As we have posted about before, retailers using store inventory to fulfill on-line orders is a thing. It is also a thing that raises an interesting question: At what level of store inventory should a retailer stop using store inventory to fulfill on-line orders? That is, should everything be available first-come, first served or should some store inventory be held back only for those customer that wander into the store? According to the Chicago Tribune, different chains are following different strategies on this (With Hatchimals scarce, who gets dibs — online shoppers, or those in the store?, Dec 13).
Target ships online orders from 1,000 of its stores, up from 460 last year. To avoid empty shelves, Target will turn off the order pickup or ship-from-store option on some items when a store’s stockpile falls below a certain threshold, said Target spokesman Eddie Baeb. Stores that ship also get extra inventory.
An online customer likely doesn’t care which store or warehouse handles their purchase. The shopper already walking the aisles does. Exactly how many items Target holds back depends on the product and how quickly it typically sells. …
Other retailers, like Toys R Us, don’t try to guess how many items to hold back for in-store customers.
Even on Christmas Eve, the retailer doesn’t bump back online orders to help procrastinating brick-and-mortar holiday shoppers. Purchases, whatever the format, are first-come, first-served, said Toys R Us spokeswoman Jessica Offerjost.
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It’s the end of the year so it is clearly time to see what is up with how retailers are handling holiday logistics. A useful starting point is this graphic from the Wall Street Journal (As Web Sales Spike, Retailers Scramble to Ship From Stores, Dec 1).
This shows how Toys R Us fulfills its web orders. And, yes, that says that over 40% of the web sales were fulfilled from stores. (To put that total in perspective, the company’s revenue last year was $11.8 billion.) (more…)
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There is a good chance that the last time you bought something on Amazon’s website, it wasn’t actually sold by Amazon. It instead came from an independent merchant, and Amazon just handled the logistics of getting the item to you. That arrangement has an implication that I never considered until a recent Wall Street Journal article (Amazon Prods Its Sellers to Free Up Warehouse Space, Nov 4): By inviting in the additional sellers, Amazon is giving up control of just what is in its fulfillment centers. If a merchant wants to sell miscellaneous crap, that is their business. At the same time, however, that miscellanea potentially ties up space that Amazon needs — or at least could use more profitably on other items. This is particularly true as we head into the holiday season when Amazon should reasonably expect business to be booming.
What is a poor e-commerce giant to do?
How about a little surge pricing? (more…)
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Many years ago, I worked as an office assistant in my college dorm. One of the responsibilities was letting residents know if they had received a UPS package. Anything sent via regular mail went to the campus post office where we were all assigned a box. Since UPS couldn’t deliver to the post office box, it came to the dorm where someone would get around to writing out a paper form so the student could be notified. It wasn’t a particularly efficient process, but once you got past the start of the school year, there weren’t too many packages to deal with.
But times have changed! The Daily Campus (of the University of Connecticut) reports that UConn’s mailrooms are getting overwhelmed (Mailroom backup continues as officials search for solutions, Oct 5).
The number of packages received by the university for residential students has been increasing drastically in recent years, in large part due to the rise in online purchases, Assistant Director of Building Services Tracy, told The Daily Campus in an earlier article. As a result, there is a growing need to find long-term solutions beyond hiring more staff.
According to Cree, more than 100 student workers are involved in work related to the residential mailrooms.
In order to fix some immediate problems, plans have been made to modify existing mailrooms in the next few weeks. These alterations are intended to allow packages to be processed much more efficiently. …
In addition to these immediate changes that are to be put in place, UConn is also considering other ways to efficiently deal with the influx of packages and alter the current infrastructure to better reflect the needs of students. …
“We have been discussing the possibility of creating central locations for sorting, but also discussing distribution systems to get the packages delivered sooner,” [executive director of Building Services Logan] Trimble said.
The earlier article referenced above claims that UConn is receiving 3,000 packages per day. The Business Insider article on UConn’s mailroom woes notes that the school has about 31,000 students. Some of those presumably live off campus and have their Amazon sent to their apartments so we are probably looking at over 10% of on-campus students getting packages every day. I am glad my dorm assistant days are behind.
