The Trial Economy | Friday Finds #24
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Will faster delivery drive a “try economy”?
A few weeks ago, I shared the news about Amazon speeding up their famous two-day shipping to one-day. The change is exciting for consumers who are constantly expecting purchases to get to them in an instant, but this shift could have a lot of negative implications. Quicker shipping times obviously takes its toll on the environment and is expensive for retailers to implement, but how will this impact consumer buying habits?
As in-store visits are more often replaced with online browsing, will consumers use the one-day shipping as a larger opportunity to “try” rather than buy? As someone who is guilty of the “buy before you try” mentality (and frequent Amazon returner, I know, it’s bad, sorry), I worry that the convenience of one-day shipping will increase the number of people who buy something in order to try or return it. Currently, 41% of e-commerce purchases are bought with the intent to return some or all of the items. Since free shipping and fast shipment times are one of the main drivers for consumers to shop online, it makes sense online shopping – and thus online returns – will increase.
Given the cost of online returns (think shipment, packaging and potentially wasted product), this isn’t a good outlook for retailers. While fast shipping can certainly help drive loyalty and sales, will it be enough to balance out? How can retailers ensure that they come out on top?
This is where operations can shine. By having fast fulfillment centers that speed up reverse logistics, retailers can ensure that product gets back onto the shelf quickly. And, by leveraging the data that e-commerce can provide, retailers can begin to understand who their most and least profitable customers are through return profiles. This will enable them to advertise more efficiently and ultimately maximize profits. Finally, brands will be required to better differentiate themselves as quick shipping shifts from a benefit to a norm.
In the era of faster shipping, brands and retailers will be forced to evolve to stay relevant and meet consumer expectations. Do you think faster shipping will change how consumers buy? I’d love to hear your thoughts!
Gold Stars go to:
- Harry’s. They’re being bought for $1.37 billion by Edgewell Personal Care which owns Schick, Banana Boat, and Wet Ones.
- Uber. They went public this morning at $45 a share – valuing them at more than $82 BILLION (although it sounds like opening day isn’t going as well as they hoped).
- Qantas. On Wednesday they launched the world’s first zero-garbage flight. The Sydney to Adelaide flight typically produces 75 lbs of waste. The airline hopes to cut out the use of 100 million plastic items from its planes by next year.
- Walmart. They’ve agreed to power more than 40 stores with solar energy as part of their commitment to get half of its electricity from renewables by 2025.
Bad news bears:
- Rideshare companies. Their drivers are taking a stand by going on strike today from 7-9am citing bad work conditions and unlivable wages.
- Air pollution. Evidence shows that it leads to dementia.
- Trade deals. As talks between China and the US escalate, 25% tariffs went into effect this morning on nearly $200 billion worth of imports,
Quick Tidbits:
- L’Oreal is diving into the DTC game with the launch of their own at-home product for hair coloring.
- Cash is still king in Silicon Valley. San Francisco officials banned cash-only stores citing that such entities discriminate against low-income individuals.
- Earlier this week Google held their Keynote. Here’s a list of everything they announced (personally I’m v intrigued by the Lens update that will tell me what to order from restaurants)
- Love Bird? Now you can buy your very own electric scooter from them for the low price of $1300.
- Hawaii is cracking down on Airbnbs due to the increase in cost of living it has caused for residents.
On my GoodReads:
Raise your hand if you’ve ever tried to buy something labeled “one size fits all” only to find out that is not true. I’m guessing I’m not the only one with my hand raised. In an ever-growing diverse world, “average” no longer exists, however, the world was built around that idea. The End of Average says that success lies in customizing our needs in all aspects of our lives. While this is technically a “self-help” book, I’m really interested in how we can apply this thinking to how businesses engage with consumers. With technology advancing, we no longer have to deal in “averages.” Enter the age of personalization.
ps: is anyone interested in a book club? It would be nice to talk about some of these books with people instead of just sending these out into the abyss that is the digital world. If you’re interested, let me know!
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As a consumer, I love the concept however I think it will lead to higher return rates and less efficiency with shipping overall. The environmental impact will also be affected as a result.