Service of a Crack in the Surface of E-Commerce

September 10th, 2018

Categories: Discounts, E-Commerce, Luxury, Retail

Photo: physics.aps.org

A Wall Street Journal article about traditional retailing and E-commerce made clear that those who see the latter annihilating traditional retail shouldn’t order the funeral flowers just yet. Some retailers of both luxury and discount goods are spending big bucks on their brick and mortar stores. In a second article the same day the Journal reported that WalMart has started to refuse to ship heavy items–because of the cost– by claiming they are out of stock. This approach may be temporary and therefore, potentially less significant in the long run.

What’s In Store?

Photo: pinterest.com

Target was also a focus of John D. Stoll’s Wall Street Journal article, “Tiffany’s $250 Million Bet on a 78-Year-Old Store.” He wrote “It turns out that all over the ravaged retailing sector, companies are rethinking the mantra that the future is digital, and pouring money into actual brick-and-mortar stores.” Target plans to spend $7 billion. It doesn’t break down the superstore’s expenditures though “a spokeswoman said stores are an ‘incredibly important linchpin.’”

Why this confidence in physical stores? Stoll wrote: “Because the bulk of America’s retail is still done the old-fashioned way. Target has consistently increased online sales, but ecommerce represents less than 6% of its revenues. Online sales are closer to 7% at Home Depot but under 4% at Walmart.” Tiffany’s stores produce 90 percent of its revenue.

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PricewaterhouseCoopers’ annual Consumer Insights survey showed weekly purchases from stores has risen from 36 percent four years ago to 40 percent in 2015 and 44 percent this year. Stoll wrote: “Retailers are smart to better integrate the physical shopping experience with people’s online habits, but now is not the time to give up on making stores better.” On a recent Wednesday, he reported, Tiffany’s new café in its NYC flagship had 1,000 on a waiting list for 40 seats.

Cupboard is Bare

So what about Walmart’s shipping policy? People need the products involved such as household cleaners, nonperishable groceries, pet food and cosmetics so they will buy them somewhere.

I marvel at how CVS often covers the cost of shipping heavy items with no minimum purchase required, in conjunction with a sale many times, and wonder how long the windfall will last.

Photo: walmartcareers.com

Sarah Nassauer in her Wall Street Journal article wrote that the Walmart “has begun telling online shoppers that some products in its warehouses are ‘out of stock’ after the retailer changed its e-commerce systems to avoid orders deemed too expensive to ship.” Some suppliers were surprised. To address the policy they’ll “stock their products at more Walmart warehouses around the country to keep sales steady, according to an executive at a large food company.

“The shift is part of a test, Walmart said, to see if it can deliver more products via ground shipping, a cheaper option than air shipping, in two days or less.” Spokesman Ravi Jariwala “said shoppers shouldn’t notice a big increase in out-of-stock items because walmart.com will suggest similar products from nearby warehouses.”

Do you think retailers like Tiffany’s and Target are throwing away their money in this retail climate by upgrading their traditional stores? Is there an aura about some stores—like Tiffany’s—that compels shoppers to visit? Will retailers figure out cheaper ways of shipping heavy goods or will customers increasingly pick up in stores their online orders deemed too heavy/expensive to ship? Walmart says it’s a test but if profitable, don’t you think the “shortages will be permanent, potentially impacting online sales? When you buy online, do you stick to your shopping list more than you do when you’re in a store?

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6 Responses to “Service of a Crack in the Surface of E-Commerce”

  1. ASK Said:

    I generally buy online when I am looking for a specific product or a replacement part for an appliance that I know will not be stocked in-store. e. g., filters for my microwave oven. I also buy some clothing online, but only when I know the designer and what size I wear in that particular line. Sizes are sometimes hard to find in-store, and the sales are often not as good as they can be online. At least, that has been my experience.

    Perhaps owing to the cost of gold and gemstones, Tiffany’s does not seem to be selling as much dazzling jewelry as they have in the past; the first-floor showcases can hardly compare with those that I saw when I first set foot in the store as a college student or in “Breakfast at Tiffany’s.” To me, Tiffany’s is a ghost of its former self. The new café is a bright spot and there certainly was a long line of people waiting to have lunch when I last went to the store to order stationery. But not too many in line were carrying the distinctive shopping and the gorgeous displays of china, crystal, and silver were gone, no doubt due to pervasiveness and popularity of more contemporary design and stainless steel. But, dinosaur that I am, I personally miss the opulence.

  2. Protius Said:

    I think you are on to something and have spotted a shopping trend, which makes more sense than you might first expect.

    I have always disliked shopping and try to spend as little time as possible doing it. Consequently, I prefer to buy from merchants with knowledgeable sales personnel and a customer friendly attitude. Their merchandise may cost more, but I save money because I make fewer mistakes and buy less things that I do not actually need or want. Just this morning I experienced an example of this. I bank at a one horse country bank where you can still find a knowledgeable human being sincerely interested in helping you. A salesperson there fixed a problem for me in 10 minutes that two weeks ago, after an hour and 15 minute wait, a New York City bank declined to fix.

    I also dislike internet shopping not just because I am unsure about what I am buying, but also because I am hopelessly sloppy about filling out online forms and make expensive mistakes.

