RSL Podcast Episode 1– New Trends in Ecommerce for 2019

by Rakuten Super Logistics | 2-Day-Shipping, eCommerce, eCommerce Strategy

 

Audio transcript [Edited for clarity]

Sarah: Hello and welcome to the very first episode of RSL’s podcast where we discuss the latest trends and news in ecommerce and logistics. I am Sarah Smith, Manager of Marketing Operations, here at Rakuten Super Logistics and I’m joined by Jeremy Brooks, Manager of Client Implementations, and Jason Chan, Vice President of Sales and Marketing.

Jeremy: Hello

Jason: Thanks for having us here.

Sarah: Well, welcome! With the start of the new year, we’ve been reading a lot about what industry speakers are expecting to see unravel in ecommerce over the course of the year. So we decided to dig a little deeper into these trends and discuss whether we think they’re a “Go” or a “No-Go”.

Later this month, we will reconvene with our own predicted trends for the new year with our first webinar in 2019, so make sure you join us for that.

So let’s start off with just a couple of the top trends I think will be in the ecommerce world this year. Again, I think we’re going to focus on final mile delivery– I think that’s going to continue to be a big topic. So as shipping times need to be reduced for cost savings for retailers, it’s going to be more and more imperative that retailers start doing that final mile delivery delivery within a twenty four hour period.

Jason: Absolutely– “Go”. Go”. “Go”. “Go”.

Jeremy: Go.

Jason: Go. With ecommerce, people are wanting their packages now. You’ve got to figure out how to get that package there sooner, faster, quicker. In the old days, we’re all used to having the two o’clock pick up from FedEx or UPS… What happens when the package is ready at 2:01? All of a sudden you’ve got to wait another day! In today’s world, consumers are just expecting their package faster. The other half is that Amazon prime’s kind of spoiled us in that you can get almost anything within a couple hours. So look for other retailers to actually expand upon that, to figure out how to get you your your packages quicker, faster, and actually handle that final mile delivery on their own.

Jeremy: I remember going back, this is I don’t know how many years ago– but think about when Amazon first started offering two-day shipping, where you didn’t have to actually you know get through the prime program and that was pretty cool. And then, expect Amazon to do whatever is the most hyper-competitive thing that they can just throw resources at– So what they do? They go to next day shipping, and then they go to same day in cities like Manhattan and Los Angeles, and that just blew everybody away. I think that’s probably been about four years or so since they’ve offered that.

And you don’t really want to chase somebody like that, but it sets the expectations with consumers. So it’s something that all merchants need to be aware of– that’s who you’re competing with, you’re not necessarily competing with Amazon toe-to-toe, but you’re competing with the expectations that they’re creating in consumers’ eyes that “I can get things the same day, that is awesome”.

Jason: Absolutely.

Sarah: And I think in today’s world where there’s more of an instant gratification people actually need some of these things– to have that right away.

All right so, here we go, final mile? Is a go.

Jason: That’s a go.

Jeremy: Absolutely

Jason: Three “Go’s”.

Sarah: So with all the security issues and packages being stolen, as we’ve heard over the last couple of holiday seasons actually, it’s been a really big issue in Las Vegas, here where we’re headquartered, it’s been a major issue with people taking packages. So with that said, what do you guys think about BOPIS and the click and collect. The BOPIS is the buy online, pick up in store?

Jeremy: Yeah click and collect, that’s getting big. I mean you see outside of a lot of stores– there’s a grocery store down the street that has this large locker where Amazon can deliver packages to. There are some services where they’ll actually give you the code to your door. Tesla is actually cutting deals now with some shippers and some distributors where you can actually contact the owner– you can have a Tesla sitting in your driveway and they’ll contact you and you can watch them open up the trunk of your car and put it in the trunk of your car, while you’re sitting there watching them. It’s just amazing.

