Making Your Own Luck. How Success Can Be Built from Constant Learning, Clever Ideas and a Legion of Customer Advocates

Aaron Kay isn’t your typical entrepreneur. This former media high-flyer isn’t interested in market disruption, work-life balance or having a Plan B. Because he believes that when you get your light bulb moment, you’d better be ready to learn from failure, keep the endgame in sight and build your own legacy.

What follows is the full interview on how Co-founder and Creative Director of The Swank Store turned his desire to build his own legacy into reality.

Tell us about the ideas and innovation behind your business.

I was once working for a man and he was very inspirational and he said to me ideas and creative will always sell. My thought was to build something creative that we’re not selling to 1 person or 5 people but to 100 people at once.

Our business is not a disruptive business that’s not what it is, it’s only a retail store but the fact is that it’s a cheeky business. We’re not massive innovators or disruptors we’re just an online store at the end of the day

It’s the ideas that come to the back end of our business that creates a unique experience for our customers and makes our environment one that is pleasurable to shop in and that’s where our point of difference is in the marketplace for today.

Where the idea for your business come from? What was your job at the time? What prompted you to do something about it?

When we were hatching our idea for this, we realised there was a gap in the market. There was a high-end luxury resort wear brand in the marketplaces and there were some lower end products, but there wasn’t a middle play in the marketplace. The idea was to create a one-stop shop for a wide birth of products and to provide that to customers at a reasonable price at a high level of customer service.

I was working in telco consulting. The thought process was I want to be involved in a business and start something quite unique so that’s where I met Johnny, our business partner. We worked together to sell a unique style of product that we could sell at mass.

Within 4-5 weeks we were getting so many orders we couldn’t keep up with the orders from a part time standpoint. So both of us had to leave our jobs and focus on this full-time. That’s where the fun happened and that’s where we started to realise what our customers wanted, and we started building meaningful relationships with each of our customers. They started working as our advocates to spread the word for us.

Tell us about quitting your job. Was it hard?

There was a lightbulb moment there. I remember sitting in a meeting thinking to myself. I don’t want to be here. There’s something much better in the world for me. I felt that I wanted to build a legacy and that was really important for me and I couldn’t do that within the 4 walls that were confining me at my corporate role. After that meeting, I packed up my book. I walked out. I stepped to my desk and I sent them a letter – that was my resignation letter and I was gone.

What is the one piece of advice you would give to someone who has an idea but is afraid to do something about it?

The one bit of advice I give to someone starting up a new business is that you need to plan because if you fail to plan then you plan to fail. That’s really important. You’ve got to visualise what you want to achieve and where you want to go.

To see the rest of Aaron’ story, head to Shippit.com/Hustle.

Shippit.com is the shipping engine for modern retail. Learn more about our how our software can save you time, money and keep your customers happy.

Treat ‘em clean: A Success Story of Taking the Leap and Making It Happen

This is Charlie De Haas, a fitness-model-turned-health-food-entrepreneur who personifies the word ‘hustle’. Her success rests on three things; knowing her purpose, acting from love and not caring what other people think. When you believe wholeheartedly that you’ve found your passion in life, failing isn’t an option.

What follows is the full interview on how Founder and Director of The Clean Treats Factory was inspired to bring her passion to life.

Could you please share your founding story and how you started?

When I actually started, I wanted to do something, I knew I wanted to work for myself. So many people want to be a boss or entrepreneur or they have this dream life, like living in Bali …or whatever it is. You’ve got to do the work and you’ve got to have those healthy habits to pick up every day.

Where did the idea for your business come from? What was your job at the time? What prompted you to do something about it

I was a business develop manager and a fitness model for a protein, supplement company and I kind of got a bit sick for myself. I would actually be doing promos and making treats…somebody said you should just do it. I also quit my job at the time, somehow managed to live on $10000 on a tax refund for 6 months, and just started going to cafes. I would go buy more product and do more sales and would cold call to another café

My whole life has led me to where I am today. Every company I’ve ever worked for. With business development, education, skincare, fitness, health, whatever it was has led me where I am today. I know for a fact that I’m doing what I should be doing. You’ve just to keep getting back up and to keep trying

What was the first challenge that you had to overcome when you started? Was it giving up your day job? Was it the money?

The challenging thing about starting you first start your business is generally you don’t have the money or you have too much money cause you’re waiting for that perfect moment. For me it just happened, so I didn’t have a lot of money. I had to make it work. I had to pay my rent. I had to have friends around me that paid my rent.

I was extremely poor. I had to have other people around me pay my bills. That was a driving factor me. That was motivation. That was the most challenging thing for me.

What is the one piece of advice you would give to someone who has an idea but is afraid to do something about it?

My one piece of advice would be to act from love, not fear. Fear is only a thought you’re going to fail and what people will perceive as failure

As adults, we’re so scared about what people think and in being ridiculed and being a failure or not being good enough – just start. Start somewhere.

If you don’t giggle or laugh at where you started from, then you started too late. I look at our first logo and I’m like eugh…

It’s about doing something about it. Is this the person you want to be? Is this the dream? Do you actually really want it? Otherwise, you’ll never make it happen. You won’t make it through the challenges, hurdles or pitfalls … to become successful.

Stop caring what other people think. Choose to act from love, just check in know it’s your passion, know it’s your purpose and don’t be scared to fail. You can fail if you don’t quit. Just try something new.

To see the rest of Charlie’s story, head to Shippit.com/Hustle.

Shippit.com is the shipping engine for modern retail. Learn more about our how our software can save you time, money and keep your customers happy.

How to Make Free Shipping Your Profit Powerhouse

Your followers are finally taking notice, you’ve become a self-taught digital sales funnel pro, your landing page is a sales copywriting masterpiece and all is going well – your website hits are on the up and up…but for some reason, the visitors are not turning into customers.

Sound familiar? We might know why.

You could be losing your sales at the last hurdle because the truth is, charging for shipping is sure-fire conversion-killer. If you need proof, you only have to look at the facts:

  • According to Metapack 47% of respondents to ranked free delivery as their #1 consideration for the majority of their online purchases
  • Research by Forrester found that the addition of shipping costs is the most common reason (44%) for abandoning a shopping cart
  • 85 – 90% of online shoppers claim it has the biggest influence on whether they buy from a website site. This is up 80% on two years ago

So free shipping is a big deal to your customers, but let’s cut to the chase; what’s in it for you?

The advantages are threefold; firstly, it’s one of the best ways to convert e-window shoppers into customers. Secondly, it makes customers more likely to place larger orders. And thirdly, they’ll keep coming back and tell their friends, which makes it your #1 PR and marketing tool (we’ll get to more on that later).

Right, that’s cemented the case as to why, and now to the how.

Make A/B testing your new best friend

First things first, you need to make sure that offering free shipping is what your target customer really wants.

Luckily, working this out isn’t rocket science. As Kissmetrics explains, one way is to create alternative website header banners; one which states the free shipping offer and one without, and see which one leads to more sales. Then you’ll have the stats on how likely free shipping is to boost your conversation rate and therefore, profit.

Work out your minimum order thresholds (number crunching part 1)

We understand your plight; free shipping and returns can be a big undertaking for a small to medium business and the ROI is a slow burner. But there are lots of ways round this.

The simplest way is to calculate your minimum order threshold and only provide free shipping on orders over this. This magic number should involve some careful number crunching because getting it right could mean the difference between profit and loss.

Work out your margins and expenditures (number crunching part 2)

Practical commerce and ShiverWeb suggest only offering free shipping on the high margin items (and they’ve got the maths to back it up), or during limited periods, or even just on items which cost less to ship anyway (that’ll require more number crunching).

Do whichever works best for your business, but the bottom line (pun intended) is that when it comes to offering free shipping, it’s not all or nothing; you can make a profit and still reap the rewards.

Remember, there’s no such thing as a free lunch

We know what you’re thinking; offering free shipping doesn’t mean you absorb the cost, you’ll have to wear it somewhere.

Studies have shown that a customer is more likely to purchase a higher priced product with free shipping than if the price point was lower, with shipping was added separately. In this podcast, Bill D’Alessandro explains what happened when he tested this theory out.

In fact, offering free shipping could actually save you money. Think about it; free shipping could increase traffic to your site, lower your cost per acquisition and increase the quality of your customer; creating higher customer lifetime value.

We’d hazard a guess that these reflect the goals your marketing strategy sets out to achieve, right? Which means you can put some of the budget set aside for attracting new clients, into other areas of your business (or straight into your savings).

To summarise, in the form of a mathematical equation: free shipping + an optimally functioning shipping and returns service = more loyal customers (and we all know what that means)

Or to put it another way, you will see 15-30% improvement in net profit.

And you just can’t argue with the numbers.

Shippit.com is the shipping engine for modern retail. Learn more about our how our software can save you time, money and keep your customers happy.  

Returns – The Last Battlefront of Competing Online

Returns can be costly, messy, and downright depressing BUT making them easier for your shoppers will actually grow your business. Over 30% of online purchases are returned and over two-thirds of shoppers will read a returns policy online before committing to a purchase. So, why is it still so hard for retailers to get it right?

Learn from two industry leaders (Dean Jones, co-founder of Glam Corner and Leonie McCarthy, director of 6R Retail) as they speak to the business challenges in meeting shopper expectations, and how to implement a simple and effective returns process.

What follows is a transcript of the webinar. If you’re short on time, read on for five key takeaways.

  • The Era of Retention-based Retail: Driving repurchase intent here is key and returns is that critical point which happens post the purchase. Repurchase intent due to an easy returns process is as high as 92%
  • Getting Returns Wrong Can Really Hurt Your Business: With 49% of shoppers not purchasing due to a poor returns policy, this loss of conversion is what impacts cart abandonment. Following a bad returns experience, 95% of those customers will claim never to buy again with that particular retailer
  • Challenges in Practice: Knowing and address the numerous challenges will be critical. Key challenges include system interoperability, payment platform integrations for refunds and credits, processing physical product and keeping the dialogue open during the process.
  • The Simple, No-Punish Returns Process: Customers want options – it’s about how do you give that customer options of convenience the same way you would in the delivery space. Simplifying returns is about providing a label, instant refunds, free returns and an easy- to-follow process.
  • Recovering Lost Profit: As a retailer, returns will cost you money. Tactics for cost recovery include getting customers to meet halfway, tracking reasons for return, precision in cost accounting and sharing costs across delivery and returns.

Read the full transcript below:

Introduction

Rob Hango-Zada (RHZ): Welcome everybody, I hope you got a live stream. We’ll try and make this move quite smoothly and hopefully find this insightful and productive as we have in pulling it together. So, we’ll crack on to like getting started. So, look today I guess you joined us to learn about returns, returns are the last battlefront when it comes to you know building an online business, in fact, any business returns is a critical component that affects the customer experience.

So today what we’re going to learn about is I guess how important returns policy is really are in growing your business. What shoppers expect and what best practice can kind of look like in the returns process and how to make your returns process as simple and as efficient as possible. Only given the brains and experience that we have around the table today, you can learn a lot. So, let’s get into it. We’ve separated this into four key modules, so I’ll be talking you through the first two modules.

The first one is really about underscoring the importance of returns and trying some key stats. The second is how you can meet shopper expectations but what business challenges could lie in between that. To talk about the evolving need to shop us in that space. And then we’ll move into learning directly from two lovely people who joined me today. So, Glam Corner and 6R. So, you know it’s going to be quite a mass session. So, you can feel free to ask any of your questions anytime by typing them into the box as Teresa have instructed. We’re going to throw those questions during that time if we need to otherwise there’s a space dedicated for Q&A variant.

Module 1: The Importance of Returns

RHZ: So, let’s talk a little bit about the importance of the returns and the returns process in general. Two key stats that really underscore where we are at in terms of online retail specifically. So, we’ve entered an era of what we called retention-based retailer. To think about you know the past sort of decade, internet retailing is really about making your first purchase online. The scary thing then was really about entering your credit card details, parting with personal information, privacy and the like. Now we’ve got credit cards linked to all sorts of that and God knows how many businesses know my credit card details. It gets every time my credit card number changes, I’m in the painful process of updating our security.

Now, we’re into this era of retention-based retail. So, people have bought once, twice, now it’s about the umpteenth purchase that they’re making online. And returns is that critical point which happens post the purchase. So, we’re looking at how you drive repurchase intent is a real critical step to get your head around. So, one thing that we found is that repurchase intent due to an easy returns process is as high as 92%. So, when a customer experiences a positive returns experience, they’re 92% likely to repeat the purchase because the risk of purchasing from you as unknown, really reduces and diminishes quite a bit.

The second piece comes from a study which tracks two retails over a four-year period. And what they found is, those retailers that offered free returns soared an average increase in spend from the customers that kept returning of around 357% as of those to control. So, as you think about the longevity of the client base that you have and what returns can do, it’s really quite an important statistic. No doubt this study was a little bit dated but it does go to show you that over a longer time period, returns is so critical in fostering that ongoing rush to the customer if it wasn’t so hard to build. You know, this is not a new set of stats. This comes from a study that comes from another but really anywhere you look when it comes to improving the experience for our shoppers and what we get online shoppers to buy more, free shipping is always been number one and that’s kind of the holy grail of the, or you know the much-rated factor of whatever online retail has to deal with especially in light of Amazon’s entry. You know behind free shipping is a returns process. So, the second thing that drives purchase intent here is an easy returns process. And that’s more important than fast shipping, more important than delivery tracking, and more important than better customer service or experience. So really if you’re going to solve anything beyond free shipping, it’s returns.

The key fact is, getting returns wrong can really hurt your business. So, we know what the positive side of is about driving a simpler returns process who exist but the negatives are actually quite clear. So, 49% will not purchase due to a poor returns policy. This is your conversion. Your cart abandonment. This is what impacts your cart abandonment right. So, we know there’s a very high percentage of customers who actually review your returns policy before making a purchase. You know one in two will basically not purchase due to a poor returns policy. And if they’ve had a bad returns experience, like many of us had probably had ourselves, 95% of those customers will claim never to buy again with that particular retailer. So, it’s such an important point to really understand and get it well.

Module 2: Shopper Expectations VS. Business Realities

RHZ: This moves us on to the second module which is really about understanding shopper expectations versus our business realities So, few returns is great but how the hell do you offer it? Enabling customers to keep sending items back as great to the customers but what about our business. Meet your millennial shopper. She’ll return one in three of her purchases this year intentionally. The statistics are quite high about her intent. I think they have the highest intent of any group when it comes to buying online with a hopeful return. How we call a wardrobe in or a virtual dressing room really.  ASOS has embraced that fact, as many other retailers like The Iconic have gone on to do.

