Earlier this month, Target agreed to buy grocery delivery startup Shipt for $550 million. The move is a clear indication of Target's intent to roll out same-day delivery options for customers in order to compete with other large retailers (ahem, Amazon). How the same-day delivery phenomenon impacts e-commerce retailers will largely depend on how their digital operations are set up.
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I spoke with Gregory Ng, Vice President of Digital Engagement at PointSource, a Globant Company, about the digitization of the supply chain and what it means for e-commerce retailers. Ng's company works with supply chain managers, retailers, and insurance providers to help build a digital infrastructure that is flexible and adaptable enough to hang tough in an ever-changing digital transaction landscape.
PCMag (PCM): What does Target's acquisition of Shipt mean for the overall big-box retail landscape, especially as it pertains to e-commerce?
Gregory Ng (GN): Target's purchase of Shipt clearly signals not only the threat they feel from Amazon Prime Now but also the change in customer expectations. As Amazon continues to get faster and faster with shipping offerings, consumers are demanding this from other retailers beyond just Amazon. As Target works to fight "the Amazon Effect," Shipt will be an essential tool in their arsenal so that they can meet these demands along with Amazon. Target's acquisition demonstrates the need to constantly update offerings across the retail landscape. Big-box retailers need to keep this in mind as they think about their e-commerce strategies moving forward. If they aren't keeping up with the demand for speed that Amazon has set consumers up for, they'll inevitably lose business to retailers who can provide that experience.
PCM: How soon should we expect same-day delivery to become the norm for large retailers? It's somewhat available in major cities from companies like Amazon but what about suburban areas from brand-side retailers?
GN: I think that many people already expect this. And if they can't get their purchases from large retailers in the same day, consumers will likely take their business somewhere they can. As this trend continues to take hold in the retail space, we've been seeing large retailers, like Kohl's, partner with companies like Amazon so that they can make this happen. I expect that we'll continue to see large retailers enable same-day delivery, and if they don't, we'll see their numbers go down accordingly.
PCM: How will mass adoption of same-day delivery impact the supply chain?
GN: This will change a number of things in the retail supply chain. This includes the need for real-time supply chain information so that retailers understand where every product is at all times and the need for the ability to ship from anywhere to anywhere. Transparent supply chain info will be essential in ensuring customer satisfaction and supply chain efficiencies. As the same-day delivery trend continues to take hold, the expectation for delivery range will continue to widen as well. Supply chains will need to adopt tech that gives this insight and create efficiencies within their processes so that delivery is streamlined and quick.
PCM: How will these near-instant online transactions impact the brick-and-mortar operations? What shift will you see happening there?
GN: Brick-and-mortar retail employees will now need to be trained in shipping and delivery as well as showroom unpacking and merchandising. In order to meet the same-day delivery demand, it will be important to have all hands on deck in preparing the shipments and making sure that orders are accurate and processes are efficient. The percentage of showroom-to-warehouse space within brick-and-mortar will shift as well. Brick-and-mortar may become more of a showroom and self-pack space in some departments. For Target, that most likely means TVs, furniture, bicycles, and things that are too big to fit in most cars. The ability to same-day ship means no need to carry huge boxes out to strap to your car roof.
PCM: In addition to same-day delivery, what other delivery options should consumers begin to wrap their heads around? In-car delivery? In-home delivery? What else?
GN: I think that the next delivery options that consumers should start to think about are around large-quantity orders. Will bulk neighborhood discounts be far behind? If Target delivers same day, why shouldn't they offer the option to bulk-buy with neighbors? This could also help them take on competitors like Costco who own a different type of market share and consumer base. Being able to go in on orders with a neighbor in large quantities could mean more efficient supply chain processes and better deals for buyers. Target and other big-box retailers could take learnings from supermarket chains who offer in-car delivery options. This allows retailers to free up valuable shelf space while offering many more options because the decision-and-purchase process now exists in a virtual storeroom delivered straight to your car or door.