But I mean, this all comes down to porch pirates, right? You can’t watch the news for one week without seeing clips of porch pirates, and people are sharing that on Twitter and Instagram like “hey people in the Las Vegas area, somebody just stole this thing off my porch. Can anybody help me, can anyone identify them?”

It’s kind of funny, it’s like the back-swing of piracy. And in theory, everything started to go online for that, because everything is happening online now. Credit card payments are all online, people don’t buy as many things at brick and mortar, but this is new because everybody wants to buy things online it’s harder to steal somebody’s credit card information in an online environment versus grabbing a card and skimming it in a restaurant.

But this is the other side of that coin, where it’s pretty easy to just grab something off somebody’s porch.

It would be interesting to see the internal conversations of some of these shippers– like what is the cost of just letting drivers drop something on your porch, verses requiring signature or doing something like that. And the click and collect is really the end of that path. You can order something online but you just go to whatever retailer you bought it from or some third party business and pick it up. It’s safe and secure and you don’t have to get a PO box, you don’t have to deal with going to the post office. I think that’s the logical outside of that discussion.

Jason: Arrrr the porch pirate is here for your package!

Jeremy: Some guy with a parrot on his shoulder and an eye patch stole my rice cooker.

Jason: You know what’s interesting, you talk about one side– obviously security in protecting the package, but the second half is it gets almost back to our final mile question, that consumers just want what they want when they want it. So if you’re willing to wait, you wait for the final mile delivery. Otherwise, you’re saying “you know what? I need the medicine at CVS, Walgreens, whatever and now I’m going to go there, I want it to be picked up in a separate line for me, so I’m able to get quickly out, fast, and secure.

Jeremy: Absolutely, absolutely. It’s kind of anytime there’s a great innovation, you see this big splash back in both directions, so everything went online. And all of a sudden you have these major retailers– brick and mortar locations, closing down because online is the big thing. And now you’re kind of seeing this splash back in terms of– “well yeah, but my stuff is all getting stolen off my porch”. So it starts splashing back in the other direction. But if I can order it and know what’s coming the same day and I could be there and available to receive it, it kind of solves that problem. So there the splash starts going in the other direction– now I trust online commerce a little bit more, because I know when it’s going to be there, it’s not gonna be out “well sometime between Wednesday and Friday, roughly business hours, could be as late as eight o’clock”. I think that’s a game changer– being able to deliver things real-time or near real-time in that way, it instills a little bit more trust in just their methodology of ecommerce.

Jason: Agreed.

Sarah: All right so I think all three of us here would say that this BOPIS concept is a definite go.

Jaon: Triple go.

Sarah: It was interesting, Jeremy, that you’ve brought up a lot of the brick and mortar. So as everything did and has moved online, I think with this backlash we’ve actually started to see somewhat of a change with the brick and mortar… and I’m not sure if you can see where I’m going with this, but Amazon has been a great example of an online retailer that is now starting to go out into that brick and mortar space.

Jeremy: Yeah and that’s the splash back. You start seeing that they realize that they kind of maybe took it a little too far in that direction, so you real it back and it’s a competitive thing where it’s easy to say, “well hey I just created this vacuum, now let me go back and fill that in with my own presence”.

Sarah: There’s a couple other stores that have been doing similar and they started this earlier. You’ll see there’s a lot of boutique shops for Fabletics, that’s the online athletic wear company– a lot of it was subscription model, you get a savings that way, but it was an online retailer only. Now you’re starting to see, within the last year, a lot of these stores popping up in shopping malls across.

Jason: You’ve got to build a brand, got to get foot traffic.

Sarah: So it’s it’s interesting to see where as a lot of these customers and a lot of retailers have gone online, a lot of them now are starting to go into these smaller (physical) shops. So I think one of the ecommerce trends actually will be to see more and more of these brick and mortars.