The reasons why returns happen are quite disparate, but if you think about it and you really break it down, and you probably found this in your own business as well, the majority of the issue comes down to changes in mind. Typically, retailers offer an exchange only policy for change of mind, not necessarily a refund. But you know we won’t get into the debt. So refund versus exchange policies but we will talk about is, you know 37% of the consumers will return a product because it didn’t fit well or they didn’t actually like the product. So, you got to think an online store as the ability to extend beyond that virtual storefront to become a physical store front in that sense. Like an interactive fabric. They can put that on, they can assess the fit which I think my friend Dean will talk to in a little bit. Really understand how you how you can get a sense of the product without, you know without having to commit to it. Second is ordered duplicates is the second highest reason when it comes to a consumer reason. And you know that basically means they’re buying multiple sizes to hedge against that delayed delivery. So, we’ve all probably done it before two pairs of jeans, two pairs of shoes, two dresses for the weekend, because time is everything. And you return the second one when the time comes when it’s the most convenient to do. So, post purchase is also quite important to understand. So, post purchase consumers are not content with what they’ve ordered then they’ve ordered off multiple websites at the same time. So again, hedge their bets because you probably didn’t have what they needed. So, finding a better alternative also comes into play as well as an unwanted gift. An interesting statistic from this one to me was that 25% or one and four returns are due to a retailer or a supplier fault. So, retailer error things like pick and pack issues. So, maybe the wrong hands went into the satchel or box, or you know the wrong colour, size, grade, whatever. Damaged and quality issues also come into play as well. So, you’ve got a different type of mindset to deal with. So, what I want everybody to kind of think through is what are the implications if some people change their mind and how urgent they need to return the item. This is somebody who has ordered, who has hoped to get what they want then have actually resulted in a damaged product. How quickly can you resolve that issue? KPMG came out with a saying you know that really underscores this “delivery is the new dressing room concept” where you know customers deliberately over order in order to intentionally return the product. And so, if you look at the stats, almost a 5th of all online purchases now in fashion include duplicates. That’s quite low and as a millennial consumer becomes the biggest spender online and we honestly see they start to rise. So how do we embrace this reality and how do we make that cost work harder for us as well. So as a retailer, returns are going to cost you money. And looking at all the data, reverse logistics basically contributes around 15% of your total revenue. So, the cost at the moment is around 15% of your total revenue. That’s nothing to sneeze at, but if you know if you really did a strong attribution and look at the unit of economics on your whole delivery and fulfilment piece, along with your reverse logistics, you actually see that it’s not the majority of the cost, it’s typically a hesitation that offering free returns or offering a greater transfer is going to drive up that reverse logistics cost dramatically, but as you’ll find the benefits far outweigh the negatives. And that’s the perspective that we’ll hear today.  But it is, it is important to know that cost of reverse logistics can be quite substantial. Those are some other things to think through as well. So, as you consider the returns process, shipping is only one very small component of the entire end-to-end spectrum when it comes to returns. So, in fact, if you really add it all up we can start to add up dramatically and it really makes sense to pay attention to what the options are once a return is in your network and what you actually do with it – how efficiently you process those returns. Dean’s got some great prospective about processing returns efficiently giving the blanks that they’re seeing and a 100% their items needed to be returned at Glam Corner. So, you know listen for what he’ll say to that particular process. That stats as they say, that you know on average they’re looking at 5-7 dollars to return an item that comes the shipping, receiving and processing orders or returns rather, cost up to 5 dollars and that includes you know transaction fees when you’re refunding the customer, the time it takes you to process and authorise, and the time it takes you to actually receive the item, and actually do something completely different with it that you usually would do when you receive new stock. So, moving on to the third piece of cost element there which is around what we actually do with the good once you receive it in. Studies indicate that the recovery cost is around 20cents per every retail dollar that the item is worth. So, if we sold it for 10 dollars, it’ll only be worth 2 dollars due in service strat value. And that’s due to you know the need to discount and receive the item too late, it’s no longer at the right season, or the need to dispose of the item if it’s damaged faulty and trying to recoup the cost of that in the supplier. So, that’s the final interesting part of returns and the back-end engine which I s really important to get right as well. But knowing your options is critically important, so there are great liquidator options as well as in terms of turning returned products into a second market, and that could be a great revenue driver for our business which economically makes more sense than driving sales up on the website and impacting brand value as well. But one of the underlying hidden costs is really fraud, so being clear on you know what is general return and what is a fraudulent return is quite important. I guess we see this across a lot of different channels particularly in the offline space right into purchasing to one retailer and turn to another. And we say they account for 3.5% of all returns. So, you know for a total market perspective that’s quite a significant amount of money that as it goes out on fraudulent returns. We did talk quite a bit about an easy returns process. Let’s actually put some numbers and let’s actually put some fact behind what an easy returns process looks like. Customers want two key things. They want you to give them options and then want you to make it really simple. When it comes to options, you know return options, I would say equally or more importantly than having delivery options on your website. So, offering same day express and standard delivery should be likened to offering multiple return avenues for the customer. There’s a business in the states called Return Happy and the slogan is “Friends don’t let friends go to the post office.” So, you know forcing your customer who has bought through you as a retail experience you know to go into an out of the way place to return an item is really old-world thinking. So, new world thinking is how do you give that customer options of convenience the same way you would in the delivery space. So, 40% of customers would expect to drop-off to the post office still has a role if they go there themselves. The courier pick-up is also becoming a more attractive option given the technology that we have to get and coordinate pick-up processes as well. That’s quite an important chapter to offer if you don’t  so already. Drop-off and pick-up points as well. So, the likes of Parcel Point do quite well in space which gives the customer a physical retail point for a pure play retail which they otherwise couldn’t have and finally drop-off to the retail store. There you have many stories about this I imagine, but one of the key challenges when we talk to retailers is well online and offline do tend to compete.  So, when a purchase is made online but returned in store not only are you taking time away from selling to customers in store which may cut their budgets but you’re also getting them to process in store which can generate sale. So, how do you really think that through as an interim process for business is really critical and that’s something Leonie’s got to share insight on shortly.

In terms of making things simple, the first and foremost thing is about getting a label quickly and easily. You know, if I could see a hand raising at how many do you actually own a printer or have a printer in your own home. Most consumers these days actually don’t have a printer in their own home. So, if you’re expecting them to print out a return label, this may be a charge. So, what options does a customer have to generate return label if they don’t have a printer?

Second piece is around an instant refund. So, if you’ve never returned anything, you’ve gone through a process of logging into your bank account every day, checking to see whether that refund is given. So, customers are really expecting the moment that item has left them, and what’s is on their mind as to when they’re gonna receive their money back. Because that’s a dead money to the customer. So, it’s really important to process those really quickly. Free returns, so 51% of all customers expect returns to be free. So, you can’t charge customers for return, that’s something they don’t necessarily want to do. So, it may impact your chances there, but it is third on the list.

So, knowing the first two is probably a little bit more important before you get into the big main one. And the final bit there is an easy to follow process. So, do you have multiple sales channels? Do you have multiple avenues from which the customers build or start the return process? Are those channels aligned? Is the process they follow really simple? So they have to fill out millions of fields of information in order to create or generate a return label. Often times the data is already in your system given the customers purchased before so why make it harder for them to generate the return. First, the things just to keep in mind as we’re keeping to our next module what we learn from those there at the front line in dealing with returns processes.  So, we’re swiftly on to learning from both Glam Corner and Leonie from 6R.  Dean, take it away!

Module 3: Learning From Glam Corner and 6R

DJ: Thanks, Rob. As you said, returns is a really huge focus for us. For anyone in the audience who hasn’t come across Glam Corner yet, we’re Australia’s leading online designer fashion rental business. We particularly rent out a lot of dresses to women around the country for those one-off occasions throughout the year where it doesn’t make sense to buy something outright. We’re a pure play online retailer so we ship it straight to them and as Rob alluded to, everything comes with a pre-loaded prepaid returns section so as soon as customers are done, they can simply just place their item in the returns section and put it in the post box and it comes back. So that’s the underlying model. So returns, solving that and all the problems that are associated with that from user experience right through to the logistical challenges has been fundamental to our success. If you cannot get that right, actually you kind of can’t do rental at scale. So we’ve learned a lot and we’ve actually taken leads from a lot of other best practice online retailers who just offer a fair and excellent returns and refund policy because in the end that’s all customers really want is to be happy.

RHZ: Thank you, Dean. Leonie?

LM: Well, our experience really around returns is mainly when we’re working with clients, with retailers. So as you said before we work with designers to implement and improve their systems and usually that’s business systems that are talking to one another. So often that’s sitting between the online experience and the in-store experience and making sure that those things align. And one of the things that you alluded to before about the whole reporting of returns and how you balance that sales equation you really need to be able to trace the transaction from actual to origin to be able to return an item when it gets stored. That’s the whole point. So, if you process something in store that needs to be returned, I guess you’re all in store so it needs taking into a place of not being reluctant to do the return and I think that the other element that you sort of need when you’re connecting those two pieces is really that element of being able to see the return as an opportunity to convert the customer. You can see the customer walks back into store having bought something online when something hasn’t worked for them like you were saying before. It’s not that right or wasn’t exactly what they thought it was going to be because they can’t get to see it and touch it. Even though your stats support that everyone wants to go back into store, I think the more retailers can focus on getting their customer to go into store. I think that’s really beyond duty, to use to think to try and convert the sale or create a positive experience so that at least whereas the customer have definitely gone back to them that’s so important.

 RHZ: Absolutely. And I think the system interoperability piece which we’ll come to in a moment is going to be critically important.

How to Make Returns Simple

RHZ: Now, preparing for that is quite challenging but it can be done. So, I guess it moves us to the fourth question which is you know what are the keys to easy returns, I guess. What are those key elements that make returns really easy? So, let’s talk about it in practice.

LM: Like we spoke about earlier that consistency across channels. So, I mean Retailers talk channels. Customers just see a brand. They don’t see a channel. The consistency and then also the simplicity of a returns process. We don’t really want to go through a whole heap of caveats and dozens of hoops. You won’t be able to clearly say to the customers you’ve got 30 days or you’ve got 60 days or you’ve got a reasonable amount of time. Of course, manufacturing faults will have a different process of being that when retailers are talking or thinking through returns policy, you definitely need to consider what urgent level of responsiveness to factor in. Disappointment by you know damaged or manufacturing faults in terms of being able to exchange items when someone changes their mind requires little bit probably owning a little bit. Whereas when you have experience of having been promised something and it didn’t arrive as expected then that’s a disappointment even when you try and solve it best you can.

RHZ: Yeah, I think that’s a really interesting point because when the customer can own some little responsibility they’re going to be a more lenient to the process. So, maybe it’s going to expose your returns process that really is how you deal with faulty goods or damaged goods or incorrect items.

So, when we touch on the consistency of the returns policy at different touch points, but I guess you know if we can kind of summarise them, it would be online – it would be what’s the state of accounts are?

LM: That’s also about training staff. Dean, you wouldn’t have this problem because you’re consistently communicating directly with the customer. But, I think other retailers when you’re talking about store network you’ve got also that consistency of training and the consistency of the message that start by delivering in the store. And, you know if your returns policy is too complicated, staff can easily get confused. And for them, it’s important to be able to communicate directly to the customer when they get a different understanding.

RHZ: And Dean, yes shifting back to online I guess you know making things as simple as possible so 100% your order that goes out must come back. How’d you make it really easy for them?

DJ:  We thought a lot about that earlier on because that was fundamental to getting it right. We put ourselves in our customer’s shoes and said, if we can first of all mail delivering something swiftly to people when they expected it to arrive and where they expected it to arrive, the next most important thing to think about is if it’s not exactly what they were looking for. How easy can they give it back to us without it being a punish? Because as you allude to Rob, you know, we see it as a retention opportunity. We can show people that even if it didn’t quite work out in the percentage of cases where a dozen which as you said is maybe about 15%.  Genuine reasons too. Just didn’t fit. No problem. You want to let them know that it’s very easy and convenient for them to send it right back. For us, it was as simple as a regular return satchel already completed with some basic instruction that don’t hesitate if this doesn’t fit to send it right back to us and let our team know as soon as it arrives on one of our couriers our system knows immediately that it’s on the way back. And send the customer a notification to let them know, thanks for sending it back, we’ll be in touch soon. It’s really putting ourselves in the customer’s shoes, we did it ourselves a few times here and we tried out lots of different players. This is a couple of years ago now. To sort of find those paving points around what actually makes an easy return process.

RHZ: I think Dean, it’s such a great point the no punish sort of policy is quite critical. And I think trying out your own process is a really good way to do it. I think it’s called dogfooding. So, if you hadn’t dogfooded in a while and I get that in too, right? So, you can really test the pain points in the process. So, I guess if we kind of summarise now we’ve got some great, great sort of perspective here which is clear and consistent communication policy, keep it really simple, you know when it comes to you know processing or requesting return make it as easy to use as possible if it’s online.  If it’s offline, simplest process is whacking a label on the package that goes out. Whack a prepaid satchel as a label in the package that goes out as well. So, you know, really pretty cool to get those right move to make the returns process simple. But, coming with that obviously, comes great challenge. So, Dean, you kind of mention you send out a prepaid return satchels to every customer you know that’s quite an investment from your behalf. What do you kind of recommend when it comes to you know really overcoming challenges? What are the biggest challenges? Which cause the biggest challenges, what are the other challenges you have?

Challenges in Practice

DJ: Sure, thing you’re right. It doubles the cost. So, cost is definitely number one. How do you fix that? We found if we can assure customers we will get it to them swiftly, and then it’s super easy to return it and they’ll get a full refund when they do, a lot of customers or our customers anyway, are happy to meet us halfway. So, we charge nine dollars ninety-five ($9.95) for return shipping. While delivery is free, the return is nine ninety-five ($9.95). Which is not passing on all of it. It’s a subsidised amount. Just to make sure that that’s an easy process to do and our customers are happy to pay that given the assurance that comes with it. As soon as it arrives they can send it back really easily and it’s not difficult. So, understanding what that fully loaded cost was per unit and where what was the absolute lowest we could price it at in order for that to be commercially viable, and also be a fair proposition to our customers. We did a lot of work just financially early on. So, cost was the big one. You’re right. We have the luxury that everything we’re sending out has to come back. So, we preload the satchels ready to go. But, I think you can still take a leaf in that book for any customers that at least it could perhaps be a satchel that wasn’t fully completed. But it’s still halfway there compared to hey, print all this out yourself, take it to the post office. There are probably a number of steps you could take out for the customer to not make it really difficult for them. Who has time for that? Who has time to print all that stuff out and take it to the post during business hours? I mean, a lot of people don’t have time for that. It’s not really fair to expect to put your customers through that when they genuinely just want to give it back and didn’t quite work out that time. So, I guess we’re breaking that down. What are those steps and what can you do for your customer at that time to make it a bit easier for them.

RHZ: That’s a good point and Dean, I guess just going with you for a little bit longer, the processing of the physical product, I mean that’s coming in. I don’t know if you mentioned but how much you’re processing a week?

DJ: It’s about a tonne. It’s over a tonne a week of satchels coming back in our warehouse now which is you know quite a bit. In terms of cubic volume and it’s going up. In terms of the unit that’s a lot of processing to be done. We started to cap out on how can we have individuals reading the satchels, entering in each system and having them processed so we have to build the system around doing that which is based on the bar code. Rob, you especially would know this the amazing technology you guys built called “Shippit”. Barcode is pretty simple, there is a lot of devices out there that can read a basic bar code.  And it marries up to a lot of software where you build it yourself. There is plugin that you can get from google sheets right through the third-party software of all types. Which can just really like quickly scan a satchel and process it. And a little kick that we put on the end there is now an automated notification email that goes out to the customer who sent it to let them know that their items safely arrived and back to us.

So Leonie, I guess the equivalent of all what you’re saying about at least having the store or the person who is receiving it on the other end, trained up on what’s the message?

DJ: A pre-loaded template or a script providing that’s consistent. I think we found customers really appreciate that because they care. They care if they send something back has it come back to you yet.

LM: Well they want to know that it’s right and I think I get what you’re saying there that if you’re returning something to a pure play retailer and as a customer, I think the key things they want to know is if they get it and have that give me my money back yet. I think it’s kind of like that. I think that it’s one of the things you’re highlighting there is that also those who report of communication for the flow so if you define what your points are where you need to check-in with the customer where you show them that we’re still on it. It arrived, we haven’t had financially processed it yet but I think in your situation you’re doing something slightly different to most other retailers (where they’re expecting an item when it comes in for a return). Everything in your business is coming back, once it comes back, it comes back kind of thing but I’m assuming an element of possible damage and another kind of things that you need to deal with on your end. I think that other retailers also typically look for quality issues and flaws on the other side so there’s an element of assessment usually in the back-end process.

RHZ: Absolutely and I think, you know just going with that as well, I guess technology is receiving in store or you know when somebody brings in an invoice or packing slip from their online order and you can scan it in store. What about interoperability?

LM: Because there are a few challenges in that area but definitely and getting the systems to talk to one another is absolutely a challenge as I’m sure that you’re probably also aware what we’re talking briefly before when I started about the integrated carriers which are the elements which exist in the returns process.  You’ve got one situation with a customer which is in store that is easy in a way because you don’t have to deal with any of the carriers. Whereas that integration process and the points where you’ve got multiple carriers and multiple systems talking to one another is incredibly challenging. And so giving in-store staff access to that information you’re giving them sort of assurance around that checking that the item was intact. They need to have a decent background. You don’t want to be unfriendly about returns but you also wanna have some reasonable checks in place to make sure that customers are doing an honourable thing as well.

RHZ: Yeah absolutely. Dean, have you encountered fraud in that process as well?

DJ: Unfortunately, yes and I think fraud is a reality for all e-commerce. Where in fact a lot of people who sell anything online or have them get anything online. It’s a challenge and the industry is getting a lot better but the forces are getting a lot smarter too. It’s not a big enough problem that keeps me up at night but it’s there. I think the real red flag is when there’s been a fraudulent order is when it doesn’t arrive back at all. That’s when you know that’s certain that was a fraud transaction. Because I don’t think fraud will send something back. They’ll probably keep it. Yeah, so we see it, we found it comes down to knowing your customers. “KYC” anti-fraud we build a lot of systems out. With the data we built up, where we can detect abnormal behaviour, we know when if the new customers they order a lot of stuff or some strange delivery locations. It gets red flagged by our team which is there. It’s not that we’re singling out that customer, it’s just their behaviour in terms of transactions stats look really different from the middle of the bell curve of what we see. And so those items actually get verified by a human being before they get shipped. That’s how we found the best way to combat fraud. It’s still there but you can’t do nothing about fraud online. It’s there and you just need to constantly be getting smarter at preventing it.

