A survey request from a freight forwarding start-up

Yes. Another freight forwarding survey request but one from a start-up company here in the US. It’s completely anonymous and only takes a couple of minutes to take. Also, if possible, feel free to share the survey link with others.

So, please help an up and coming freight forwarder out. If there are enough responses, perhaps a nice blog post will be in order to summarize the findings.

Purpose of the survey: According to the company, the survey is designed to learn about the challenges ocean consolidators face in their sales and marketing processes and the role of technology in the current ocean freight sales and marketing process.

https://www.surveymonkey.com/s/Z8GWPZT

Thanks again,

Cathy

Return to Sender

This is the final post in the “Retailers, Supply Chains and the Holiday Season” blog post series and it addresses one of the most difficult parts of the supply chain that retailers have to deal with each holiday season – returns.

An article from the Wall Street Journal offers some interesting data surrounding returns:

  • According to Optoro, more than 20% of returns happen during the holiday season—about $60 billion in merchandise.
  • Furthermore, Optoro estimates retailers see a 5% to 10% return rate on in-store purchases. For online purchases it’s typically 10% to 15% and for apparel brands, the online return rate can be much higher, in many cases closer to 20% to 30%.
  • The U.S. Postal Service handled 3.2 million returns in the two weeks that followed the 2013 Christmas season.
  • United Parcel Service Inc. expects to handle four million returns the first full week of January, up 15% from two years ago as online sales continue to grow.

Returns are expensive for retailers. As noted in a previous post, “Supply Chain to the Rescue for Best Buy”, on average returns cost Best Buy $400 million.

How to handle this meddlesome problem? Evidently in a number of ways…Companies such as Overstock.com initially sold surplus and returned merchandise on an online e-commerce marketplace. In recent years it has expanded to sell new merchandise, as well.

For FedEx, it went out and bought one of the best known reverse logistics management companies, Genco. Meanwhile, others, such as Best Buy, build an online marketplace and resell returns that are determined resalable.

Optoro, an IT company based in Washington DC, helps retailers and manufacturers manage and sell returns and excess inventory. Optoro’s cloud-based system takes those returned and excess goods and sells them directly to consumers over a variety of platforms, such as eBay, Amazon, and Optoro’s site BLINQ.com. While most clients have their own distribution centers, although Optoro has one for companies that need it. Retailers also can see where the goods are at every step of the way.

And, in India, Reverse Logistics Corps, which operates GreenDust.com, is planning to expand its global footprint by entering Africa, South Asia and CIS. It has already started a pilot in Dubai, the U.S., and Hong Kong. “Returns and refurbished market are a $500-billion opportunity worldwide, and we want to be the Alibaba of this space,” said GreenDust founder and CEO Hitendra Chaturvedi. Founded in 2008, GreenDust refurbishes damaged or defective products and sells through its online channel and offline franchisee. The company sells products under three categories such as end of life products, factory seconds and refurbished products at a discounted price. The company had recently partnered e-commerce companies such as Flipkart, Snapdeal and Amazon to manage their reverse supply chain.

So, as noted above, there are numerous ways in which to handle returns. To find out more about this topic, topics in previous blog posts in this series and more, be sure to check out Ti’s upcoming report, Global Ecommerce Logistics scheduled for publication in January.

11.11 and 12.12 – Busier than Black Friday and Cyber Monday

Thanksgiving Day, Black Friday and Cyber Monday proved quite successful for online retail. Together, total online sales were well over $3 billion. Mobile is playing an increasing role and represented over 30% of online sales for Thanksgiving Day, 28% to 30% for Black Friday and 22% for Cyber Monday.

However, Alibaba’s self-created online “holidays” in China, 11.11 and 12.12, have proven even more successful. Dating back to 2009, this year’s 11.11 or Singles Day brought in over $9 billion for Alibaba. Over 27,000 vendors participated and the event spread to over 200 countries. According to Alibaba, 278.5 million items were shipped and almost 43% of sales were via mobile.

