Retailers’ shipping strategy affected by Amazon
There are few industries as competitive as the retail sector. Retailers are always looking for ways to surpass their competitors by expanding their product offerings, adding new features, lowering costs, improving customer service, opening new stores, redesigning their websites or anything else they can do to gain a competitive edge. This is why Amazon has presented such a big problem to many retailers. With the aid of a smartphone, people can always check prices of goods and – in most cases – Amazon has them beat. To compete with Amazon, merchants have had to take aggressive measures, whether it’s price matching or other means of competitive differentiation.
Shipping and order fulfillment is the latest battleground for many retailers in the challenge to compete with Amazon. The web retail giant has opened up distribution centers across the world and is even storing some products for marketplace merchants to help them expedite the shipping process. For non-marketplace merchants, Amazon’s commitment to fast, reliable delivery and free shipping offers with a Prime subscription creates more competition. If prospective customers are already getting free shipping from Amazon, other retailers need to do more to win over their sales.
According to Multichannel Merchant, some online retailers are feeling the pressure from Amazon. Thirty-six percent of respondents said Amazon’s aggressive shipping offerings have actually caused them to change their own order fulfillment and shipping practices. In addition, 23 percent have decided to switch to free shipping on some orders, while 12 percent encountered more pressure to ship orders faster.
“I believe Amazon has had a major effect on all eCommerce sites,” Chris Brenner, vice president of PetSolutions, told the news source. “They are definitely the toughest competitor on the Internet. Fast and free shipping is just something customers expect these days.”
Shipping has long been the bane of eCommerce operations, as few customers want to wait for their order to be delivered or pay extra to cover the fees. Savvy retailers will follow Amazon’s lead and find ways to minimize shipping costs and offer free shipping wherever possible. They can do this by taking a special look at order fulfillment processes, third-party logistics providers, warehouse operations and other areas that can be improved.