RHZ: Great perspective!

DJ: We’ve seen it, yeah.

RJ: Yeah, so I think there are numerous challenges obviously in this space but we’ve got to talk to knowing those challenges and being able to address them head on is really critical. So, carrier integrations that generate labels easily is kind of one of the core challenges system in system interoperability. One thing that we’ve talk about previously is how do you initiate a refund when it comes to these new and innovative payment platforms so is it After Pay, is it Zip Money?) Processing of the physical product so needing to automate the process and to be able to diagnose issues, diagnose fraud early as well as flag important points for you to think through. But the basic points and the easy wins is the just to gain visibility on the process that’s going on unseen so when we received the goods and a refund is being processed usually these events can be used as marketing options or activities as well. It’s a chance to re-engage that customer. If you don’t talk to them at all, chances are they probably won’t come back to buy again. So in their return, keep the dialogue going. Across multiple channels, be prepared for buyers online returning in store. Embrace it, don’t fight it and use it as an opportunity I guess

How do you recover a lost profit?

RHZ: How do you recover lost profit or profit that you lose from the returns process?

LM: We talked about this earlier, one of the challenges you have you try to reduce the risk. It is going back to the source and trying to give as much information as they can about perhaps some of the things we discussed earlier in about how you know detailed people are becoming or how detailed online retail needs to be. I think the other thing that Dean has also highlighted well is that idea of meeting the customer halfway with the shipping cost. I know other retailers who will give a threshold for free shipping or will ask customers to contribute to the shipping cost for a chance to have a change of mind. Giving a couple of caveats around some of that shipping cost I think that is definitely something that we have seen in practice that seems to be acceptable to customers it sounds that you’re experiencing that thing.

DJ: Absolutely, we are highly sensitive with that too. Cause we’re conscious of getting our prices down for our customers across the board wherever we can. If there’s anywhere that we can add some value for our customers then we will. We found when we introduce that extra little bit of shipping to ensure faster returns it didn’t affect conversion rate, we found a lot of our customers found it pretty fair. So, yeah I think it’s something…in reality, it’s hard to deal with. We would love to provide universal free shipping but I think in Australia, it’s a big place and moving tonnes of stuff around the country cost stuff, so I think commercially we just have to find a way to find that middle of the road in terms of pricing to make it work. Sometimes if it’s free shipping, it might be baked in the actual item you’re buying anyway so we better be upfront with our customers about the costs.

RHZ: So Dean, I just wanted to touch on some point. We have a question come through which we’ll get to in a minute, thank you, Wendy. We’ll kind of talk to Dean, a question around or something Leonie brought up which is about the right descriptions online and the right fit guides, I guess Glam Corner probably not using it to you know sort of hang out or watch in on a Sunday You’re pretty much going to an event. The Logies were on the other day. I imagine and then have a couple of clients there so how do you advise on fit and how do you make that as accurate as possible as possible cause it’s so critical.

DJ: Absolutely, it’s pretty high beater when it comes to size and fit for our customers so we take it really seriously. There are a few ways we’ve improved that over time, and we’ve seen the instances of refunds that are related to size and fit come down as a result. First one has been, I think Leonie’s alluding to earlier as well. It’s just more detailed description around size and fit. People like to do their homework before they place their online order so no problem. Give us as much information as possible to see if they’re gonna have success with what they bought.

And then this mean provide lots of information. Make sure it’s accurate. Make sure the size and the fit information is as accurate as you can get it. So that’s what we do on that side. We have also found our customers if we give them a platform or a solid box can help us kind of crowdsource our size and fit the customer reviews. So that you can see customers just like you, not just a size 6 or a size 8 model wearing the dress, but customers just like you in any size category having success with the dress that you’re looking at. We found those things especially have really helped customer just have more certainty around size and fit. Because it matters. It’s got to fit otherwise there was no point in buying from us. The last thing we introduced which we have the luxury of doing was a backup dress. You got a backup dress to our orders of 15 dollars because we knew everything is coming back anyways. So, it’s much low cost for us to do that. But I can imagine for some retailers that would be quite hard.

LM: I think the other element there is, I’ve read that some retailers are having good traction with this is that whole online chat as people are going through the fitting process online to improve their questions. Do you have live chat on your website?

DJ: Absolutely. Absolutely, we have a live chat and it gets used a lot mainly for that. Obviously a customer is a high intent customer ready to order and just wants to ask that one question. They can chat, they can email. We found providing as many channels as possible for your customers to interact with you – you should do. It’s extra work on customer service, but it allows your customers to interact with you the way they prefer to. Sometimes it’s email, sometimes it’s chat, sometimes it’s Snapchat, sometimes it’s Instagram. We even just have a girl fashion phone line. Our customers can call our staff anytime during business hours and that helps. It helps in keeping reassurance or as much as possible that they’re going to have some success as happiness.

 

 LJ: I guess one other thing to quickly inform you on that I could probably add into the recovery profit piece is something I’d seen The Iconic do which is they offer customers the option of taking refund or taking a store credit and 10%. It’s they add another 10% in store credit. So, you’re kind of almost just giving customers the 10% discount in their next purchase. So, it’s a great incentive to actually have to process the refund and to be able to give customers who don’t know that they still got like, I got a store credit for a little bit more than they have. So, they’re actually going to feel like they’ve one little bit.

Well, that’s another way of trying to reduce the push on, you know the online catch is, you know it’s like since they are returning customers they are a happier customer next time.

 RHZ: Absolutely. This last question coming from what is more just asking a lot of returns in store. Can we view this a negative for store sales, does it reduce the daily sales? Do you think systems should be able to charge them for the original location?

LM:  Absolutely. You got to be able to report across channels and I think the other element to add to that is we’ve had various concessions (stores) about returning and the whole collecting store and those elements too. This tension I guess between online and offline. It’s really an interesting thing because retail is a traditional set up for different stores to compete with one another. And really as the digital push growth, they have to reframe and rethink about how their stores are actually competing. So, they get a competition rather than one another. So, it’s a different way of, I think that’s something that definitely needs a bit of a briefing. Just a little bit of briefing.

RHZ: So, I guess we did some really insightful things there, you know. There are a couple of tactics you can do for cost recovery. I guess one of the key points was getting customers to meet halfway. And so, I guess it’s always within reason. And what are you actually offering to the customer? So, its benefit divided by cost gives you values. So, what are you actually doing on that plan to actually get them to start paying some of those elements? You know, tracking your reasons for return is really important. So data coding, data accuracy, if you’re not tracking specific reasons as to why returns are coming back and looking actively reducing them get a plan in place and get ways to improve them.

Precision in cost accounting is obviously quite important and then obviously you can start limiting windows when returns are acceptable but you can also differentiate returns based on reason as well so it’s a fault, makes it as easy as possible if it’s not at fault then you can work within the realms of reason.

Best Practice: The Ideal Refund or Exchange Program

RHZ: So we go on to our next section, we’re gonna start with our best practice but I guess it’s not a one size fits all as you can imagine. All the retailers you’ve worked with Leonie are different in their business models and customer set. So what do you think are the tips for really putting in place the best refund or exchange program or best returns policies?

LM: Well I think that treating people as though they have the best intent is the best place to start and I think that whatever this regard is, just being transparent, simple, and going back to consistency and simplicity, it really is quite a powerful driver. Dean, you were saying to let the customers choose. One of the things you do really well is that you’re putting the cost to return the items (less some shipping) – you’re putting that up front so no one’s surprised. Most people are comfortable with those of ideas when you’re more clear upfront and there are no nasty surprises. I think customers get cold swing, they have an expectation that’s one thing and the expectation isn’t that.

DJ: I think that’s exactly right and not just anecdotally. We’ve got thousands of customer views on our website and there you’ll see so many people who said I really appreciated how easy it was for me to return my items. They place a lot of value on that, it’s kind of a hint that you know, they’re happy to pay a few more bucks just to make sure they have success and it’s easy and convenient to them so I think that’s exactly right.

RJ: And what about advertising the intent so I’m seeing a lot of retailers kind of really advertise their returns policy I think that’s what they advertise on tv and it’s just the Best N Less day guarantee you know those types of things so what about advertising that upfront and using it in your marketing arsenal?

LM: Yes, I can give you… if you are going down that path then you are putting that up front and centre, it really goes to set you apart when you’re talking about that segment of the market and another cost. The intent in that situation is really to have an open returns policy as best as we can and possible.

RHZ: And I guess for retailers they have quite high seasonal sort of a hundred day window is quite extreme but if you look to the US there are quite a few retailers who are operating within a 90-day window. Obviously, that got a liquidation strategy on those items and they kind of worked economic scales to a point where they can afford to do that.

LM: I think the other element of that is that most people have returned within that original 30 day in spite of the fact that it was very generous window. If you got something you didn’t expect, something that quite didn’t make your expectations, you kind of want to sort it out.

RJ: So that’s one important point as well, don’t be afraid of offering generous windows because the argument stands that customers generally feel like we’re out of pocket and the main thing then is to make the money work for us so economics have suggest that we will have to return the loss soon. So Dean how do those time windows work for you?

DJ: We’re a little bit of a unique case, I agree, I think it’s great that the bigger those windows can get, the better. I think the really interesting if only the industry ever saw some stats on exactly what is the window when people actually use it cause maybe one day you might see a one-year return window or two-year return window. For us, our window is basically anytime between when you place the order and when it’s supposed to arrive or before we shipped it. If you want a full refund or you want to cancel your order, you can do that free of charge and you get all your money back. There’s no reason why not because our customers are typically renting it for a specific event and we’ve asked for a particular delivery date after that point and they’ve had successfully or not they sort of, there’s no longer the same understanding with the customer that they weren’t hanging on to it for more than a hundred days or 120 days so there’s been less of a need for us to focus on that, more just focus on it’s very easy to return it because people are quite new to our concept when they discover us and that’s the natural next question.

Rob: Thank you for sharing that, we’re running a bit short on time so I’ll just wrap this particular section up. Thank you, more details about us, the website, details are here, feel free to connect with us on LinkedIn, hope to speak to you soon. Thank you very much to Leonie and Dean.

Shippit.com is the shipping engine for modern retail. Learn more about our how our software can save you time, money and keep your customers happy.  

Customer Loyalty: Why Money Can’t Buy You Love

The path to building a meaningful, lifelong relationship with your customer goes a little something like this: gaining their trust will lead on to retention, in turn, building loyalty, which blossoms into advocacy and this, my friends, then becomes your single, biggest selling tool.

And the hard truth is that you may have been going about building brand loyalty all wrong.  

If you’re incentivising loyalty with transaction-based discounts, you’re most likely attracting customers devoted to bargains, not brands. Reward programmes, membership offers and most other traditional loyalty schemes can lead to fixation on price, and (ironically) not loyalty to your brand or product.

Yes, there is an argument that a points-based loyalty scheme is beneficial for data capture, but this is the golden age of eCommerce and there are much more reliable and cutting edge technologies to achieve this out there.

According to Brad Dodge, the way to build loyalty is by “leveraging the three key components of trust: capability, reliability and caring. Thereby creating a better consumer experience and driving growth”.

So with these three ‘pillars of loyalty’ (as we like to call them) in mind, we’ve put together a loyalty-building 101 masterclass, just for you.  

Pillar 1: Capability

An online customer’s biggest obstacle is making the decision to part with their hard earnt cash without actually seeing or touching the product in real life.

UPS found that when making purchasing decisions, shoppers find real value in content both from retailers and other shoppers, with 77% saying product reviews were most influential in encouraging them to click ‘buy now’.

Content really is king online, with only 57% of shoppers wanting to see user-generated content or images uploaded by their peers.

With reviews being trusted by 88% of customers, you can forget Kendall Jenner, make your customers the brand advocates, and even the face of your site and the trust (and eventually, loyalty) in your brand will skyrocket.

Pillar 2: Reliability

It’s of paramount importance to take away any potential risk your customer sees both pre and post purchase; building trust requires them to feel reassured they’re making the right decision.

Where possible offer samples so they can try before they buy. If samples aren’t appropriate for your product, fear not, cutting edge tech such as Virtual Reality and Augmented Reality are not as futuristic as you may think, just last year eBay and Myer launched the world’s first VR department store.

And if you’re thinking AR and VR are a bit out of this year’s marketing budget, there’s a much more low-tech, but arguably just as powerful, solution – real life product experts who are ready and waiting anytime (yes, that does mean 7 days a week) to tackle any questions or doubts.

According to research, 77 percent of customers deemed online chat an important factor in shaping their perspective of a given retailer.

Next, you can take away any headaches by making returns easy peasy. Buyer’s remorse can afflict the best of us and if it does hit, your customer will appreciate (and remember) returns being simple, efficient and quick.

We’ve touched on the importance of a streamlined returns process before, however, this study reveals that, although overall returns satisfaction increased in 2016, this is an area that is very much ‘ripe for improvement’.

60% of those questioned in the study reported that the best returns experiences come from providing a free service. While around half viewed a hassle-free experience and easy to print return labels, as their online purchasing security blanket.

Psychologists refer to this as the ‘peak-end rule’. Meaning that it’s the last impression (good or bad) left at the end of the engagement, that’s remembered. Give your customers a great experience in what could possibly be their last encounter with you, and we promise it most likely won’t be.

Pillar 3: Caring

Cultivate emotional connections with your customers. Offering monetary-based rewards and discounts can be great for transforming a browser into a buyer, but customer-brand relationships thrive on less conventional rewards, such as ‘surprise and delightmoments.

You can and should still reward customers. Offering tailored, unexpected treats work harder than their traditional, expected counterparts and the good news is, they don’t have to blow the budget. For example, you could post ‘thank you’ shoutouts to customers, or re-post their product shots on your social accounts to get the conversations going.

Alternatively, now we all know how much importance customers place on free shipping (see ‘Pillar 2: Reliability’ to jog your memory), why not offer sporadic ‘free-shipping’ days?  

Surprising and delighting keeps customer expectations fluid and the possibilities for moments like this are endless, check out this article for more where they came from.

So that’s what you should be doing right now, but what does the loyalty programme of the future look like?

Well by using data analytics we can turn loyalty schemes from being discount-focused and impersonal, into sustainable, mutually-beneficial relationships. In turn, this will align customer behaviour with brand values and can provide unexpected rewards, in a structured way.  

We have to agree with Digital Pulse in predicting a world where eventually there are no cards, no points and no discounts. And in their place a utopia of emotional value, engagement and organic reviews and referrals; a place where you and your customer can live happily ever after.

Shippit.com is the shipping engine for modern retail. Learn more about our how our software can save you time, money and keep your customers happy.  

Same Day Delivery – How To Nail It When Time Really Does Equal Money

Due to the ever rising share of online retail, the ‘last mile’ (or the final delivery step to the customer) is fast gaining importance. Customers expect ultimate convenience on their terms; be it alternative pickup locations, such as locker-boxes and parcel shops, real-time tracking options from warehouse to door, or the ultimate holy grail of delivery perfection- same-day.

It won’t be long before same-day delivery will become the industry standard, the fact that next-day or two-day delivery is already the norm in all developed countries, means it’s the next logical evolutionary step. So if you’re not offering same-day delivery right now, you might want to jot it down on the to-do list, because it’s fast (pun intended) becoming not just a nice to have, but a need to have.

Stats from Amazon show that just by offering same-day delivery, even if the customer doesn’t use it, makes that customer 20-30% more likely to purchase at checkout, it also has a positive effect on loyalty and they are less likely to make returns.  

A prime example of same-day done-well is Australian online marketplace Hunting for George, who offered free same-day delivery Mon-Fri for all customers in the Melbourne Metro area leading up to Christmas.

According to Marketing Manager Jonno Rodd, “Traditionally the last week before Christmas sees online sales drop dramatically as people go instore, but we were actually up 38% on the previous week and 160% on this week last year. We also saw our average order value up by 25% from the same time last year.”

