A Greek philosopher noted that “The only constant in life is change.” Over two millennia later, a French writer said: “The more things change the more they stay the same.” Both statements reflect reality, especially in the world of retail. The world of commerce is changing rapidly, but the fundamental principle of staying a step ahead of what the customer expects remains paramount. We enter 2020 with five key learnings from 2019 that deserve consideration by Natural Product Retailers:
- Supply Chain
- Amazon Hub Counter
- Buy Online Pick Up in Store (BOPUS)
As the internet grows, so does the use and abuse of the knowledge it provides. While some of the “facts” on the internet can be argued, the reality is that more and more consumers want to know more about where their products come from. Supply chain transparency has developed from a phrase to a reality, one which is virtually impossible to provide via e-commerce. The Wall Street Journal reported in December 2019 some harrowing examples of their findings of supply chain activity on Amazon. The December 18, 2019 WSJ article “You Might Be Buying Trash on Amazon – Literally” speaks with actual dumpster divers who clean up their finds and sell product on third-party seller sites. Amazon has since created a policy that disallows trash from being represented as new, but the reality is the only way Amazon found out the Trader Joe’s Lemon Curd that was sold on Amazon was from a dumpster is because the reporter that did the dumpster diving, created an Amazon 3rd party store, and sold the trash, told Amazon the story. The real dumpster divers are not as forthcoming to Amazon. The story also describes sellers that “rescue” items from shops and thrift stores.
Over the summer of 2019, admitted counterfeiting of Procter & Gamble products by third party Amazon sellers resulted in the first major Amazon recall. Other smaller sellers still complain about the preponderance of counterfeit products and blatant knock offs. These practices continue to impact reputable sellers from insuring the products sold on Amazon sites are of the quality and reliability expected.
In 2020, Natural Retailers should reinforce to customers the dangers of an opaque supply chain and the value of supplier vetting to provide increased security and reliability.
Amazon Hub Counter Program
Amazon has made significant advances into the brick and mortar world through the Amazon Hub Counter Program. This concept first began in 2017 when Amazon partnered with Kohl’s for them to accept returns. Many wondered why stores that were reportedly being put out of business by Amazon would suddenly welcome them through their doors. The result of the Amazon partnership is showing positive results in an environment where almost all of Kohl’s brick and mortar competitors are showing declines. Same store sales for stores participating in the Amazon return program are recording increased sales of approximately 8% compared to a 1% to 2% increase in stores not participating in the program.
Amazon is expanding its Counter program through new partnerships with Rite Aid, GNC, Health Mart and Stage Stores. These stores serve as pick up locations for Amazon customers who wish to use the neighborhood locations as a depot to accept packages of all types. Stein Mart is looking to put Amazon Lockers in 200 of their stores. In all cases, the merchants are hoping to benefit from the increased foot traffic brought in by the customers wanting to receive their packages more securely than at their front door.
In 2020, Natural Retailers should remain vigilant about the opportunity that exists with this type of “partnership.” While GNC and Rite Aid are officially partnering in this regard, there remain ways to adopt the program to benefit your foot traffic as well as meet a consumer need.
Reviews are increasingly cited as a major contributor to the current buying decision-making process. According to a recent Mobile Path to Purchase Study by Google/Nielson, consumers spend over 15 hours per week on product research. This research leads to these researchers buying at a brick and mortar establishment 82% of the time. Reports of fake reviews, bought reviews and manipulated reviews by both consumers and Amazon continue. The “Amazon Choice” label has come under considerable scrutiny over the past year as the company has not truly disclosed an exact definition or algorithm for the label.
In 2020, Natural Retailers have the opportunity to provide a more accurate and trusted review process made by legitimate patrons and highlight how their individual store handles reviews.
The ease with which returns are handled by e-commerce can be alluring. What isn’t realized is the cost of the ease of returns is paid by someone, directly or indirectly. UPS reports more than 1 million packages were returned to retailers on a daily basis in December 2019. The peak day to start returns is December 26, and 1.9 million packages were estimated to be shipped back to retailers on January 2, 2020, a 26% increase over January 2, 2019. The impact of these returns is recognized as detrimental to the bottom-line of retailers and beneficial to the bottom-line of shippers. One often unrecognized fact is the impact of the returns on our landfills and environment. A recent report estimated e-commerce annual returns of $390B contribute five billion pounds of waste to our landfills with 15M tons of carbon dioxide released into the atmosphere. Returns though, are unnecessary if the customer is satisfied in the first place.
In 2020, Natural Retailers have an opportunity to educate consumers on the real cost and impact of returns. The traditional retailer can make the process of returns less costly and perhaps even unnecessary through education and direct interaction with customers.
The 2019 winner in the world of retail trends was Buy Online Pick Up in Store (BOPUS). In 2018, the number of BOPUS locations nearly doubled and the success of the trend has been proven by Walmart and Kroger. Both of these grocers have publicly stated that the implementation of BOPUS for their customers has resulted in substantial benefits to both the companies and their consumers. BOPUS is reported to lead to 37% more in-store sales as a result of customers buying additional items when they come to pick up their intended purchase. An iVend study reported the reasons for shoppers preferring BOPUS as an option are to avoid shipping charges, save time and same day pick up. Other benefits mentioned include knowing an item is in stock, and ease of product return. Walmart has expanded BOPUS to include delivery to the trunk of the car at over 2,000 stores in 2019. An additional benefit to the retailer is yet another opportunity to personally interact with the customer. The personalization opportunity is significant, and savvy retailers can utilize their knowledge of the purchase to offer suggestions for additional accessories or aligned and related products.
In 2020, Natural Retailers have the opportunity to embrace the trend of BOPUS and find ways to both implement and improve the concept to better serve the natural products community. BOPUS is an important trend that is changing the landscape of online purchasing at a significant rate.
A purchasing atmosphere devoid of all human interaction is a fantasy that simply will not come true. Yet there are mega-trends that technology supports, that when leveraged properly, can be used to advantage by Natural Products Retailers. The opportunity for things to change and stay the same is in front of us. It is up to each of us to determine the best way to allow the inevitable change of retail to find its way back into the brick and mortar location where it belongs.