economics of eCommerce is always interesting to me. Here, an in depth analysis of the food delivery business, as seen by the restaurants, the delivery platform (think doordash) and the consumer. Full of good data tables. Summary: tough to make money if you are in the restaurant business, but possible.

WHY IT MATTERS: free delivery appears to be a myth based on this analysis from parcelLabs. And in-store pickup is the most popular option. Is this because customers really prefer to pay for delivery or go to the store? - or because the pick-pack-delivery-return costs are too high and as they come down with economies of scale, customers will naturally pick the free delivery option, as they do with Amazon?

WHY IT MATTERS: delivery is expensive and contributes to pollution. Last mile delivery alternatives are essential to make eCommerce efficient and eco-friendly. This project in Montreal is a great way to start in that direction.

WHY IT MATTERS: paypal raises its fees to 3.5% + 50¢ per transaction. Add to that the other costs of being online - shopify store fees, Poste Canada delivery fees, return fees, support, packaging, etc. etc. - and you quickly rack up 15$ or 20$ for a 100$ buy. When online is a side retail channel (what it is for most small retailers), then those fees come on top of physical store rent and employee salaries. No way they can make money. Something's got to change to make eCommerce profitable.

WHY IT MATTERS: eCommerce is starting to specialize, showing the limitations of Amazon a-to-z "the everything store". As raised in this short post, the specialization comes from the pick-pack-delivery side of eCommerce - logistics - as shoes, furniture and pizza can all be sold on the same website - say Amazon or Shopify - but require vastly different logistics to fulfill the order. We will see technologies appears to answer those special needs in the future.

With Le Panier Bleu we recognized that limitations of eCommerce for small retailers often are related to the high cost of delivery by mail (poste canada, UPS or other) and that a marketplace solution must address those concerns. This post just provides insights into one aspect of this.

WHY IT MATTERS: je mets mon commentaire en français parce qu'il s'adresse spécifiquement aux amis du panier bleu. L'article de Ben Evans soulève une question importante et fait la démonstration que non, Amazon ne sait pas. Et que pour Amazon, pour l'instant, peu importe. Mais pour le panier bleu et sa place de marché, le marchandisage et la curation de contenu sera importante. Essentielle même. Et qu'elle sera peut-être le différentiateur et la clé du succès. Le panier bleu ne gagnera pas en créant une place de marché mais en réglant les enjeux des commerçants (coûts élevé des cartes de crédit, logistique, livraison, retours et publicité) et en offrant aux consommateurs une destination pour trouver des commerces et des produits québécois. 

En gros, il faut régler les problèmes du commerce de détail, et la technologie ne résoudra pas tous les problèmes à court terme...

WHY IT MATTERS: this is old news but a new picture that shows what it looks like when you track your delivery in China. The image is from March 2021 even though the article is from 2020. So it seems to remain after a year. Not sure when it will be part of the UBER app... ;-)

WHY IT MATTERS: anyone looking at fulfillment by amazon (FBA) should consider this reference for add-on tools.

WHY IT MATTERS: a very interesting article about a robot taxi system, how it works and its limitations. Fun read to understand what is possible and what is not in self driving tech today. This is important because many of digital transformation use case depend on this for profitability (for example eCommerce delivery cost should reduce drastically when this available).

WHY IT MATTERS: 50% return rates stated as "normal" for this retailer: I find it shameful and unsustainable for many reasons (economic and environmental for starters). It is great that only 0.05% end up in the landfill but this is not the case in most organizations: returns are at best discounted and most often trashed. How can small retailers build profitable eCommerce business models when 1in2 or 1in10 orders gets returned? It may work ok for apparel or luxury or other high margins segments, but for most retailers this is not the case. Returns are a problem and they need to be addressed!

WHY IT MATTERS: this study of 100 post-checkout experiences across UK retailers applies to Quebec, Canada and US as well. Full of useful insights about free delivery, delivery selection, returns, etc.