So introducing same-day may seem like a no-brainer, but before jumping in feet first, according to McKinsey, there are a few prerequisites which need to be addressed:

  1. Local product availability. If you say you can deliver it, you need to have it standing by, which is great for those retailers who own stationery shops too, but we’ll get to that later
  2. Real-time product visibility over inventories. Your checkouts; both online and in-store, need to be talking to each other – fast
  3. The picking and packing process needs to be slick and quick. Seems obvious but when time is money there’s no room for error here
  4. Flexible logistics capability; delivery logistics need to be responsive in real-time. Which is a platform like where Shippit comes in, providing a 3 hour scheduled metro delivery service*

Getting delivery wrong can cause some long-term brand damage, the 2016 study by MetaPack found that 38% of customers surveyed said they will never shop with the retailer again, following a bad delivery experience.

The same study found that 45% of customers have abandoned their shopping baskets at checkout because of unsatisfactory or unavailable delivery options.

So offering same-day delivery may not be for the faint-hearted but then again, fortune favours the brave and once a business has nailed it, they will most certainly reap the aforementioned rewards.

Hunting for George are not alone in taking the plunge, along with logistics companies and global giants, we are seeing more start-ups and small businesses seizing the opportunity to improve service levels by offering same-day, and then using it as the differentiator to pull in new trade.

This movement towards same-day delivery is good news all round for retail; it will support e-commerce by significantly improving its competitive positioning against stationary retail and drive online sales for products in almost every category.

For stationery retail, it will force them to come out swinging, leading to innovation. Let’s not forget that they have a notable advantage in being able to introduce an online channel, while utilising their stores and warehouses as distribution points to ‘ship-from-store’ (using stock from their stores to fulfil an abundance of online orders). This means they can be more competitive on delivery and returns prices.

Ok, so same-day sounds like a plan, but how you ask? McKinsey identifies various models emerging to service the need for offering a same-day delivery service, and for small and medium sized business the trick falls mainly with partnering with third party shipping platforms, who already have the connections in place to offer a fast service at competitive prices. Whichever path is chosen, the objective will always be the same – how to satisfy the customers need for speed, while making sure the process is operating like a well oiled machine and all at the lowest cost. Easy!

Shippit.com is the shipping engine for modern retail. Learn more about our how our software can save you time, money and keep your customers happy.  

Beating Amazon with Bricks & Mortar: Making Stores Work Harder

Ever wonder how bricks & mortar stores will survive the Amazon shake-up? With the retail giant recently saying it will, “destroy the retail environment in Australia”, optimising fulfilment from stores will be the true key to success.

Learn from PetStock’s General Manager, Andrew Gibbs and MyHouse’s former eCommerce Project Manager, Nathalie Reiter as they discuss how they’ve leveraged the physical store network as a distributed warehousing network.

What follows is transcript of the webinar. If you’re short for time, read on for five key take-aways.

  • Amazon’s Entry: The five things customers expect from Amazon’s entrance are cheap prices, free delivery, quick delivery, a wide range of products and brands (from household staples to hard-to-finds).
  • Benefits of Ship-From-Store: Key benefits include an increase of delivery speed, greater flexibility in delivery options, reduction in shipping costs and fulfilment times, as well as improvements in the customer experience.
  • The Case For Distributed Warehousing: It’s not a question of whether you can do it or not, it’s the question of capability and process.” GAP puts it simply as, “some people talk about Amazon with their 71 distribution centres, God bless them, we’ve got 2,600 distribution centres throughout the nation.”
  • Barriers & Operational Challenges: As well as having the right enabling technology, the core challenges of shipping from store is around staff motivation, training and impact assessment. It is about aligning everybody in the organisation behind the view of the customer, and giving the customer ultimate flexibility with delivery.
  • Tips On Getting It Right: It’s important to develop strategy around specific goals for your business, maintaining consistency in approach, playing to strengths, executing well, and keeping communication open between stores and the head office.

Read the full transcript below.

Introduction

Rob Hango-Zada: Welcome everybody to Shippit HQ, and joining via satellite is Andrew down in PETstock HQ in south Melbourne. Basically we’re going to talk a little bit about how to leverage your store network to compete with Amazon, or in short, how to beat them with brick and mortar.

Webinar Structure

So there are four things that we want you to take away from today. First of all is why stores matter when it comes to Amazon entry. It doesn’t sound like a logical fit, but if you’ve done any reading or research around the topic, it is quite a smart fit. So we’re giving some reasons why they matter.

Secondly, what the benefits of using brick and mortar stores and distributing houses. Also, how to overcome challenges associated with using your store’s fulfillment, but obviously challenging piece of work, so let’s get into the guts of that.

And finally, how to guide potential change management for retail ops, so I imagine most retail operations managers out there are kind of shrieking in despair at the sheer context of leveraging your stores as a distributed. warehousing network, so let’s get into that.

So breaking the session up into four modules. First module is talking about Physical Versus Online Retailing, the role of the store. Second module is about The Case for Distributed Warehousing. And the third is Learning from retail greats PETstock and MyHouse, on how they run about. And then we’ll save up most of the questions towards the end, but if you do have something in the meantime you’d like to ask, please do not hesitate to ask, and we’ll try and get back to you. So I’ve just been told that there’s bit of an echo, so hopefully you can hear me a little bit better now, so off we go.

Module 1: Physical Versus Online Retailing

What Australian Shoppers Are Expecting From Amazon

RHZ: Amazon has been widely talked about, I think publicised, if you… Paul Greenberg one more time, I think he might explode, but there are really five things that customers are looking for, and they’re kind of expecting from Amazon. A survey recently conducted by Nielsen was released towards the end of February, and what I really found is some quite interesting results. I think one out of every two Australian shoppers who visited the Amazon website ended up making a purchase, which is a pretty stellar conversion rate, if you really think about it.

The five things that customers expect, the first thing, the really obvious one, is cheaper prices. So Amazon is synonymous with lower prices and lower margins, and really about scale. So cheap prices are going to be in a space which Australian retail has really taken a task of the past five years, and you see a lot of lower cost entrants succeeding tremendously in markets. So whilst there will be a contested space, I think that we’ve already got a great deal of competition around price.

Second is it’s free delivery. So free shipping is obviously a basic expectation of customers in this day and age, but that’s really what they’re expecting from Amazon.

Third is faster delivery. So delivery options are now probably more important than they’ve ever been. But Amazon Prime obviously offers free two-day shipping anywhere in the state. And that’s for Prime member holders, which presents a compelling challenge to the Aussie retail market.

Fourth is the wider range of products. I don’t know if anybody knows it, but Amazon actually offers over 485 million SKUs. Quite a mean number, and in the last 24 months, I think they added 50% of that, so rapidly expanding their mix, which for them is also an opportunity for local suppliers to come and get involve in that one as well.

And lastly, a wide range of brands, so obviously going from the very small, niche kind of products, right way up to the house-hold brands.

The two I want to really focus on are around shipping, obviously. So it’s faster delivery, and free delivery are two key things which we really need to get a handle on in this market. So let’s kind of look into what Amazon is at least doing in that space.

Amazon’s Closed-Loop Logistics Model

Many of you may not have seen this, but Amazon is closing the loop on the logistics model. So their model has been quite interesting, if you’ve studied it, they start from a very simple kind of proposition, and worked that right the way through, understanding what the customer experience impact is, and looking at ways to cut costs as much as possible.

They’ve got entire teams and departments dedicated to solving the logistics challenge. But previously, having partnered with the big guys like UPS, FedEx, and the like, they’re actually closing the loop on logistics completely. So right the way through from supplies production, production to warehousing, warehousing into a distributed warehousing cross-docking, and then moving that through to the last mile.

These really presents a compelling challenge because you’ve got a provider who is not only disrupting retail, but disrupting logistics. any online retail these days who’s really driving growth and really paving the way through is focusing on how to solve the logistics issue more so than any other online retail issue. Amazon just happens to be selling products but they are without a doubt a logistics business.

So it shouldn’t be a surprise then when they’ve got over twenty jumbo jets that use as cargo planes in the US, so you can see this here is that plane the Amazon Prime library. So I’m not sure how many retailers would put their hands up and say, “Yes, we can pilot 22 jumbo jets, but they again we’re not in the States.” The more compelling thing to me was that same day is actually an option offered to 31% of the US population. 31%, a third of all Americans can purchase on the same day to an online retailer.

The secret to their success really is that they’ve got 71 fulfilment centers across the US. So it’s probably satellite fulfilment centers that preemptively ship products to. They can determine what products they need in stock locally available to the US population. So exceptional coverage, and an exceptional challenge to anybody competing with Amazon.

Location is The Last Battleground

In the words of Shutl’s founder, Shutl’s a small local delivery business which was acquired by eBay and grown quite rapidly, and the founder of Shutl is now the head of shipping globally for eBay. So they talk about really location being the last battleground for retail. So Amazon’s already beaten most retails on price and selection, but the third battleground is really on location, and it’s about smart retailers not competing that they have locations ready to roll, how do you mobilise the in defense against the big players.

Should Offline Really Compete With Online?

So the biggest question that really should be asked is, should offline really be competing with online to begin with? And I think the smarter retailers out there don’t see the channels that’s competing. So if we go to it like a purist definition of channel-based retailing, where you’ve got single channel, multi-channel, omni-channel, a lot of times these terms get thrown around quite a bit, but there really is quite many differences which could change the way a company reports on the different channels that exist with any business.

So single channel’s obviously pretty simple. It’s old-school retail, it’s either you’re online retailer that sells to customers, or you are a physical retailer that sells from your store to your customer.

Multi-channel means I operate multiple channels of sales, so you’ve got a store that sells to customers, you’re big on online presence, which sells direct to customers. And that’s really the majority of the market today.

As we move to omni-channel retailing, it is the store that actually contribute to your ability to sell online, and online contributes to your ability to sell offline. So these strategies are around Click and Collect, think about showrooming, think about ship from store, and think about ship to store. So there are a few other things that come into omni-channel. But generally speaking, it’s about a philosophy of looking at your total cost base across the multiple channels that you operate.

The Power Offline Stores Can Harness

Jumping into that, I’m thinking about the dormant power what you can enable from the store perspective. Rather than looking at stores at the red line on the balance sheet, how can they actually be leveraged to improve the way that you sell online? Very first point there is an obvious one, so if you’re shipping locally rather than across the nation, you tend to save on shipping costs. If you look at the likes of how Harvey Norman operates stores at Perth, Sydney, and Melbourne, you’ve got a customer base down at Perth, it probably makes a great deal of sense to ship out of Perth to Sydney. So there’s a natural advantage to shipping from store in the way that you’ve already paid for items to get close enough to your customer, now its just about getting it to their front doorstep.

The next piece is linked to that, which is improved stock turn, but you’ve got stock sitting in-store, generally what happens after the season’s over is you’ve got to clear that stock out of the store. So rather than doing a flash sale at the end of the season or shipping all the leftover items back to the distribution centre, there’s the opportunity to actually improve your stock, and actually selling through stock that you’ve already invested in getting to your stores.

And the third and final piece is obviously because stock is now more localised, you can actually turn on faster delivery times. So three-hour delivery becomes a reality. Harvey Norman was one of the first retailers to offer national three-hour delivery by using their store network. So it really creates the ultimate level of flexibility for your shipping options, and now start to get to that same level of fulfilment technique as Amazon.

Module 2: The Case For Distributed Warehousing

So I guess that’s kind of paints the picture before The Case of Distributed Warehousing. And I’ll jump into that in a little bit further, it really is about waking up the giant.

The Ugly Ducking: Waking Up The Giant

So sort of the ugly duckling that grows into that beautiful swan. Gap talks about this in a really easy way: “Some people talk about Amazon with their 71 distribution centres, God bless them, we’ve got 2,600 distribution centres” throughout the nation. So just think about, if Amazon does launch down under, how many distribution centres they’ll likely have launched, how many stores who actually have ready to go right now. So it’s the question of capability and process, not a question of whether you can do it or not.

Competing Priorities For Using Stores

This is going to be the last piece from me before I hand over to the panel, but they’re obviously quite evident competing priorities for using stores. So fulfilling offline sales – staff, they’re incentivised to sell. Stock is reserved for store purchasing, and space tends to come at a premium, so they often have a small footprint than you can afford with a regional distribution centre.

On the flip side, when it comes to fulfilling online sales from store, you’re now competing with staff time to sell to actually get them to start focusing on pick and pack. You’re taking stock which could have been sold in-store, and attributed against the budget or the daily sales commission for each of your store staff, but now that stock can’t be touched and is reserved for online.

And the space for the fulfilling for an additional sales channel means that you need to store a hell of a lot more stock in a particular store. So how do we store more stock where there’s a smaller footprint in space, something that’s more premium.

These are the competing priorities we’ll get under the skin of with some retailers, and we’ll let them kind of talk through how they dealt with these challenges.

Module 3: Learning from PETstock and MyHouse

So I’d like to introduce Nat, who’s been patiently waiting on my right here. So do you want to talk a little bit about your role with MyHouse, and a little bit about MyHouse as a business for those who don’t know it?

Nathalie Reiter: So MyHouse sells homeware mostly linen, bedsheets, things like that. They’ve been around for 60 years, and they have around 40 retail stores mostly in New South Wales. Their e-Commerce stores only started about two years ago, and I was part of the team about 12 months ago to really drive that channel a little bit further. I was responsible for the web development, and also for the setting up all the fulfillment processes and customer service.

RHZ: Right, so not a mean feat here when you’ve got 20 years of experience…

NR: 60 years.

RHZ: 60, there you go.

NR: It’s definitely a new venture for MyHouse to go into the online world.

RHZ: Right, OK. And Andrew, via satellite, do you want to introduce yourself?

Andrew Gibbs: Yes, Andrew Gibbs from PETstock. We started back in 2002 in Ballarat primarily as a stock feed and pet retailer, and effectively grew out our network to around 144 stores today across Australia and New Zealand. And certainly sort of have a breadth of obviously food and pharmacy, and kennels, those sorts of things, but also a veterinary component, and our grooming, and puppy school. So certainly building our services offerings so for us it’s certainly about trying to sell the breadth of what we offer, certainly to try to counteract the different pressure that come in from the market, so it’s certainly, for us this particular part of the business is certainly an exciting space for us to sort of how we integrate it into our complete network.

RHZ: Obviously no stranger to complexity, multi-channel, multiple service lines from puppy school to livestock, can be, I imagine PETstock is quite familiar with running around a bunch of complexity.

Why The Decision To Ship From Store?

With that let’s jump into the obvious question being, why the decision to ship from store, Andrew?

AG: Each business is different, but for us we certainly have a lot of brands that are well-known in the industry, so whether that be premium food or pharmacy, so the private label component of our industry is still relatively sort of young, if you like. So price comparison, things like that are quite easy to do, so for us it really came down to one of our core operational pillars, which is how do we replicate our experience across all our different channels, whether that be our services offering, whether it be our in-store experience, and how we can replicate that as best as we can online. So for us it just wasn’t good to send an item from Melbourne to Perth and for it to take more than ten days to get there as far as our service offering.

So apart from price, it was really around that customer experience, and I suppose we also looked at when we talked about our stock, and our stock holdings, and the risk that physical stores take and for us to leverage off that as an opportunity was something that we saw as being able to offer a wider range across a broader geographical spread to ensure that we get our items to people’s doors quicker.

For us, whether it be obviously smaller numbers going into Queensland, into Darwin, but certainly into WA, and parts of South Australia, some of the more remote locations, it was a great opportunity to really shorten those time frames, and after that experience, and then really when it comes to the volumes of Melbourne and Sydney, and even Sydney alone with its challenges with just sheer traffic, and the roads themselves, Melbourne’s not really immune to the moment, it’s certainly an opportunity to start to get to that same day.

And we can offer same day in New Zealand in Auckland, and certainly North Island is definitely minimum next day, but once we start getting to the south island we start to run into that one- to three-days. So how can we drive it to get to that same standard in Australia where we’re sort of where we’ve started to move to leveraging our best stores to be able to pick and pack and dispatch.

RHZ: Nat, did you, was it obviously a bit of a different kind of impetus why the decision to ship from store from MyHouse?

NR: I think, pretty much the points that Andrew mentioned, like quicker delivery time and better customer experience, but I think in addition, which was MyHouse was quite a new player in the online world, it was kind of smart way to actually test the online borders to just see, “What are we in, for? We’ve never done this before? What are we to expect? How much stock do we have to reserve for this?” Instead of hiring a massive warehouse fulfilling our stock, you know? But it was a big aspect of just seeing what happens, what are we going to do with this channel.