Jason: Yeah I would say the other concept to probably watch out for is more kiosks. I was just at an airport yesterday and you look at those Best Buy kiosks, I think we’re used to that. You’re going to see more of that. As minimum wage continues to increase, people are going to look for more innovative ways in which to cut labor costs, while still being able to deliver the product.

Furthermore, the technology has just gotten better. I mean you think of the vending machine of twenty years ago, ten years ago, now you can have a hundred options in the same footprint of what maybe used to only have ten options. It’s really an exciting time to be a consumer and I think different retailers can come up with different concepts, and some will win, some will lose, but lots of different concepts.

Especially when I was at CES this past week– no shortage of innovation coming to the space. So absolutely I think new store concepts are coming and out with the old. You look at Sears with Eddie Lambert and their bankruptcy issues at this point… The old model, the “battleship” department store for filling every need you have? Those days are just gone. So buckle up, it’s the wild west, let’s go for a wild ride.

Jeremy: It’s interesting. One of the things I think might be part of the Amazon concept for the brick and mortar is– there’s a phrase for it and I can’t think of what it is, but you basically go there and you look at the products and you buy it, but you don’t take it with you. You’re just there to hold it, and to look at it, and to play with it, and push the buttons, and then you put it back on the shelf and say “okay great, go ahead and send me one of those or send it here and I’ll pick it up later”.

That’s an interesting hybrid of both of those models: ecommerce and click and collect. And I mean really and kind of unfairly, a little bit, but markets will do what what markets will do. That’s how consumers are treating a lot of these existing brick and mortar stores, especially in the electronics field. They’ll go down to look at a TV and pick out the one they like and then they go home and order it off of some online retailer. There’s a lot of competition that exists in that space, but it’s an interesting hybridization of those models.

Sarah: I had an interesting experience this past weekend with a brick and mortar store. It’s one of those shoe places, but for gym shoes, and they fit you for this, you do the whole analysis of your stride and all the other great stuff. It was interesting because we went through the whole process, picked out a pair of shoes, and what does this retailer do? They go online right in front of me and they say “all right this model is available and here’s your color choices. What do you want me to order?”

So now they order it for me and there’s no incentive, no like price difference. So I could have gone home and ordered it myself.

Jeremy: I think that’s a function of just a hyper competitive environment that we’re in right now. The global playing field is getting level more and more every year. I spent fifteen, sixteen years in payments and ecommerce and fraud and we saw that happening more and more and more. You look at the different types of of payment models that are out there, the difference ecommerce channels– Amazon and eBay and these different platforms, and what you find is as retailer, as a reseller, on a lot of these platforms is you’re competing against somebody in another country, where they’ll compete on dimes and nickels all day long because it means different things to them– success and winning means different things to different people, in different environments. It’s not necessarily MSRP or how much can I get out of this product. And so along the same lines you see where now you can’t compete on price anymore, you have to compete on service and you have to have a unique offering, and that’s a perfect example. The offering there was well I could buy this online, but I was able to have a conversation with somebody that looked at my stride and my gape and all of these things and told me this is the right shoe for you, let me just go online and order it for you. You just paid maybe the same price, or you might have paid them a little extra– even if you don’t, you bought it from them and not from their competitor.

Sarah: That’s interesting that you say that because it actually leads into the last point that we kind of want to talk about, which is differentiation. It’s huge because I as you said, going to Amazon and you could type in any single product you want– food, jewelry, whatever and you could have so many of the same exact product with just negligent of a price difference. So how does a company or retailer differentiate their self? One of the trends that we’ve noticed is custom packaging.

So yes or no? “Go” or no? Custom packaging, Jason?

Jason: I’m going to sound like an Amazon fan voice. It’s that iconic box. Everyone knows what an Amazon box looks like, their taping, etcetera… Beyond the actual mechanics of a box, it’s a great marketing tool. I think brands are catching on to that and realizing that why wouldn’t you go ahead and try to take that extra opportunity, especially if you’re getting any sort of volume behind your binder product. Especially a lot of the box of the months, like shave club where they have that branded boxing and packaging, just to one– obviously work in that marketing opportunity and two– to make the customer feel special. And then three– I think at some point you’re actually able to command a higher price on trying to position this more of as a premium product.