    After the depression until about 1980, wealth was broadly distributed thoughout the country’s class structure. Since then we have seen it trend to accumulate increasingly among the richest one percent of the population and to decline proportionally for those in the country’s middle and lower classes.

    I know that I live far less well today than I did forty years ago and that forty years ago I lived far less well than my parents did eighty years before that. The raw financial data available doesn’t necessarily confirm this to be true, because, unfortunately, quality of life issues are far less measurable and far more subjective in nature. (This is especially true of service issues. How do you measure the value of a doctor who makes house calls against a hospital with computerized operating equipment? Or the time you waste calling a business with an automated “press one, press two” answering machine against the value of being able to talk directly to an operator when you call?)

    Indeed, real minimum wages here have now been driven down so far as to be inadequate to provide even a substance level of life to the wage earners. They now get food stamps, Medicaid etc. And the current administration wants to get rid of all those benefit programs as well.

    Given the alternatives, I suspect that a service job, such as in sales making, “Nice-Nice,” to shoppers may become increasingly appealing to many minimally skilled laborers, and that consequently merchants have access to a growing pool of salesmen and women available to them at a reasonable cost. What better way to grow your sales? Hire sellers.

  3. Jeanne Byington Said:

    ASK,

    I’d guess that the flashy Tiffany jewelry sits in cases in India, China and the Middle East.

    As for buying online, I wear long sleeve tee shirts all year long and you’d think they were all alike. They are not. And 100 percent of the ones I’ve bought online I don’t like.

    As for elegance, it’s pretty much gone in these parts. A friend invited me to dinner at the Pierre Hotel in NYC the other week. We were nicely dressed and we were pretty much alone. Some of the guests were in ratty shorts and tee shirts and others looked as though they wore the comfortable clothes they chose for long flights to the city, yet the service was formal. The food was great, by the way.

    I am happy for the comfort of informality most of the time but appreciate spiffiness in its place. It still exists at some companies and at some industry events. Well dressed people going to work stand out in a good way.

  4. Jeanne Byington Said:

    Protius,

    I save money and time buying online when a favorite vendor of OTC products has a real sale and offers free shipping. I find that men’s clothes are truer to size than women’s so that I have had better success buying them online from a store I know and the recipient prefers.

    I’m a lifelong discount shopper and tend to visit full-priced stores only when I buy gifts [and even then, not often]. My experience is statistically insignificant and skewed but I’ve consistently found over years cheerier, more helpful sales help at discounters than at department and specialty stores and not only in the U.S. It may also be that I have higher expectations for civility and service at the latter. I empathize with people who must stand for hours, often in an empty store, not being thrilled by my modest purchases but if they make this evident to me in attitude they pretty much guarantee not seeing me again.

    The exception that proves the rule: My cashier last week at Trader Joe’s on 14th street was unlike any I’ve encountered at any of the stores I’ve visited and I drop by often. She was surly, angry, uncommunicative–didn’t respond or acknowledge that she heard me when I told her I had a shopping bag to fill–so when I left, instead of saying “thank you,” which is my habit, I said, “Cheer up!” She was alarmed and, tried to smile and said “I’m fine!” She may not have felt well. Who said life was easy?

  5. Martha Takayama Said:

    Many stores still do have an aura or an atmosphere. These can range from the near sacrosanct in Tiffany’s to the adventurous, and humorous in Target. These auras can certainly stimulate a shopper to visit.

    In addition shopping is a social activity even if one sets out alone. Pleasant service, the ability to see in real life and even touch items or try them on can be very engaging or useful. Not everyone wants to try things on in solitude or spend time bundling and repackaging for returns.

    The enormous pile up of goods delivered from online purchases to single and multi-family dwellings can create logistical, aesthetic and service messes. Even full service multifamily dwellings are less and less able to accommodate the deliveries, especially of oversized items, to be held until the owner is at home. Reception areas begin to look like warehouses or even trash rooms. Furthermore packages delivered to single family or multi-family dwellings with no one on hand to receive them can even create on street pile-ups and result in more and more package theft.

    The matter of cost and efficiency of shipping oversized and heavy items will have to be researched or thought through. I think it is part of a field called “Operations Research.” I do think that on the occasions when I purchase on line I order more of any given item that has variations in size and sometimes even in color.

    I am unsure as to whether on line shipping causes me to stick more to a list when ordering. I do think it means that I am less likely to keep all of what I order. There is no charm, glamour, aura or fun in shopping on line for me.

  6. Jeanne Byington Said:

    Martha,

    I suspect you enjoy shopping and I certainly do but for those who hate it, the Internet works. I am grateful for discounts and free shipping but I wouldn’t call the experience much fun.

    You describe a real mess at large apartment buildings especially at holiday time. I arrive home and on any old day am surprised at how many boxes there are outside the small room devoted to boxes because it has run out of room. Years ago some large corporations forbade employees to ship personal items to their offices. I imagine this is still true.

    I find daunting returning items purchased online so if I am not sure about a size, I move on. But how can you go wrong on shampoo and vitamins?

    If I know that I am looking for a navy blue sweater for my husband, I am distracted by nothing else online. However, if I am at, say, T J Maxx and I’m looking for that sweater, who knows what else will catch my eye?

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