RHZ: Yes, so two very different reasons to ship from store, but hopefully what we can kind of summarise from this is really increasing speed of delivery or adding greater flexibility, simply in the case of PETstock, reducing shipping costs , and really getting that customer experience through shipping. And finally the potential to then enables more delivery options. So I guess, first things first, enabling online from MyHouse, and then in the sense that Andrew also then enabling multiple options for delivery speed is quite critical.

What Were The Biggest Barriers?

RHZ: Thank you for sharing that. But obviously, with the impetus to change comes the challenge, so I just want to talk a little bit about what barriers you faced? These could be barriers which are technology specific, barriers which is about staff, are we still about competing priorities for attention pointed just a little bit earlier. Nat maybe we’ll start with you on the challenges there. What challenges did you face, what barriers?

NR: Firstly, it literally finding a solution that met all kinds of needs, from the finance department, how did they handle the recording and budget? Where do we allocate budget, to how do we treat the web store as its own store, things like that. On the other hand, when it comes actually to enabling our stores to ship orders, making sure that their computers and software up to date so they can actually use systems like Shippit.

And in addition to that, it was finding ways to train new staff, making sure that all staff across all these stores, there’s a lot of people involved. So making sure they’re actually all on board, they all know what they’re doing, they’re all being consistent on how they tackled it, for example. And also how to remotivate them, how do we actually get our in-store staff to be fulfilling online orders and fixing issues that come up.

RHZ: And I can imagine that’s kind of one of the core challenges that get people into the battle, it’s what we find in that change management piece is so critical. So I want to get into that maybe in the operation challenges area, but Andrew, did you find similar barriers, or did you have different barriers when you were getting started?

AG: I suppose we were a little bit fortunate when we talk ship from store around the technology bit in that we wanted to go to market early on Click and Collect so for us what underpinned that was the fulfilment logic that we built into our ERP, which made the technology bit when it came to ship from store a lot easier. And certainly going to market, first with Click and Collect that really broke down a lot of barriers with our store network as far as the impact that online was having. So that certainly helped a lot, but certainly when it came to shipping from store, there certainly was a lot challenges around the budgetary side, who pays for what, how do we build an appropriate roster, and who bears that cost all those sorts of things.

And then we have a portion of our network as a franchisee, so we went to our best franchisee, and the initial trial with them, and I think we rolled out each site methodically with a very detailed plan with the same people involved, so that we were basically using consistency in our message, and the energy, and the positivity as to what was involved. And certainly from a franchisee point of view, the opportunity to then suddenly identify addresses where they know they have a physical footprint, and then to be able to put in a dog wash voucher or a grooming voucher or a little surprise and delight that helps just build that relationship with the customers, they saw that as an exciting opportunity. So that certainly helped, but we worked very hard with our retail operations team.

We do have an advantage in the sense that I actually built that retail operations team, so they obviously know me quite well, and that was a big help in the sense that we did have a strong relationship, so it was very much the core to the success, very much having the retail team buying into it and understand that view from the customer as opposed to the channels and such, and that was sort of important to us to ensure that we incorporated everything. And really, even HR, that was important that we got them on board early from a health and safety point of view, and that definitely made the whole project plan move quite seamlessly, especially as our first site was quite very much a demo.

We’re trialling different kinds of trolleys, different heights, the benches. So for each site we set them up in a similar way, but we also had them in a way that they could be changed around a little bit depending on the individual staff’s needs. So for me, I might have a priority of picking from right to left, but the store might have a priority of going from left to right. So for us we weren’t too worried about that, but we just wanted to give them the basic framework to work with. And there were the main challenges, it was the operational side.

RHZ: Understood. So I guess what I’m hearing here is no mean feat, but not for the faint hearted. It is a massive piece of change management, when you’re working with buying the stores that you both sort of had to save. What I kind of really heard being the main themes having the right enabling technology on kind of the foundational layer. That to me sounds like it’s a bit of work in that that’s not going to be the core challenge here, and the biggest barrier really is around the staff, and staff training, and the impact assessment. But those all sound like it really is about aligning everybody behind the view of the customer, and giving the customer ultimate flexibility where they choose to buy from, and kind of working back from that.

What Were The Operational Challenges

RHZ: So then I’d imagine once you’ve overcome all these barriers, is probably something which is around once it’s in market, how do you actually work through the operation? So, Nat, can you shed some light on the operational challenges you faced. You’ve overcome these barriers, you’re aligning management on the change, but now you’re actually rolling out the store, and what are these challenges that you faced?
NR: I suppose one of the biggest challenges is making sure that your store has enough stock. What we actually do at MyHouse was before fulfilling from all stores, we selected 13 stores in good position that couriers would pick up from that had enough storage to give them extra stock. And then it really comes down to making sure that stock is always there. So for example, communicating a lot with the marketing team, “What are you going to online? Are you going to push-out that one-day offer?” How are you going to handle that situation making sure that you can either ship from the warehouse directly, or you have such stock in your store so you’re ready and you can continue to give to customers the best experience, and they don’t have to wait three weeks, you know because everything fell apart. So making sure these kind of things run.

And also keeping your staff motivated. Making sure that your staff are actually rewarded for online. So you don’t really want to look at it like the web is actually competing against the store, because then there’s a store budget, for example, and you want to make sure that you have a system in place where your store staff are actually motivated to fulfill those orders and fulfill them the best they can every single time.

And also for the staff to communicate. We’re dealing with technology, that’s is how staff know what’s fulfilled. In those situations we really need a team that knows to communicate that to you and tells you when there’s anything that’s not working. There’s constant communication. And instilling in staff the feeling like they’re actually part of the head office, we’re actually one team. Just really encouraging them.

AG: You said a little bit about what you did to help them feel like they apart of the online team?

NR: Yes, as simple as literally as on the launch day of shipping I send everyone a big box of donuts. “This is awesome, you guys are really special, can’t believe we’re going live today.” Something like that. You know, calling in, going in to store, always keep that personal relationship alive.

And then going in by the end of the year, we’re boarding the store, for being a web store, and in our case, every store in fulfilling work orders. Just giving them incentives, things like that.

RHZ:  That’s very helpful. And Andrew, what about the operational challenges for you guys? You’ve quite a methodical plan that you were rolling out to assess  OHS impact everything was ready to roll. What challenges did you face?

AG: Certainly, donuts must be the key because we do things like that as well. A big thing is, and for us, is it can be quite tough doing the pick and pack, and there can be heavy bags, and big boxes and things like that, so certainly the staff appreciation side of it was a big part. We had regular communication, and we needed to ensure that we had really clear accountability. And really was born from that was the greater need to bolster our customer service team and ensure that they’re right across how our fulfillment and how our system works as well. So that took a bit of pressure off stores, so ideally the store is focusing on the customer experience, they’re focusing on the pick and pack, and personalising the article that’s going out, and any challenges that any customer, whether it be delivery issues or they find something’s broken or something like that, that all comes back to our centralised team. We started off with daily communication, and it becomes sort of more once a week as far as that centralised… We now have someone who solely looks after each of those dispatch senders, and they’re filling information through a couple times a week as far as how they’re going we’re trying to integrate their KPIs in with their store KPIs so they’re effectively working towards channel KPI, or the overarching omni-channel assessment, so it’s all incorporated into their day-to-day and it’s not our store, and online, and we’ll just get to online when we can. So that was a big thing. I agree with Nat that the more we could just basically say thanks and just try to make them really feel good about what they’re doing, and really say thank you for the effort they’re doing went a long way.

RHZ: That’s really great. I picked up some really clear things around… more importantly I get the motivational aspect, and making sure that you’re controlling everything you can control, starting with the trial stores, then the selected number of stores to fulfill from. So controlling the variables that you’ve got in front of you. Opening up the lines of communication between stores and head office, and making it an official roll out which everybody must abide by. And I think, Andrew, you kind of worded it quite well, which was incorporating it into the daily schedule for the store’s retail operation heavily involved in getting the stock off the ground as well. And then supporting it as well, making sure that customer service and store staff, and everybody is across the same sheet.

Thank you for sharing that. I think there was a little bit around stock allocation to the right location as well, and making sure that you’re not relying completely on technology so there’s a bit of human intervention involved. And then finally, reporting capability, so making sure you know what you’re going to be measuring, making sure you know what you’re reporting on daily, that you can start to assess whether you’re actually doing well.

What Were The Results?

RHZ: So then I guess the question everybody has in mind is did it actually succeed? Was it any good? I would actually want to kick off on that one.

NR: Yes, so for MyHouse, absolutely, it was a great success going into store fulfillment. Our delivery time produced from about two weeks to one to five days because we now have a store close to you that could send you your order so couriers can pick up on the same day and deliver it, which was an amazing customer experience, and our customer feedback show that, like, it’s literally flying off the line, that’s just fast delivery. We’re really happy with that.

In addition, it actually reduced the order fulfillment time by 75% for us because by implementing Shippit the system was a massive upgrade, from what we were doing before. So it’s actually taken our staff much, much less time to book in an order, and because we’re all connected to the same system where each store access Shippit as well. It was really, really quick in saying you have to have that stock up and sent out now, rather than picking up the phone or sending a million emails as we did before. So that’s been a massive result as well.

And in addition we’ve saved 70% on costs on each order which was massive as well.

RHZ: Great result. I guess MyHouse was happy with that one.

NR: Yes, and customers are happy. So the transparency that Shippit offers, people can track their orders, and all of that. And it’s all in the one system that we’re using.

RHZ: That’s good to hear. Andrew, what about yourself?

AG: For us our initial focus was on improving the experience, so for that we measure that through our Net Promoter Score or NPS. And we’ve seen increases of about 25 points on our Net Promoter Score, and certainly our feedback, and work around that are all heavily weighted around delivery, so we’re really excited about that because it was an area we needed to improve on.

And I suppose, speaking from a financial point of view, we’ve certainly seen an improvement of about 10-15% on our freight costs, and we think that there’s still a significant improvement to be found there in the sense that our initial focus was to improve speed of delivery, and then start to optimise our freight component. And we’re sort of that stage now where we’re drilling a bit deeper into how we can optimise our network to improve the actual costs of freight. But certainly, as far as what our initial game plan was around improving the experience, we’re pretty excited about what we’ve seen.

RHZ: Tremendous results, guys. Well done. So it’s pretty obvious that strategy does work if it’s done right. I think all those sort of benefits of using the store network really did come to fruition. So staff engagement, customer experience, an improvement in Net Promoter Scores, which is a tremendous thing, and everybody’s focused on that little NPS. Delivery time reduction, fulfilment time reduction, so I think we’re in an era where there’s no reason why you couldn’t use stores to ship from. The question is really about how you do it, uniquely for your own environment. So great job Nat, and Andrew. It’s amazing to see numbers like that, so well done.

How To Nail Ship-From-Store

RHZ:  I think we’ve got maybe a minute just to cover some tips for supporting the store, if you could give tips to anybody out there thinking about using their store as a mini distribution centre. Feel free to give them your sage words and wisdom. Andrew, Nat, whoever can kick off.

AG: I’ll go first this time. I think it’s important that it’s designed around your specific goals, and the business goals, and every business is different. I think it’s important to ensure that there is consistency, and it’s one thing to build the system, and there are some terrific software app there that they can be easily bolted on or you have the capability to build it yourself, then that’s terrific.

Fundamentally, you can’t just turn it on and expect the store to execute, and I think it’s important that there’s consistency in approach, and that what goes out the door is embraced by everyone because, certainly for us we’re in an emerging industry, and that’s a real advantage to us, especially when you want to take on organisations like Amazon. And when we talk Amazon as a strategy, quite frankly we just see that it’s really an approach to take on any threat and we just happen to call it Amazon, but the things that they won’t be able to do as well as us is that emerging side and in that personalisation, and things like that.

And that’s where we need to play to our strengths because it’s very difficult to outprice an Amazon, and the logistics side from their end is a little bit unknown, but if we’re going up what they’re currently doing, obviously they’re going to be fairly sharp at that to. So it’s about playing to your strengths, just making sure that the execution side of it is right, and you don’t necessarily to dispatch from every single location. I think it’s about starting off what you can do, and making sure that you’re good at it, and then start to scope where there’s an opportunity. That would be my take.

NR: I think, to add to that, I would definitely say plan it well depending to your personal goals, whatever your company’s heading for, but at the same time I’ve always tried to view our team as my customer as well. But you know, not just trying to look at how it can actually the customer, which is absolutely crucial, but also looking at your staff like they’re your customers as well. You need to make sure that they’re happy with the solutions that you’re presenting, and that they’re motivated and encouraged. And keeping the communication open is a really big advantage. Continue to communicate and make everyone feel part of one thing,

RHZ: Thank you very much, everybody. Thank you to Andrew and Nathalie. Thanks to NORA as well.

Shippit.com is the shipping engine for modern retail. Learn more about our how our software can save you time, money and keep your customers happy.  

How To Take On Amazon And Win

Amazon is big, scary, powerful and coming to Australia in 2018, so you could chose to believe that your customers will inevitably jump ship, or you could think tactically, grab your proverbial sling shot and show Goliath whose boss. See, Amazon is like that friend at school who was good at everything, except then you came to realise that no-one is good at everything, you just had to seek out their weak spots and use them to your advantage.  

According to Paul Green, Founder of the National Online Retailers Association, at this year’s Telstra Innovation Summit “There’s plenty of space between what Amazon does and doesn’t do to provide opportunity for retailers to compete”. Whatever the size of your business, the trick is to work smarter, not harder.

Or to put it much more bluntly, if you want to compete with Amazon, or any other big retailer or marketplace for that matter, you need to differentiate or die. This may seem obvious (and maybe a tad dramatic) as product differentiation is intrinsic to all great retail, but Udayan Bose, Founder & CEO, NetElixir, discusses differentiating your offerings and experience, stating “customers will buy from you based on who you are, and not what you sell”. 

So, with that in mind it’s time to get down to business. Here is how David can beat Goliath in 21st century retail:

Narrow your niche. Amazon sells pretty much everything, fact. Hopefully your business sells a few things, that you’re good at and that’s your niche.

Once you’ve got your niche, dominate it online. How? Through kick-ass content marketing. See, since Amazon sells everything they struggle to rank for keywords. So there is a major gap you can fill. Need a content marketing crash course? We think this one is great

Know your niche. The good thing about having a niche is that you can then become the industry expert, or the guru if you will, of said niche. Use your digital presence to give your customers consumable content; blogs, FAQs, how-to videos, relevant and engaging social media.

Be the place your customers turn to for expertise; a destination where they can buy a product, learn how to use it and be part of a community to talk about it. Now, Amazon, Walmart or any of the other giants definitely can’t do that.

Give the people what they want. And what the people want is a fantastic online browsing and user experience. A winning e-commerce site should be functional, fast, 40% of site visitors say they’d abandon a webpage that takes more than three seconds to load and fetching (or aesthetically pleasing, but we needed another ‘f’word).

Making customers come back is all about top visuals, fast loading times, ease at check out, optimising for mobile (Paypal found that 71% of Australian consumers are now shopping on their smartphones), great navigation and great content. And for the love of god have a strong search function within your website! Check out The Academy Brand whose search functionality predicts possible products as you type in the first few letters of the word – now that’s what we’re talking about!

Shipp-it better. See what we did there? Credit where it’s due, Amazon are good at shipping, but that’s not to say it can’t be done better…you can provide an awesome shipping service without the customer even knowing they need it, just by exceeding expectations. How about delighting your customers with Shippit’s branded tracking page feature (follow this link (link to schedule a time to talk with sales) to find out how), or deliver before the customer is expecting it, by shipping-from-store on the same day.

Competing with the big players is going to mean pulling out all the stops and so same-day delivery isn’t an option, it’s a necessity. The little things make a big difference, go the extra mile and your customer will be pleased as punch.

Be local (yes, this does apply to online too). By local we don’t mean in the corner shop sense, we’re talking ‘local’ as in a service that shows your customer that you’re a human being. Provide personal care, answer emails quickly and maybe even (shock, horror) pick up the phone to answer their query and proclaim how much you value them. Flattery will get you everywhere and convert visitors, to customers, to fans and followers.

Thinking that your sales and marketing team sells your product is sooo 2016, this is the new era of retail; an era where a happy customer becomes a brand advocate and the brand advocate has a far bigger buying influence on their peers than any sponsored insta post.  (

So with Amazon heading to (in their own words) “destroy the retail environment in Australia” in but a few months from now, don’t try to directly compete, it’s time to work out your strengths and differentiators and OWN them by singing to your own tune, as Oscar Wilde put it ‘be yourself, everyone else is taken’.