WHY IT MATTERS: last mile delivery is the Achille's heal of eCommerce. This report provides a great overview of the micro-fulfillment solutions out there.

WHY IT MATTERS: Amazon delivery cost now account for 17.8% of sales, increasing. It ships billions of packages via postal service in US (and Canada and elsewhere) but reports like these seem to indicate it may want to build its own delivery infrastructure. And this would be bad for eCommerce as Amazon would control the whole supply chain and obviously keep the savings for itself. 

Graph is from The information: https://www.theinformation.com/articles/amazons-massive-spike-in-delivery-stations-poses-threat-to-usps

WHY IT MATTERS: the acquisition of robotics for Ocado fulfillment centers could be seen as one more tech announcement. But buried in this Fortune article is this quote from Ocado CTO that summarizes the ultimate goal of grocery eCommerce: dark warehouses with robots doing all the work. 

This may sound very futuristic but in fact it is the consequence of the grocery eCommerce business model: the only way to make money is to have robots to the work that consumers do when pushing carts in the store.

WHY IT MATTERS: parcel delivery has become the primary volume for postman. Why not have delivery routes - postman or milkmen - to deliver the parcels and not just the mail? Would this not be a more cost effective solution than delivering one by one?

WHY IT MATTERS: Amazon will use failing and bankrupt stores and shopping malls to build warehouses so close to consumers that 1-2hr delivery becomes possible - the last hurdle in making eCommerce viable in many product categories (grocery, food, meals, and other high volume / low margin categories come to mind first of course).

WHY IT MATTERS: amazon appears to be testing another method of grocery fulfillment that leverages dark stores that are close to households (with dedicated staff and soon micro-fulfillment automation) and a network of freelance drivers that delivers orders in a very small area in order to solve the last remaining problem of eCommerce: delivery cost and speed.

WHY IT MATTERS: when Amazon receives FAA clearance for drone delivery, I take notice. After all, delivery is the final frontier for profitable ecommerce. So maybe drone delivery is the solution - especially for Canada and its wide empty territory? Not sure that drones will solve delivery issues but sure it is fun to think that it may provide a low-cost option in certain areas.

WHY IT MATTERS: a very complete study on the state of the art in eCommerce logistics in Quebec. Still valid today, can act as a guide to retailers struggling with order fulfillment, shipping, returns, etc.

Go direct to the report here: https://cefrio.qc.ca/media/1906/cefrio_portrait_logistique_commerce_electronique_au_quebec.pdf

WHY IT MATTERS: ecommerce fulfillment must be efficient to be profitable. With order volume increases in recent months, the benefits of micro-fulfillment solutions have become clearer than ever. With setup costs in the tens of millions, they remain capital intensive endeavours for the long run. When combined with automated delivery, they can make eCommerce a profitable business for many retailers. This report highlight some of the key characteristics of these solutions.

WHY IT MATTERS: delivery is the last problem to solve for eCommerce to explode. Not only do delivery fees need to be reduced via automation and "milk runs", but it is impossible for retailers and restaurant to support the rent of mostly empty space (during covid and I assume some time after) in prime locations. The overall business model has to change. Ghost kitchens, dark stores, and other solutions are required.

WHY IT MATTERS: grocery is tough with small margins and this chart from Bain says it all: delivery and the fees are the last problem to solve with eCommerce. And I would say this is true for all other retail industries, not just grocery. It is that grocery is more sensitive with their high volume and low margins.

And here the original article from Bain&co : https://www.bain.com/insights/how-to-ramp-up-online-grocery-without-breaking-the-bank/#

WHY IT MATTERS: online grocery adoption has been very slow (I know, I did the first IGA online in 1996!) but now it seems covid may have pushed it over the hump. And if not, at least it appears that it has shaved about one or two years in its adoption cycle. This report provides useful insights as well a great review of startups in the field.

WHY IT MATTERS: one of the best webinar on eCommerce fulfillment out there - in french!