To continue the momentum, Alibaba introduced 12.12 or Double 12. This “holiday” is a bit different from 11.11 or other such online retail events. Instead, this event focused on the growing online to offline market (O2O). More than 20,000 physical stores participated on Alibaba’s Taobao website through promotions using Alipay Wallet, the mobile app from Alipay – Alibaba’s online payment service.

According to Alipay’s blog, about 10,000 discount vouchers for car washes were sold in the first hour, while 1,400 online-education courses were sold in 15 minutes, and 4.8 million people ordered food.

Along with the rise in mobile, the use of alternative payment methods such as Alipay, PayPal and Apple Pay is as well. In particular, these payment methods are growing in popularity within such regions as Asia, Africa and other emerging markets in which credit cards are frowned upon and not only that but are also helping to further expand e-commerce as they serve as a trusted source of payment.

As for the supply chain, mobile is resulting in more of a real-time supply chain – tracking and inventory availability for example whereas alternative payment methods are also having its effect on supply chains.

Ti’s Global e-Commerce Logistics Report

This is the fifth post in a blog series which looks at how retailers are evolving in a new retail environment. However, that’s just part of the e-commerce evolution. Disruptions are occurring in all industries and supply chains are being redrawn. A detailed analysis of this phenomenon will be available in Ti’s Global e-Commerce Logistics report available in January. For additional information, drop me a line

Is the UK Holiday Season a Result of Over Promise and Under Deliver?

I can’t help but see the irony in what’s currently going on in the UK and what happened here in the US when UPS and FedEx were “overwhelmed” by a sudden deluge of packages right before Christmas Day last year. Online retailing has put the retail industry, the delivery companies and customers on edge. But why? retailing has always been an innovative industry – the Sears & Roebuck catalog for example.  In this week’s Ti e-newsletter, I wrote a brief, Don’t let supply chain basics slip during disruptive periods, in which I suggested some basic supply chain components were missed in last year’s US holiday problems. I believe what is going on the UK is similar. In fact, other analysts have noted they believe the lack of forecasting (one of the basics I cite in my article) is a major contributor and I’ll take it a step further and add collaboration. Technology is a wonderful thing, if it is utilized effectively, but face-to-face talking with customers (i.e. collaborating) and setting expectations on a regular basis throughout the year is just as important.

So, the plan was to write on UK’s Marks & Spencer this week. However, after reading several articles on Yodel this past week, I decided to take a further look at this courier company. Why has it been voted the worst delivery company for two years in a row? It seems to me they must be doing something right if they’re the second largest delivery company and delivers on behalf of over 80% of retailers in the UK.

Information from Ti’s GSCI portal indicates that Yodel was originally known as the Home Delivery Network Limited. In 2010 the company, through its subsidiary company Parcelpoint Limited, purchased the domestic B2B and B2C businesses of DHL Express (UK) Limited.

Besides courier basic home delivery, there are several other services Yodel offers including CollectPlus, a joint venture with PayPoint, which allows consumers to collect, return or send parcels from their local convenience store, newsagent or gas station. Through Arrow XL, Yodel also offers a two man service for white goods and large items up to 120kg.

Have they, as well as others, including retailers, spread themselves too thin by over promising? I’m not sure but one thing that may be contributing to delivery delays is a shortage of drivers in the transportation industry. However, Yodel announced plans to hire 5,000 staff before Christmas, including “thousands of self-employed drivers and couriers”, and it insisted before the holiday season began that it was well placed.

Interesting to note, another company, Clipper Logistics Group, reported that despite experiencing its busiest ever period (Black Friday period), it had achieved a 100% success rate in dispatching orders within their allotted time-frame. What are they doing differently? Is it the ability to effectively utilize and forecast data?

And what about the potential 4.2% option Amazon has in Yodel? Will it be exercised? Amazon was among the many retailers to experience a disruption in delivery service levels. Last year it was quite vocal in its disappointment with two of its biggest delivery partners here in the US.

There are more questions that we at Ti have and we are looking into as we prepare the Global Ecommerce Logistics report. The report is due for publication in January. Speaking of irony…our original plan was to publish this report in November, however after internal discussions back in August, it was decided to delay publication until January to include analysis on the holiday period. So, to see what we find out on Yodel as well as our analysis of how well the holiday seasons in the US, the UK and other countries went, be sure to check out the report.