Shippit.com is the shipping engine for modern retail. Learn more about our how our software can save you time, money and keep your customers happy.  

Insourcing Your Core: Why These High-Growth Retailers Chose Not To Use 3PL

To 3PL or not to 3PL, that is the question. Third Party Logistics (3PL) has grown tremendously in recent years, mirroring a dynamic and ever-growing e-Commerce market. Whilst 3PL fulfilment can be a godsend for a growing business, it is not a one-size-fits-all solution and many businesses question whether out-sourcing such a critical component of an online business is really the right choice. Given that this decision is usually made by retailers planning for substantial growth, making the wrong choice can have a devastating impact.

Learn from two extremely successful online retailers, St Frock and GoLights who have made the decision to in-source what they believe is the core operation of their business.

What follows is a full transcript of the webinar. If you’re short for time, skip straight to Panel Introductions, or read on for five key take-aways:

  • The Outlook:When it comes to logistics and fulfilment, the experience of new generation retailers is limited. In the days of larger, sort of omni-channel retailers, logistics is the backbone of their business. The focus of the next breed of retailers is on growing and curating a brand, creating an experience for their customers, and on channels like social media to create a successful business.
  • A Core Operation: Fulfilment can be termed, the “core” of any online business. Whether a retailer makes it or not, really comes down to these three critical areas in fulfilment: stock availability, dispatch speed and shipping speed.
  • The Benefits: The key logical benefits when it comes to outsourcing to a 3PL include, network efficiencies, scalability, flexibility and being able to tap into logistics expertise and best practices. These work very nicely for retailers who potentially have a simplified product range.
  • Not A One-Size-Fits-All Solution: There are some nuances and complexities around retailers that would really be a challenge for any third party logistics providers to even be able to modify their processes to service them, without adding costs to their own business as well.
  • Tips On Getting 3PL Right: On how to do 3PL right, it’s important to see if their other clients have similar products and business sizes, having a testing period and being clear on obligations and expectations for an exit plan if things don’t work out.

Read the full transcript below.

Introduction

Rob Hango-Zada: A  big welcome to everybody who’s joined the webinar. Please be gentle on us, it’s our very first webinar. It feels like a backroom production, but we’ve got plants and we’ve got people, so we’re good to go, I guess.

We’ve got a good mix of people on the line. So we do have telco providers, we’ve got retailers, we’ve got solution providers, and a really broad array of attendees. So, you know, I think what James touched a point was, this is a really critical point for a lot of retailers. There’s not a lot of experience that new generation retailers have with logistics and fulfilment. If you think about the days of larger, sort of omni-channel retailers, logistics is the backbone of their business. If you think about it, new generation, new breed of retailers, their focus is on growing and curating a brand, creating an experience for their customers, and focusing on avenues like social media and the like to really create a successful business.

So the whole reason that Shippit exists, and the whole reason that we’re having this webinar today is to really empower retailers to make the right decisions for their business, and to also help them empower them through the journey of creating successful empires themselves. So I’m really thankful to have both Sandradee and Nick in the call today, and I think you’ll learn a great deal from their experiences. So without further ado, I guess, you know, any webinar is only so good as what you can take away from it, so I’ve been very practical and tactical. What I think you can get out of today is really understand the importance of the fulfilment process on your customer, and your business.

Secondly, really about the key benefits of keeping fulfilment operations in-house. There’s a lot of education in the market about the benefits of taking fulfilment out to a 3PL provider that not a lot for the case of, are keeping internally. And it can be a really big black box for a lot of people. So we’ll really like to take the lead on that and understand it a bit further. Also, how to set your business up for success if you do decide to go the route of in-house fulfilment.

And then of course, you know, there are some remarkable partnerships in markets between 3PLs and retailers. And it really is about making the right partnership stick, and that works for anything in the logistic side, partnering with the right carrier is critically important to represent your brand, just as much as it is partnering with the right email provider, partnering with the right website provider, whoever it may be.

So just collecting some tips from, I guess, those that are with us, and then even extending that to those that are on the call with their experiences too. So we’ll talk you through how to choose the right 3PL provider for your business as well. Keeping it nice and open.

Webinar Structure

So the way that we’ll structure the webinar is with three key modules. The first is really explaining why fulfilment is a core activity, and kind of talk a bit about what core activities really are. Secondly, we’ll move to the case for 3PL, you know, and what considerations come to mind and why a business would choose to outsource. And then we’ll come to learning from both St. Frock and Go Lights who have experienced a 3PL type of fulfilment relationship, and have also experienced the other side of the coin of owning that fulfilment journey in-house as well.

So there will be a panel discussion, we’ll go through a few questions there, and then what we’ll do is we’ll flip it over to the audience for a bit of excitement. You know, I’ll try and do my best as a panel, kind of moderate a bit. Obviously I’m no Paul Greenberg, but please bear with me.

Fulfilment As a Core Activity

So to kick things off with understanding fulfilment as a core activity. So no doubt, if you’re an online retailer, fulfilment’s critically important to you. Making the sale is a difficult journey, driving conversion to your website, having the right product mix, all those are critically important to achieving your kind of success with the customer base. But really, the rubber doesn’t hit the road until you get to the, what we call the “arse end” of eCommerce, which is the logistics space. And that’s getting the products to the customer’s hands.

So let’s go on a bit of a journey before we get stuck into things, you know. If you’re somebody with an idea and you’re sitting at home thinking, “You know what? It’d be great if I could start selling candles online.” You know, you start your business, you start looking for suppliers, you start thinking about how you can construct this, how you could style it, what the brand could represent to your customer. You may launch on eBay store, you maybe launch market stalls to test the product fit. The product seems to work, people are talking about your product, it starts to grow. As time progresses, your business starts to gain momentum. Now, you’re starting to stare down the barrel of what could consequently become a really large business, but you’ve got to make the right decisions.

That is where it’s quite important to start thinking about your fulfilment. So what used to work for you as a little hobby, now probably knowing what works for you, so storing things in your garage, you’re probably starting to outgrow that. You know, finding the right office space, which is a mix of office people and product, and you’re now tripping over products in your office. How do you take that and how do you turn that into a scalable business to the photos that you see, the likes of the Catch Group, the likes of Amazon, even. And you think about those types of warehouses. How do you make that leap and how do you prepare for it?

The other question is, at what point in time do you do it? Because you kind of got to build the plane while it’s in flight, so I think those are the types of considerations that people come to us with looking for a solution on. And this is exactly what the experience of both St. Frock and GoLights have kind of gone through.

Critically, what we find is that sustaining growth lies in three core areas. So if you could really think about logIStics, you know, fully modern business for new retail, as it’s kind of framed in the newer language. You know, it’s about three critical things. The first is about stock availability. So selling stock online is terrific, if you don’t have the stock to fulfil that order, I think you’re in a little bit of a mess.

Second piece is about dispatch speed, and this is what separates good retailers from bad retailers. Getting products out to customers and in an efficient manner, not taking too long to get products from the time an order has been placed to the time the carrier picks it up. So, you know, based on all the retailers that ship through our platform, on average, 25% of the total time it takes the delivery to get from order placed to completed status, is sitting in the dispatching progress piece. So if you think about that, a quarter of the time that customer is waiting is due to the business’ ability to get a product out.

Three-quarters, however, sits with the carrier, so that brings me critically to the next point, which is shipping speed. And shipping speed is quite important. You know, today, driving conversions from online sales is really rested in standard deliver. But, you know, the expectation of the modern consumer is, you know, fast delivery, different delivery options, you know, what about same day, how do you enable that? What about next day, how do you enable that? And what about even faster options that matter as we start as we look into the future, with a lot of innovations that’s happening, the point-to-point delivery space as well.

So critically, you know, whether you’re going to make it or not really comes down to these three critical areas in fulfilment. And this is what we term the “core” of any online business. I think if you’ve ever heard any really successful online retailers speak, they always talk about this fact that they’re a logistics business first, and then whatever product they sell is second. John, when he talks about this all the time, you know, there are logistics businesses who happens to sell fridges. And at the same way we’ve got a logistics business that happens to sell dresses, and a logistics business that happens to sell lighting.

So what are the consequences of getting it wrong? We talk a lot about conversion when it comes to the online sale, but we don’t talk a hell of a lot about retention. All the things we talk about here at Shippit is, “What types of activities do drive retention?” And once there’s been a bit of research on it, nobody’s got the hard and fast facts on what actually happens to bad delivery experiences.

If you’re an online retailer, you’re probably pretty familiar with customer complaints. But there’s only a small fraction of customers who ever actually complain. the majority of which who have a bad experience will never complain, or simply silently slip away into the dark and not purchase again. So lifting the lid on that, what we do find is a negative delivery experience, or a negative fulfilment experience results in about two-thirds of all those customers who have that bad experience vow never to buy from your brand again. Two-thirds. Just think about the cost of acquisition, how much time you spent curating your product mix, how much time you spent crafting your brand, only to leave it in the hands of a carrier provider, who results in a negative delivery experience.

So that’s something that’s really critical to understand here. And then, you know, with the age of social media, I don’t need to say it when they have a negative experience, they jump on Twitter, they jump on your Facebook page. You know, they leave Google reviews about the product and brand experience itself, and it can really tarnish your brand. So these are really critical things to get right when it comes to the right partners in the fulfilment journey.

So how important is fulfilment on the customer experience? Take Jeff Bezos, right? I’m sure it’s not the first time that somebody’s talked about Amazon and how they fulfil and all that sort of stuff. But a little-known fact, or I guess something that’s coming to light a lot more prevalently lately is that Amazon actually own end-to-end logistics process to truly delight the customer. So I think last year they took a lease out on 20 Boeing 747s to cross the nation of America to deliver their products, to hit their two-day shipping promise. And you know, they own their warehouses, they own the logistics network. They’re really closing the loop on what is that customer transaction. That’s how important fulfilment is to Amazon. So if we could kind of take a leaf out of their book and understand what they do well, there’s so much material out there that if you read up on it, it comes down to three critical things in their warehouse.

So there’s a lot of philosophy around a customer-experienced focused warehouse. Amazon’s a big proponent of customer experience, because that’s what keeps customers coming back.

So the first thing that I have in every warehouse is s traffic lights system on every SKU that they carry. So what that traffic lights system does is it tells them when stock levels are critically low. So touching on that core capability of stock availability, if an item enters that red zone more than once, if anyone’s familiar with Six Sigma, they jump into a Kaizen process. Kaizen workshop, which basically identifies how they can prevent that root cause from ever happening again. So they’re actively working on a daily basis to minimise their out of stocks.

Secondly, their warehouse is organised by a random array of product. So pickers are able to actually put new stock into different areas within the warehouse, and what that does is it speeds up the efficiency of their packing process. So any smaller retailer who’s probably tuned in today, you’re probably looking at your stock room, or your warehouse right now, and you’re thinking, “How do I arrange all of these different products to enable picking inefficiency?”

There was a bit of a YouTube video that kind of came out a little while ago about Amazon’s served bananas next to milk, next to laundry detergent, and why that is the case in some of their dark stores. And that really is because it speeds up the picking efficiency for any pick-up. There’s a bit of science behind that.

And the third piece is a two-day shipping guarantee. So it’s not two days for a carrier to get a product from Amazon to the customer. That’s two days from the time that order is placed to the time it arrives on the doorstep of the customer. So if you could take anything away from Amazon and the way that they’re looking at the market, and the way that they’re going after customers, it’s about maintaining focus on those three core areas by looking at it from a customer’s viewpoint.

If you haven’t yet, go out and get this book, “Delivering Happiness,” which is Zappos, for those that don’t know, Zappos is the world’s largest footwear retailer. So a massive proponent, particularly Tony, the CEO of Zappos and founder, is a big proponent of delivering happiness and about the customer experience. So they talk a lot about the core, and a lot about what the core is to run my business. And they say critically, “Never outsource your core component.” They’ve got a very strong view and, that’s kind of, reading about this story will help you understand why, but they also view call centers, keeping them in-house is critically important. And rather than burying your contact number, kicking it on the forehead of every employee and the forehead of every customer so that anyone can look in the mirror and give them a call. That might scare the pants off a lot of online retailers because that means you’re not actually limiting the number of calls you get, you’re actually increasing them. But they thrive on that, they see that as core to their innovation, the same way that they view warehousing as core to their innovation as well. So if you haven’t yet, go out and get this book, it’s fantastic.

So I hope that kind of frames up fulfilment as a core activity for any online business. Now what I want to dive into is the case for 3PLs. So I guess the deciding factors as to why you’d want to move into a 3PL, or choose to change your fulfilment practices.

The Case For 3PL

So any literature will kind of show this very clearly, and there are some key logical benefits when it comes to outsourcing to a 3PL, and these work very nicely for retailers who potentially have a simplified product range, or have found the right path.

The first thing is network efficiencies. So traditionally, if you think about logistics space, it’s all about throughput and all about economies of scale. So as a small retailer, how do you tap into those efficiencies in a sustainable fashion, and in a way that you don’t have to have the massive amount of business to do that? So it’s about optimising space so you don’t have to go on and sign a big lease on a massive warehouse that you can potentially grow into one day. But you can tap into the space that already exists. How do you tap into high-frequency shipping relationships so you can get better rates? How do you hire staff and scale up staffing quickly? How do you get the right pallet racking? How do you get the right facilities and infrastructure inside that warehouse? So that’s really the bread and butter of the 3PL, and that is the core reason why it’s a strength of a proper third party logistics warehouse.

Second piece is about saving time and money. So, you know, the theory is that when it’s your core business, you should get sort of the fulfilment piece right day in, day out, then you don’t have to waste your time trying to figure out things that have already been solved by others. So reducing your time and energy and money spent on running a warehouse is another core business.

The third one is about expertise in logistics. So logistics is really a tricky space, and traditionally, you’d need a PhD to really figure things out in the logistics space, but it’s all in the name and logistics is quite a logical business. And 3PL providers certainly have that worked out because they run a tight ship. It’s a very difficult space to be in, along with shipping providers, it really is where the pressure and the rubber starts hitting the road, so having the right expert is really critically important. And many 3PLs do this very well.
Scalability and flexibility. So if you happen to have a sales spike and you need to start bringing in more stock, where are you going to put it? 3PLs have enough space to be able to move things around, and with the right seasonal mix of the clients, some clients will contract, while other clients will expand, and they’ll fit nicely within a shared warehouse environment.

And the fifth piece is, obviously, being the bread and butter of that business, they’ll continually improve. So their picking practices will get better, their shipping practices will get better, their warehousing operations will get better, always improving and focused on those best in class practices.

Now, in most cases, this works quite well, but for some businesses it may not work at all. So in the case of Zappos, for example, they’re decision for bringing it in-house, it’s really because they found they had a quite complex business, and they really needed to be as close as possible to their stock. And there’s an underlying current at times where you may feel that a 3PL’s focused more on efficiency, whereas you as a business owner is more about the customer experience. Think about handwritten cards, and you know, the time you’ll take to pack an item. Some 3PLs can actually do that whilst others will choose not to and simplify that journey. So this again comes back to finding the right partner because they could at times be competing priorities that do exist. But obviously the more complex the business, and the greater the focus on being closer to the product, is kind of building the case to more or less keep that service and experience in-house.

Panel Introductions

So at this point I’m going to invite the guys from St. Frock and GoLights to share their experiences, so we’ll shuffle in as we can. I’ll get them to talk to you about their journey as well.

So, Nick, you’re free to come on in, buddy. Say hello to the people waiting at home.

Sandradee Makejev: Hi!

Nick Nicolaou: Hello.

Rob Hango-Zada: It’s all great, come on in, it’s nice and cozy over here at Shippit HQ.

So, I’d like both of these retailers to introduce themselves. I’m sure you’ve heard about them before, they’re quite prolific in the eComm space. And, I really want them to kind of inspire those that have joined the call and really help empower everybody that’s joined the call today.