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What’s your address? For most readers of this blog, that is a pretty easy question to answer. You have a street name and a unique number. Throw in a postal code and maybe an apartment number, and you are good to go. For much of the world’s population, however, things aren’t so easy. Whether because they live in rural villages or poorly planned, rapidly growing cities, many people in developing nations don’t have a standard address. This creates a variety of problems. In particular, it cuts them off from many parts of modern commerce. How do you deliver a package to someone who can’t easily write down where they live? Note that this matters for a developing nation. If a country has an under-developed retail market, fostering an e-commerce industry is likely a better solution for many products than building out physical locations — but that cannot happen without some way of locating customers.
Solving this addressing problem is the goal of what3words, a start-up firm profiled in a recent BBC article (Giving everyone in the world an address, Apr 30). Their plan is to match every three-meter-by-three-meter square on the globe with a three-word triplet. Under this scheme, the house I grew up in becomes collapsed.networking.farm — which would only be better if it were collapsed.networking.firm.
The argument is that it is easier to remember three words than, say, a set of random numbers. The goal then is to come up with words that are simple and unambiguous to use. Here is how their website explains the process.
Each what3words language is powered by a wordlist of 25,000 dictionary words. The wordlists go through multiple automated and human processes before being sorted by an algorithm that takes into account word length, distinctiveness, frequency, and ease of spelling and pronunciation.
Offensive words and homophones (sale & sail) have been removed. Simpler, more common words are allocated to more populated areas and the longest words are used in 3 word addresses in unpopulated areas.
How does this play out in practice? (more…)
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About a year ago, we had a post on Zulily and how they managed their order fulfillment. It featured a nifty graphic from the Wall Street Journal showing just how much longer their delivery times were relative to other interet retailers. Now, the Journal has another story — with a spiffy updated graphic — discussing how their delivery times have gotten even worse (Zulily Nips Business Model in the Bud, Mar 23).
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Whenever there are stories about Uber or TaskRabbit or any other “sharing economy” platform, the benefit of scheduling flexibility is inevitably mentioned. These firms may not offer their workers (more accurately, contractors) benefits or guarantees of employment, but they allow workers to craft a schedule that fits their own needs. Does granting such flexibility work in a more conventional setting?
Zappos, it seems, is out to answer that question with its call center workers (Zappos is bringing Uber-like surge pay to the workplace, Jan 28). Zappos’ incumbent system had call center agents signing up for their preferred shifts on paper once a quarter based on seniority. That obviously limits flexibility. Further, Zappos (not surprisingly) faces some predictable patterns in its call volume that are challenging to meet. For example, there is a spike on weekday mornings as people call from the East Coast — which is way early at Zappos’ Las Vegas call center. The solution? A bit of Uber-like surge pricing.
[CEO Tony] Hsieh was not available for an interview for this article, but as Goldstein recalls, he asked the Labs team, “‘How do you feel about looking at something like Uber for the call center?’ It was definitely not something we’d actively been thinking about,” Goldstein says.
That conversation sparked the development of what is now known as Open Market—referred to as “Om” internally—an online scheduling platform that allows workers to set discretionary hours and compensates them based on an Uber-esque surge-pricing payment model: hourly shifts with greater caller demand pay higher wages. The goal of Open Market was to create a “free-market system,” Goldstein says, and strike a balance between the rigidness of customer service center scheduling and what the company says is its dedication to giving employees time to pursue other opportunities at Zappos, like extra training. “We wanted the [customer service center employees] to work more flexible hours, eventually 100% flexible, and reward them based on how much or how little customers need them to work,” he says. …
Zappos limited the Open Market pilot to the 213 employees who work the customer service center’s phones. Everyone received at least 10% flexible time, so during a 40-hour week, employees would have four hours to play with. They could choose to not work during those hours or they could fulfill them whenever they liked by tacking them onto the start or end of a workday or by coming into the office on a scheduled day off.
Employees decided when to work with the help of Open Market’s real-time customer service center metrics algorithm and historical data that showed customer demand, as measured by the wait time of the longest-holding customer, and the accompanying compensation rates. The longer the hold time, the higher the customer demand, the more the employees working that shift would get paid.
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