It’s that old story about Mexican coke in a glass bottle versus your aluminum cans or the plastic bottles we have here in the states. It’s something like ninety percent of people can’t tell the difference, however when they see it, they have the perception that the glass bottle is much more of a superior product, talk about the sugars, etc. In fact we should bring some in the office one day and we’ll do a taste test, we’ll see if we can tell.

Sarah: Jeremy, what are your thoughts on custom packaging?

Jeremy: I think that Jason’s right– it can be a differentiator. The costs are a little bit higher of course, you have pay to have the boxes printed. And custom tape– you can have tape with your name on it, inserts, things like that. It’s a differentiator. And when you’re selling the same thing that maybe you’re manufacturing or maybe you’re getting stuff from by a manufacturer in China, then it’s being custom made for you. But if somebody can make something the same or similar to what you’re selling, there’s very little when you look at the mass market things– jewelry, clothing, sports supplements… I mean that stuff is all replicable. It all comes down to positioning and marketing, and custom packaging can be a way to really differentiate yourself. At bodybuilding.com– same thing. They are a massive eight hundred, eight thousand pound gorilla of sports supplements. They’re selling the same stuff that everybody else is! They have a couple of custom things, they have maybe a bottle and they stick a bodybuilding.com sticker on there. But you see that one box, the distinctive white box with the blue label on it, and you know there’s my stuff and it’s bodybuilding.com. But it feels different like you make an emotional connection with seeing that box.

Jason: Just to be clear I never had an emotional connection to any box. Much less a bodybuilding.com box– I wouldn’t recognize one, I haven’t seen one, I wouldn’t see it from a mile away. [Laughs]

Jeremy: Okay, Pepperidge Farms.

Jason: Seventy percent off holiday baskets. I did see some at Target and I was tempted.

You know speaking of which, to that end, we were actually just working on a project. It was like six different types of paper for one of our clients– everything from “hair of angels”, which is crinkle paper, to a silk paper on the outside. You know what I think that gets to really is just a choice and variety of options that as much as the consumer’s looking for options, retailers and providers like us are having a look for continual different ways in which to differentiate your product portfolio. So the market is stepping up, from color, to weight, to size specification, whatever. Now I’m just waiting for gold leaf to become cheap enough and then we can ship all of our packages. Gold leaf return labels.

Sarah: I agree I think custom packaging is going to make a big difference it’s something that I believe retailers have known for years prior to actually implementing it in the shipping aspect. I think about your your product from Dillard’s– if you go, when you purchase something, think about how they fold that tissue paper, the little stickers they put on it, to sit there and know how that product is packaged to you– as opposed to if you go and purchase the same product, another shirt at Walmart– they just toss it in the bag, barely folding it, and you get it home– that experience is very different. So I think that the custom packaging is going to make a big difference again in 2019. It’s going to elevate more and more brands, it’s going to differentiate a lot of these brands, so as our clients and as retailers try to do that more and more, we’re going to see that expand probably into more gold leaf and angel hair crinkled paper.

So yes, custom packaging– I think it’s a go.

Jeremy: It’s another way to compete without having to compete on price.

Jason: Triple go. Go go go go go.

Sarah: Alright. That’s it for us for right now. I think those are some of the top trends that we’ve noticed and I think we have a lot of “Go’s” on these so it’ll be interesting to see.

Hope everybody will tune in for 2019 Ecommerce Trends webinar later this month. Make sure if you’re not aware of when that’ll happen, you sign up for our newsletter at rakutensl.com so you’ll be alerted when it is live.

Thank you very much for joining us today. Thank you, Jason and Jeremy, for being here, it was greatly appreciated.

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