Sandradee Makejev: So St. Frock’s started out at Bondi markets just over eight years ago. It used to be a little bit market store, and then we had the dust storm in Sydney, so I thought maybe I should start retailing online. A few experiments later, I was doing really well, so I quit my PR marketing job, and then I was just selling online. We opened a store that did well, we relaunched the site, and that was great because it helped increase sales. But 2013 was a big year for us because there was only about five people that used to work at St. Frock to run the markets, the store, and online. We were making about, in the beginning of 2013, we were making only about $20,000/month online, which was quite small. We did a few things for advertising and we were able to have 2,400% growth in just under ten months, so we were making, like, half a million dollars by the end of the year. We had to find ourselves a warehouse, we had to teach ourselves about, I suppose just warehousing, shipping. It was like a massive learning curve, but we took that all in our stride, and then year on year we were growing 100% each year, which was also very challenging as well. So, and I know I mentioned 35 staff, but today we have 45 staff helping us around there in the high season, and then it drops back to about 35 in the low season.

I absolutely love it, I love the problem-solving, I love the challenges, I even love the craziness of it all. It’s not for everyone, but it’s been a fun ride.

Rob Hango-Zada: So that growth seemed to be, I guess would have kind of shocked you in the early days. I mean, how did you get from 2,400% growth? I mean, how did that happen?

Sandradee Makejev: I think when you are in it, I was working seven days a week at that time, so I was living and breathing it, and just taking it in my stride. And I suppose, I don’t know, just wanting to, like, I knew that we were going to be expanding, and I just kept setting things up as I land, so I was always thinking about the future, as almost building and doing, my whole process.

Rob Hango-Zada: That’s amazing. And I guess now it’s sustaining and running this massive sort of business, an office full of 35 or 45 people. I mean I can imagine your challenges are a little bit different these days than what they were when you were at Bondi markets.

Sandradee Makejev: Definitely. The Bondi market, that was just me and one other staff member. But today I work with an amazing team of women and a few men, and I think, as you grow as a boss, I was very green back then, so I used to do everything myself. But now I work with an amazing team that each person is empowered to run their department, and they do it so well. I’m just amazed.

Rob Hango-Zada: That’s fantastic. Well done. And then it brings us to Nick from GoLights, so tell us about the story.

Nick Nicolaou: So our story is not too dissimilar as Sandradee’s. We started the business at the back of a family backyard. We would do five and ten orders, we had an eBay store. At that point we decided to launch GoLights, have our own website. We graduate to sharing a warehouse with a roofing company, with a room not too much bigger than this. You all can’t see but it was pretty small. So you know we experienced very rapid growth. We had to teach ourselves everything, whether it had to do with shipping, or marketing, technology, customer experience, even lighting. I mean, we weren’t really in the lighting space previous to starting this business. So, very steep learning curve, and we had to learn, what, you know, I think Rob mentioned something about building a plane while you’re flying it. It actually feels that way. So we kind of progressed, and the business kept doubling every year, and we kept trying to find ways to grow, but also just to take that growth and not having any experience running a business of that size, you know, most small businesses fall into this kind of abyss of doubting yourself, not really backing yourself to do certain things. You start looking for experts around you to help, you ask advice, you meet other people in the industry. And we did that fairly early on, and at that point we decided that we needed to look at how we could streamline our processes, and one of the things that we decided to look at first was warehouse operations, what we were good at, what we were bad at, and what we should do with it. So I’ll leave the introduction, then we can move on to some of the juicy stuff.

Rob Hango-Zada: So you mentioned that, somewhere in that mix, that you didn’t know much about lights at the time, so you had to learn that in addition to everything else.

Nick Nicolaou: Yeah, that’s right. We wanted to be in the eCommerce space, we wanted to be in the importing game, just for some macro reasons that we thought made sense to try and leverage ourselves to those two areas, and then the product became the third piece of the puzzle. We looked around at different categories, and we liked the lighting space, construction was booming, people became very power consumption-focused, and the increase in power costs. So in any event, one of our co-founders is an electrician. By trade, he had some insight into the lighting category, so we chose lighting, and yeah, we all kind of learnt as we went, and became experts in the product, which I think you need to be to be successful. If you don’t know your product, you’re probably not going to get there in the end.
So the learning curve has been very steep in many categories, but especially in the product category.

Rob Hango-Zada: Amazing.

Sandradee Makejev: Well done.

Rob Hango-Zada: Thank you for sharing that. And look, I’m really honoured to be in the company of two amazing business owners and entrepreneurs. So let’s kick in to it.

The Decision For 3PL

So you’ve both experienced a quite significant growth earlier on in your journeys. You obviously both didn’t have a logistics background, and really the eCommerce background. So let’s sort of start with the first question, I mean, why the decision to outsource fulfilment at that stage, and can you run us through that, maybe Sandradee can kick us off?

Sandradee Makejev: Yeah, sure. The big thing for us was that we were growing 100% year on year, we were worried about the scalability. I’m also worried about the costs involved as the, like, doing it in-house ourselves originally. Basically we thought if we could outsource, we could focus on our core competencies and create the business domestically and globally. We thought that using a 3PL would be more efficient and improve our customer experience. When we thought we could save costs on shipping, warehousing, and staff, we also thought that international shipping would be more cost-effective and seamless, and basically we were running out of space.

Rob Hango-Zada: Yup, and did you find that you guys were looking for similar things? I mean, was cost really important for you guys at that point? Were you looking at improving customer experience, or what was that prompted you guys to look at 3PLs?

Nick Nicolaou: Rob, all of the above. Al of the above. For us, one of the main considerations was we had strategy that we were going to roll out over the next few years. And one of those strategies involved possibly setting up a showroom to be able to showcase that lighting. We were getting started importing some of our own products in the decorative lights space, and we felt that if we had a physical location, even just a boutique showroom that could drive sales online, and get the brand out there.

As a result of that strategy, we had decisions make in… we’ve run out of space in renting a warehouse in Botany in Sydney, which was about 300 square meters office and warehouse, two levels, and we didn’t have any space to put the stock that we were importing. The goods were somewhat bulky, so that became a very critical point to consider. Furthermore, our lease was running out and we had to make the move, so we made the decision to outsource a warehouse operation to allow us to lease a property where we could have our office and our showroom. It was very difficult, especially in the Eastern suburbs of Sydney to find a property where we could have a showroom, a warehouse that was big enough, and office space in the same place.

So for us it was either-or type decision, and we thought, we’ll outsource to a 3PL warehouse operation, for the reasons that we all discussed and focus on rolling out a showroom and putting our team into a nice office space. So we kind of felt like we were in a situation where we needed to make… We were at a crossroads for the business. Strategically we thought it was a good play, and we did a lot of research, we became students of business, and business models, read tons of books, and I believe in the school of thought that you should always outsource to experts. You cannot be an expert in everything you do, and that is the way to scale your business. That still holds true and we still believe that. So ultimately that’s why we made the decision to move to a 3PL.

Rob Hango-Zada: Great. So you mentioned something there in the Sydney house crisis, or Sydney property crisis, all that sort of stuff, so I think that’s big enough for most people, but, yeah. So if I can summarise what we just heard is, obviously it’s sustaining the growth, momentum, and kind of staring back at the boxes that are staring you back, the poles and dresses, and it’s kind of one of the bases that prompts the need to change in operation. Obviously, to save some time and really focus on what we’re good at lead the logistics back to the experts as well. And obviously, one thing that I’ve picked up from Sandradee was something around speed and agility as well, so that you can focus on your core, sort of, business core priorities. Getting the showroom, in Nick’s case, focusing on the product mix, doing your buying trips, all those sorts of things.

3PL Incompatibility

So I guess what I want to understand is, did it suit your business? So obviously, it worked well for lots of businesses, but in some cases it doesn’t work out. I mean how did it work for you guys, and did it suit your business? So maybe let’s start with Sandradee.

Sandradee Makejev: Well, it quickly came to light that it didn’t suit our business, and there’s nothing wrong with that, it is what it is. And then we had to start to really think about what we’re going to do, like, because we exhausted a lot of avenues in trying to make the partnership work with the 3PL, and we had to make that hard choice at the end to bring it back in-house.

Nick Nicolaou: For us, and again, we did look at this very closely. The thesis for us was it was going to be faster, cheaper, less hassle, and more accurate. We’d never run a warehouse before, so we assumed that by outsourcing it we would achieve those four outcomes.

What actually happened was the opposite, and it’s because it didn’t actually suit our business. We were on a somewhat of a hybrid model where we import some of our own product. We buy and resell product from other lighting wholesalers around Australia. And we also use some supplies that dropship product for us. So that comes with its own technological challenges in terms of routing orders to and from, specifically with the warehouse situation, we had somewhere between 10 and 15 deliveries coming in everyday from different suppliers. These are lighting suppliers, they’re not very technologically efficient, so there’s always holes, and that’s basically holes, that’s the space we’re in and  other businesses face the same kind of challenges.

For us what we actually needed was a very agile, robust, flexible warehousing solution to deal with all these issues coming in everyday with all these deliveries. The wrong colour was sent, the wrong globe, the wrong size–these scenarios show up a dozen times a day, and you need to be able to move quickly. Because of our model, whereby if you buy something on our website, we’ll have it delivered from a supplier the next day, and then ship it to out customer, our customer’s already been waiting one or two, sometimes three or four days, so we really have no margin for error once these deliveries show up. So a critical point for us was to get these deliveries inbounded and dispatched right away, so our customers need not wait any longer.

Now that actually conflicts greatly with the way that most 3PLs work, and we worked with two separate 3PL companies, and that’s a long story, but it was the same with both. Essentially, what they try and do is they work towards efficiency. They don’t work towards the customer experience that Rob touched on earlier. And when we have a delivery coming in and there’s some issues with it, the efficient play is to leave the issue alone, put it to the side, and work on everything that doesn’t have an issue. Doing that makes sense, but what happens is the customer that’s waiting for that order for that one product that’s now been put in to the corner to be dealt with at a later date, they’re waiting. And now our customer service team is being bombarded with a call.

So, a long way of saying, “No, it didn’t suit our business,” because there were some nuances, and got some permutations in the workflow that was required because of our model, but the 3PL operators could not handle.

If I didn’t have another 30 customers to deal with, sure, they could handle it, they’re much better at warehousing than we are. But that’s not the case, right? They’re a business, they deal with other clients, and they try and build a solution that does most of what you want for most of their customers. It isn’t customised to our business. And ultimately that’s where we kind of… That’s the mistake that we made in not understanding that. The battle is won around the edges, and it wasn’t efficient. So, yeah, it didn’t suit our business for those reasons, and there are some more specifics that we can go into in regards to cost. We like the idea of variable storage rates, we liked the idea of only paying for the storage that we use, but as far as I’m concerned, that’s a myth. And the reason for that is this: on Day 1 you go in there with 300 pallets, it’s great. A week later you ship, let’s say 20% of your stock, but you still get billed for 300 pallets. Why? Because it takes time, energy, and money to consolidate those pallets. So what we’ve found is, as we get picked with the pallets unconsolidated because that’s not priced into their pricing model. You pay per pick, you pay per order. There’s no consideration for, “Oh, we need to consolidate these pallets.” So in any event, what we found is variable storage rates didn’t help us. We found our source of pain is the same amount, regardless of how much stock we shipped out. In fact, we had staff at both 3PLs doing these for us, which cost us money. So in the end, we ended up taking the same amount as we would have if we had our own space. So that’s one tangible example.

Another example where a 3PL didn’t suit us is, we’ve got 15,000 products. Some of them are globes, some of them are one-meter-long chandeliers. We found that it was very cost-effective for us to package products in a certain way to take advantage of our dead weight due to the Australia post, where we only pay for the per kilo rate, so we could package together a few different boxes that didn’t weigh too much and save a lot of money. Again, that doesn’t fit in with the 3PL workflow. They make a margin on the freight, they make a margin on picking an order, they don’t make a margin on consolidating your shipment so that you can save money. And you don’t begrudge them for it, that’s just the model that you signed up for. So we found that it didn’t suit our business for that reason as well, when we could reduce our freight costs greatly by utilising that strategy. And that was for our business. Doesn’t really apply to fashion, I don’t think. So those are a couple of tangible reasons why it didn’t suit our business.

Rob Hango-Zada: Thank you for sharing that, Nick. You’re right, there are some nuances and complexities around your business that would really be a challenge for any third party logistics providers to even be able to modify their business to service without adding costs to their own business as well. I guess the complexity of lighting, I’d imagine, Sandradee, in fashion…

Sandradee Makejev: Very similar experience to Nick, especially things like the way that we used to package our items to lower the weights and size as well, so we could get cheaper shipping, or like combining things. It’s a very, very similar experience.

Rob Hango-Zada: I imagine there’s quite a few SKUs coming and going when it comes to seasonal fashion items as well.

Sandradee Makejev: Yeah, well basically, we get all of our fast fashion styles in, and then we pretty much have to clear them by the end of the season. That’s like new stock every season.

Nick Nicolaou: Some other challenges that we had as well revolved around, you mentioned SKU complexity. Some of our SKUs can be 20 characters long, so it takes a lot of time and attention to detail to actually get that inbounding and dispatch correct.

Another reason it didn’t suit our business is you’re restricted by the hours of 3PL operators. And this is very important, and it was lost to us at the beginning, but became very apparent as we got more involved. So when you’re really busy, and you’ve got a backlog, what I would do is get down to my warehouse, pack some models, and get them out. I’d come in on a Saturday, do the same. Come in on a Sunday, and do the same. You can’t do that when someone else runs your warehouse. And they don’t pack on weekends, obviously they tend to be more expensive, but most of them don’t. If there’s a backlog, you just have to live with it, and you move on to the next day and hope to clear the backlog.

So we were in situations, especially when we moved into these 3PLs, where we couldn’t get an order out for a couple of weeks while they got set up. And in the world of eCommerce, that’s just disastrous to not be able to do that. And the frustration kicks in, when it’s as simple as, “Can’t we go down there and pick the order ourselves?” No, for all the other reasons that involve insurance, and OHS etc. So we found we were restricted by their workflows, their regulations. When we did it ourselves, we didn’t have those problems. The team came in and we just dug in there and we got things done. And in business, nothing always goes the way that you plan it to, so you need to have a contingency for what happens when it goes wrong. Doing nothing is just not a strategy, and waiting for Monday to roll around.

So I think I just wanted to add those couple examples.

The Case For In-Sourcing

Rob Hango-Zada: Ok, fantastic.  So I guess just with time in mind, we’ll just flick through a few more of the slides and get to the other detail but I guess we have heard a lot about the complexities, the key risks and challenges. You’ve got a big business, it’s growing, there’s lots going on, even more so now than probably what was going on before you outsourced your warehouse. So why on earth the decision to bring it back?

Sandradee Makejev: I think the biggest decision for us to bring it back was that we wanted complete control over our customer experience and our business processes again. We didn’t feel that with our 3PL we were able to…we felt helpless, quite helpless a lot of the time. So it was really important for us to bring it back because at the end of the day no one is going to care as much about your business as you do. As Nick said, putting in those extra hours before 9am, or after 5pm, or on the weekend, no one will care as much as you do.

There’s a few things, like the company was failing their KPIs, we lost thousands of customers over a four-month period, our phones were non-stop ringing, four lines at a time, we had to increase our own customer service team which we were still retained, threefold, just to cope. So it was a very stressful and disruptive time for my business. Resolution times were, instead of a few hours to fix a customer problem, it was days, weeks, or things never got resolved and I had to refund customers. My refund rate increased 57% and things like we were in a chokehold, because there were long lead times to receive stock.

Fast fashion, you’ve got to put up new stock all the time, new styles, you’ve got to remain relevant, you’re got to remain fashionable, its like churn and burn. So long lead times to receive in stock, which would take us a few hours, would take them over a week, so we were losing customers as well, because there wasn’t enough new stuff to shop from. Things like trying to get stock transferred to our boutique, it just never happened or it was wrong so our boutique stuff hurt a lot with sales and probably one of the big things at the end we had to seize international shipping.

We had been growing that organically for quite a long time over the years and we were doing quite well, we had 300 international orders a week, and that was without trying. So having to seize international shipping for several months was quite hard, and probably the staff morale, that was really hard as well. Staff were stressed, we felt helpless, so we were like, let’s bring it back, let’s take control, we can fix this, we can win back those people. If we have control we can fix those processes and get back to business.

Rob Hango-Zada: Got it. So I guess there’s a whole variety of reasons in there but predominantly it’s about bringing back control and being able to intervene personally is key, right Nick, would you share that?

Nick Nicolaou: Yes, very similar, I would answer the question in a couple of words, why we made the decision to bring it back. We didn’t have a choice. We would have folded. That’s the plain and honest answer, and there’s a lot of reasons for that, most of which Sandradee touched on. Our refund rate tripled, so that affects cash flow, in a disastrous way, especially when you’re in a capital intensive industry like us where we are importing some of our own stock which is quite expensive.