If you’re interested in learning more or have any questions, drop me a line.

In next week’s blog post, we’ll take a look at what’s going on Asia.

 

 

 

Will a Loyal Customer Base Be Enough to Help Newegg Expand?

Newegg, one of the largest online retailers that cater to the IT and gaming crowd is an interesting company. According to its director of transportation, the company distributes about 30,000 packages a day and more than 15 million annually. In terms of revenue, it’s about a $3.5 billion company. Profiled in Ti’s 2012 North America Ecommerce Logistics report, I decided to take a look at what’s been going on with Newegg since they were last profiled.

Delivery Services and Options

Just in time for the holiday season, Newegg is OnTrac’s first customer for its latest service, DirectPost. Much like UPS’ hybrid solution, SurePost, DirectPost also utilizes the USPS. The difference is that DirectPost services OnTrac’s 8-state delivery service area.

In addition to taking advantage of OnTrac’s new service, Newegg is also testing the delivery waters itself. Still in trial, customers in the Los Angeles area (actually within 50 miles of the company’s City of Industry warehouse) can place orders by 10:00 am and for $20 extra, a vehicle from the Newegg Express fleet will deliver the purchase before 6:00 pm same day. The trial will run through the holiday season and if successful, Newegg will expand the offering to Indianapolis, Edison and Memphis – all Newegg warehouse locations by the way.

Another option for customers is its Premier Service. Much like Amazon Prime, Premier is a $50 annual subscription service that provides free expedited shipping, guaranteed arrival within three on days, along with discounts on two-day and one-day shipping. It also offers free returns with no restocking fees, and a dedicated customer service line.

Alternative Payment Options

In a nod to its IT customers, Newegg now accepts bitcoin as payment. Alternative payment options are a growing trend for many e-retailers as they expand globally. Bitcoin, while maybe controversial to some, is a recognized option for many in the IT/gaming community. For now, Newegg is using BitPay as the payment processor and is available to US and Canadian customers.

B2B

The successful platform model created by the likes of Amazon, Alibaba’s T-Mall and Taobao and Ebay has resulted in Newegg launching its own version. Its B2B subsidiary Newegg Business, introduced a marketplace that provides business products across 25 categories, from industrial-grade construction tools and equipment to office supplies and consumer electronics. The site’s targeted audience includes large e-retailers, manufacturers and brick-and-mortar businesses.

Newegg Business charges sellers fees ranging from 10% to 15% of each sale, varied by product category. However, it charges no payment card processing or other fees. The company also guarantees against damaged or undelivered goods up to $1,000, as long as the buyer meets certain requirements.

Cross-Border Expansion

In June of this year, Newegg announced plans to expand into six new countries – India, Ireland, Netherlands, New Zealand, Poland and Singapore. Already operating in the US, Canada, UK, Australia, Taiwan and China via its Taiwan website. However, its last global attempt failed which the company attributed to the use of a third-party vendor.

This time, however, they’re doing it differently. The company will ship orders from the US first and then once local demand is sufficient, it will build a physical presence (i.e. warehouse) in the country. This may be beneficial to Newegg but for customers it means higher prices such as import taxes, administration fees and so on which could mean the price doubling. But, according to one blogger, Newegg will charge the consumer in advance for taxes and duties so that items will not be held in customs and delivery targets can be met. It seems to me that there are better ways to handle this and perhaps Newegg should do a bit more research on this if they want to succeed globally. Perhaps seek the advice of an international logistics provider for options?

Concluding Thoughts

Newegg will continue to be successful here in the US and Canada thanks to its loyal customer base. But, its cross-border strategy is a bit concerning and one that it needs to think further on or else run the risk of another failed attempt to truly globalize. Its B2B subsidiary and B2B marketplace are good ideas along with a subscription service that it is currently testing. However, these models are very similar to its primary competitor, Amazon.

It’s a tough market to compete in and one needs to be innovative and nimble to win. I’m not sure if Newegg is there yet. There’s too much “Me Too” and a company is going to need more than low prices to win.