So our customer experience rating went from 97% to 85%. 85% is a pretty high number, but it’s pretty bad when you’re talking about customer experience, if you’re pissing off 15% of your customers and they are all going on Facebook or online, writing bad things about you and your staff, you’re just not going to survive too much longer. So for us we had no choice, we had to bring back the warehouse, and as Sandradee said, being in control of the customer experience, and being in control of our own destiny is very very important. One of the things that we didn’t consider when we went to a 3PL was what happens we you have a dispute with your partner. In most instances the customer has the power.

You’re in a dispute with someone, you don’t like what’s happening, you walk out the door, and business is over. Unfortunately with a 3PL you can’t really do that because they’ve got your stock, and that puts you in a very vulnerable position when it comes time to negotiate during disputes. Disputes happen every day in every business, we all live with it, we deal with it, you negotiate through it. Very, very difficult to do that when a company has your stock. You can’t get orders out, and at that point you need to make a concession, just to ensure that the business continues. So the risk of that for me is the biggest downside and the biggest risk to outsourcing any core competency, could be marketing, could be your customer service, it doesn’t matter what it is, for us, if we weren’t in control of our warehouse, and we didn’t have the ability to go in there and fix issues ourselves, we were not willing to bear that risk any longer.

How They Did It

Nick Nicolaou: Ultimately we put a plan together and we moved. We moved fairly quickly and we brought it in house. We bought a building, in Sydney, which isn’t too fun. But that’s just what we had to do, I was very fortunate to have a Co-Founder in Vince Hansimikali who we kind of sat down with, and we talked about it we just said let’s pony up a ton of money and go buy our own building so we don’t have to deal with this again. Also need to mention our team, our staff, they kind of went through a lot and they’re still with us. That’s how you get through it, you just come together as a team and you move on. So ultimately we just had to do it to keep the business afloat.

Rob Hango-Zada: So importantly, so how do you bring it back?

Sandradee Makejev: One of the key things like if you’re in this situation where you need or want to bring it back in house, or even if you’re considering using a 3PL, I actually hired a 3PL consultant, which was great for me because I only had my experience, up until I moved to a 3PL, then had the experience of the 3PL, in which I needed to bring it back in house.

So having that 3PL consultant just prepared me for like all the different scenarios that could happen, from good to bad, so when I went into the situation to terminate, to move, to organize the whole thing, make it fit back into my warehouse. I had someone there that was able to guide me through the whole process and give me confidence, and also prepare me for whatever may happen.

Rob Hango-Zada: What about I mean, obviously then shifting into your own warehouse, what types of tools, what type of processes, I mean how did you do that whole piece?

Sandradee Makejev: One of the main things, and not to promote Shippit, but Shippit was very instrumental in helping us move back. Very seamless, easy, no-fuss, it was actually the one thing that I didn’t really have to worry about when transitioning back in house. I was able to focus my whole energy on how I was going to move from one warehouse back into another one. Just basically setting up a whole new side to the business again. But that was great because we were able to set it up better than ever.

Rob Hango-Zada: That’s great to hear.

The Result

Nick Nicolaou: Yeah, like I said we bought a building and we just decided to bring all our stock back, set it up, in an inefficient way, because we’re not experts at warehousing. We definitely don’t do it in a way that… we don’t do it in a way that is very scalable, but at least we get it done. We will deal with the problems as they arise. Shippit was also instrumental for us, it just helped integrate very seamlessly into, we use Magento so we were fortunate they had already built that integration and it allowed us to use a variety of carriers.

We’ve actually been able to decrease our freight costs greatly, on account of the Shippit platform. We’ve got some of our own freight deals which was very good, but Rob and the team have done a good job of bringing onto the team some quality partners. We found out freight costs decreasing drastically. When we first moved which was about 10 months ago, but also in the last few months with some of the work they’ve been doing, bringing on new partners. So essentially what we did is rip the band-aid off and we didn’t hire a consultant, which I wish we did. Because it would have been a little bit easier, but we got there and now our warehouse is doing more orders than we ever did, our dispatch rates have dropped, our refund rates have dropped, our customer satisfaction has increased.

And we’re still not very good at it, but at least we’re in control of our own destiny and we’ll become great at it, like every other aspect of the business we have taught ourselves. So we got back to our growth, we actually grew 77% in the year that we were in 3PLs, despite all the issues. We made the BRW Fast Starter’s List, so the team’s much happier, and everyone, everyone is happy and focused on the way things are going. So yeah, that’s essentially how we brought everything back, and that’s what the results have been so far.

Rob Hango-Zada: That’s very well done guys. It couldn’t have been easy, the whole piece, but to really be empowered enough to run your own operation is no mean feat. So tremendous job to both of you. So I guess Sandradee, how were the results for you, how did that turn out?

Sandradee Makejev: Well basically just having greater control over the customer experience, and that was really exciting for our team, because it was so stressed for such a long period of time, that everyone was all in, arms, legs, tongues, everything, because they wanted to see the business succeed. We’d had such a great journey, up until outsourcing it, that everybody just wanted to succeed again. So we were able to knuckle down, we improved our costs for warehousing, shipping, staff, our customer satisfaction has never been higher, our pick accuracy have never been higher.

We’re on track to grow another 120% this year, which is massive considering we’ve had negative growth of 20% the prior year, which is quite upsetting when we had always been growing 100%. We were able to re-launch international shipping, same-day delivery, a whole bunch of cool stuff. We wanted the big things to me, I was determined to win back those customers we had lost, so we did like a win back campaign where we managed to re-activate 30% of those customers, and 50% of them are repeat purchasing, so it’s all down to the hard work of the team. Obviously it’s my business, but I’ve got some amazing, amazing women that just really wanted to see Go Lights get back to previous success levels.

Rob Hango-Zada: Amazing guys, well done.

Nick Nicolaou: Our combined costs for freight, fulfilment, warehousing, including your rents and all this was about 15% from when were at the 3PLs, we’re currently 8.5%. So that’s significant when you’re thinking about financials, when you’re thinking about cash flow, profitability, how do you grow the business? Well, you need to be profitable to do it. So that’s been very important for us, being able to get our costs back under control so we can fund all our growth strategies.

Tips For Nailing 3PL

Rob Hango-Zada: Amazing. Well I know we’re tight on time, if you could finish just on tips and tricks on how to do 3PL right. Obviously, it’s a tricky balance for all, but if you could just summarise the top tips in how to choose the right 3PL partner, if that’s the right solution for your business, and then what we can do is throw questions back to the audience. Sorry we’re running a bit behind schedule, but hopefully we can cover these off, because I think these are really important too.

Sandradee Makejev: Basically, do the clients have the same kind of products and business size as me? That’s really important, have a look at their other clients, sometimes it’s great to be with a specialised 3PL, versus someone who has mixed different businesses. Can they handle the order volume and the varying demands of multiple clients? That was probably a big mistake for me because there we so many different kinds of businesses that had varying demands, that it meant that I only got a small part of their customer service team, and it felt like I got pushed to the back of the queue a lot.

My problems were really severe, like our order levels would come up during our busiest season. I was helpless to actually get anything done. Can they handle complex SKUs? How do they conduct their rolling stock take? A big thing if I ever considered a 3PL again would be, I would want a list of all the clients, and I want to check their Google reviews and social media accounts, I don’t just want the standard three references, I want to see what the customers are saying about their business, because that’s going to be a true indicator for me. Is it working well for all these other clients? What expectations does your customer have for delivery and do they align with their other clients, and for that business.

For fast fashion, we have to get it out within a few hours, or it has to be to the customer within 24 hours. We need to compete against iconic, all the other online stores, that’s super important to me. A clear indication of monthly admin, receiving in time frames and hourly costs, because they can blow out. Make sure you get an itemized account of all charges each month, and question them, don’t be afraid to. Probably the last thing would be to get quotes from different 3PLs, compare price, process and make sure you understand it.

Nick Nicolaou: Yeah, I’d add a couple of things to that. I think getting a list of their current clients and checking the clients, the customer’s Facebook and other social media platforms is imperative because you can’t hide that. If someone is at a 3PL and they are not doing a good job, their customers are going to tell everybody.

Sandradee Makejev: And Google reviews. You can’t delete those, they are there forever.

Nick Nicolaou: So that, I would put that right at the top of the list, because it’s fairly easy to do and no one can fake it. I would also say just a point on when considering 3PL. For us, we were under duress when considering 3PL, it was a rush decision. We felt like we had to make a move, you’re growing a business and you’re looking at different ways to do it. So I feel like most people are in that frame of mind, when they’re considering 3PL, doubting themselves, or we can’t do it as good as these guys.

So I feel like we end up drinking the Kool Aid, of all the different stats that people put in front of you, and all the different strategies that they employ, so I think what I would say is: Don’t be rushed, don’t feel like you’re not doing it well enough, and that you are forced to go and get some experts involved. Take your time, really look at the problem, don’t make a decision under duress. And I think most people, for us, if we weren’t under duress, we probably wouldn’t have made the mistake.

I would also add that you should test them. I realise that it’s no fun running shipping from two locations, and it’s hard with tech, and it’s hard with a few other things, but it’s just so important, it’s a core competency. I would test them for 3 months, give them a certain set of SKUs, a certain set of orders, and just stress-test their systems. Again, once you’re actually in play, there’s nowhere to hide, all the inefficiencies and all the conflict, and all the areas where it may not suit your business come to light, and then you can make a decision whether you want to solve them or whether you want to abort the operation, that’s not an easy thing to do.

I would also add that having lawyers go over the contracts, and being very clear about obligations and expectations when exiting. Exiting for us, especially in one of the instances, was an absolute nightmare, where we needed to go legal, and at the end of the day when someone’s got the stock and you’re looking at contracts and the lawyers want to negotiate, it’s irrelevant, because the stock’s not getting out, your orders aren’t getting out, so good luck trying to fight it. You can fight it but you won’t, because you can’t wait 6 weeks and not ship an order. But I would get some lawyers involved up front, go through the contract, add things to the contract, that gives you a very easy and seamless way out, in the event that you’re in dispute, and that happens, it doesn’t mean anyone did anything wrong, sometimes it just doesn’t work out, and you need to be able to get out in a very seamless way that doesn’t hurt your business.

Sandradee Makejev: And I think one more thing I just want to quickly add, make sure you have an exit plan if things don’t work out, to bring it back in house, have a think about what you would do if, it’s great to have all the ideas for moving into 3PL, but you also have to be well are about what would you have to do if you are going to bring it out.

Q&A

Rob Hango-Zada: Thank you for sharing guys, we have a variety of 3PL partners ourselves, so if you are looking for advice, and you are looking for some further information, either from myself, Sandradee or Nick, please connect with us on LinkedIn. We’ll share this presentation out with the audience as well, but let’s flip to questions if we have time, if there’s any burning questions in the audience?

James Webber: We’re a bit short on time, there are a few questions that have come through the pipeline, and I think we can hopefully get back to people with those off-air because clearly we are five minutes over-run, I think it’s been a really interesting discussion and clearly Nick and Sandra have been through the mill on the whole logistics front and it’s not too dissimilar from something I have experienced, I think people talk about 3PLs or not being suitable for them.

I wonder at times whether the business is ready for a 3PL. Certainly I actually had a very good experience with a 3PL, but they were experts in my category, and they were very focused in the category. I think there would have been a time where I would also actually outgrown that 3PL and brought it back in house, due to the fact that my major competition was international eComm players therefore my major differentiation was speed of delivery, and in order to get that, that meant I needed to own that customer interface.

So I think there’s lots of reasons for doing one and the other, but the key thing is making sure your business is ready for a 3PL, and to do that you’ve got to really understand what they need from you and how you’re going to integrate those. All credit to you guys for going through that and coming out the other side, many don’t. Great learnings for everyone on this webinar. Please come back and send your questions in and we’ll try and get those answers back to you outside the webinar. Thank you, Rob, Sandra, Nick.

Rob Hango-Zada: Thank you, more details about us, the website, details are here, feel free to connect with us on LinkedIn, hope to speak to you soon. Thank you very much to Sandradee and Nick.

Shippit.com is the shipping engine for modern retail. Learn more about our how our software can save you time, money and keep your customers happy.  

6 Simple Ways To Keep Your Customers Coming Back

For retailers these are turbulent times ahead. With consumer expectations and technology continually evolving, there is no longer a standard playbook for retailers to rely on to survive and thrive. The one certain fact is – it’s never been more important to understand the motivations and actions of today’s demanding, tech-savvy shopper. Excelling at the fundamentals these very shoppers insist on will be key for retailers to lift their game, and remain competitive.

Who knows what’s around the corner? No matter what else is in store, nailing the six essentials listed below will give your website a competitive edge this year. Don’t be left behind.

#1. Your customers care more about their product search experience than ever.

Making sure that your customers can find your products online and have a high-quality search experience is essential in 2017 (and every year!). Not only do 70% of consumers want to find, search, and filter for products on your site, 73% of respondents want the ability to find and read good/bad customer reviews before making the purchase.

Other important search aspects that respondents noted are the abilities to zoom in on images, to create an account to store personal information, and to access their cart from a previous session. If you can implement all or some of these tools to your site in 2017, you’re going to impress those savvy shoppers out there.

#2. Get that community going with customer-generated content.

The fact of the matter is – your customers want to see content before they make the purchase. From product reviews to videos on YouTube, shoppers are more knowledgeable and careful about their purchases than ever before. For example, let’s take one of your customers, Joe. Joe is on your site, looking at a certain product, but can’t find any reviews of it or pictures uploaded by other customers. What’s he going to do? He’s going to head back to Google and search for the product on another site. On the other hand, let’s say he sees plenty of content on your site for another product. In that case, Joe will be more likely to go for your product.

However, many online companies are not allowing enough user-generated content. That shows with only 57% of shoppers being satisfied with the amount of content or images uploaded by other customers. Ensure that your site has plenty of options for consumers to upload their own content about the product to earn their trust.

#3. Put the power in the hands of your consumers.

Today’s shoppers want the power to be in their hands. And this is done through the use of online self-service and web-based tools – tools that allow consumers to find answers to their questions, interact with online customer service reps, and own their shopping experience.  Especially when it comes to Millennials, the most desired online customer service option is the Q&A section, where customers can ask and respond to different product questions.

Other options that are highly desirable for these customers are on-site FAQs, call centres, and live chats. If you want to get those customers to make the purchase in 2017, make sure your web-based service tools are up to the challenge.

#4. Mastering the art of inventory management and product selection.

Managing the amount of inventory you have on hand is truly an art. It will take you a while to really understand how to properly manage your inventory, but this is crucial if you don’t want to disappoint those last-minute shoppers.

And customers really value you having enough stock for them. It’s been shown that 58% of customers find it important to see your inventory status when making purchases online and 53% view back-in-stock product alerts valuable to them. And if they find out a product is not in stock, 41% of customers will drop their carts altogether.

In addition, no matter where you go in the world (the physical or digital one), your customers want plenty of variety in your inventory. In fact, 74% of those people shopping online rate product selection as the most important aspect of their product search.

This means that you should be offering a variety of products that fit your customers’ needs. Most shoppers will browse various sites to see what the selection looks like. And if they see a better selection on your competitor’s site, you risk losing their business.

#5. The power of a product warranty.

Product warranties are one of the most important aspects of running an Ecommerce business. Especially when it comes to big-ticket items like kitchen appliances, customers are much more likely to purchase a warranty plan with them. The top three items that customers are most likely to buy warranties with are: computers, major appliances, and mobile phones.

No matter what product you’re selling, online businesses should always provide the option for a warranty to minimise the perceived risk, and to close the sale.

#6. Make Returns Painless

Returns represent the next differentiation battlefield when it comes to your Ecommerce business. Online consumers really want a simple and transparent returns process that’s convenient and easy to use; 49% of respondents confirmed that an online merchant’s returns policy had deterred them from making a purchase. And as your business grows, you definitely have to deal with returns – no matter how great your product is. In fact, returns are three times more common in online retailers than with physical retailers and that has led to a lot of dissatisfaction among customers.

You will have to balance between two things: the customer and your business. For example, can you give the customers free returns and still turn a profit? Because returns can get costly for any business, you’ll want to minimise any chances of returns.

Want to get your store off to the best start possible?

Keep the above points in mind when you’re working to improve your website. That way you’re in the best position to keep your customers happy and build a loyal consumer base.

Shippit.com is the shipping engine for modern retail. Learn more about our how our software can save you time, money and keep your customers happy.