April 2013

Welcome back! This article continues our exploration of a burgeoning online retail trend: same-day delivery. Is it worth it? How have companies fared? Read on for answers!

Broadened Spectrum

What about companies that already depend on same-day delivery for perishable or time-sensitive products—what do they stand to gain? 1-800-Flowers.com is using the USPS Metro Post service to expand delivery options for products besides flowers, including gourmet food brands. While it’s too early to gauge consumer reaction, the program is generating buzz and has already spread to other retailers in San Francisco in a region covering 26 ZIP codes.

To take full advantage of same-day delivery, it’s necessary to have a correspondingly robust infrastructure and communication system. Accurate, reliable data needs to be transmitted quickly to delivery companies in order to provide seamless service on the customer’s end. This is made much easier when companies already offer in-store pickup for online orders. Naturally, that trend is becoming common in the U.S. as well; with real-time inventory updates and intra-store merchandise allocation in place, transmission to outside delivery entities is made that much easier.

Complex Operations

The USPS Metro Post has the advantage of usage of its own trucks over courier-only services like Shutl and eBay Now, allowing it to accommodate web-only retailer like 1-800-Flowers with larger order volumes and extensive customer bases. They also use Postal Service software to calculate efficient routes for its four delivery vans in San Francisco. It can be tough to keep prices at or around standard ground shipping levels (~$10), but advertising certainly helps.

EBay Now’s model differs significantly: using a mobile app, customers locate the nearest available shopping assistant via built-in GPS, then tracks and communicates with the shopper if necessary to deliver a specific product on time. Shoppers can take advantage of eBay’s Milo system, offering mobile users real-time availability at nearby brick-and-mortar locations. They are also considering letting retailers set the price for promotions and other material usage. Again, it’s still too early to tell whether e-tailers will take to the service en masse.

Across the Pond

There are still some kinks to work out between Argos and Shutl, which have been involved since late 2010. Tests continue to evaluate pricing and discounts in the context of minimum order thresholds. They’re also weighing the benefits of free same-day delivery.

McCarthy is cautiously optimistic: “It is difficult to ascertain exactly the impact Shutl has had on customer conversion. The Shutl option is shown to the customer at the very end of their shopping journey and, theoretically, we have already converted the customer. However, from the repeat occurrences and the positive feedback we have received from users, it is both a fast and convenient way of getting goods to the customer, and offers yet another route that gives customers added choice and convenience.”

The cost of Shutl for retailers changes with the size of the order and the distance to the customer, but retailers can set their own price for their customers. They’ve been able to convert up to 45% of shoppers by keeping Shutl price at or below 5% of cart value.

Moving Ahead with Same-Day Delivery

As with most aspects of e-commerce, a balance must be found if same-day delivery hopes to take off. Covering e-tailers’ costs is important, of course, but everyone’s wary of repeating the mistakes of Urban Fetch and Kozmo.com. When they tried same-day delivery in the 1990s, they failed miserably because they overextended the service. Al Sambar of Kurt Salmon warns that same-day delivery has limited applications and absolutely isn’t right for every product, especially when the product itself can’t cover the cost of delivery. Convincing the customer with convenience and trustworthiness is the order of the day—only time will tell if online retailers rise to the occasion.

Creating a business and running it successfully is a complex, multifaceted task, and many entrepreneurs find themselves being tugged in every direction by the assault of responsibilities the influx of data and the weight of decision making to the point at which they lose sight of the forest because they are focused on all the trees. In many cases, in fact, businesses can be pulled under or swarmed over by competitors because the principals involved are too busy treading water to move forward with the eCommerce strategies that may save them. To help fledgling e-tailers the brain trust at Practical eCommerce has distilled the entrepreneurial experience down to 4 key metrics upon which every business must focus to ensure continued success, those metrics are:

1. Understanding the lifetime value of a customer;
2. Monitoring customer satisfaction;
3. Measuring your sales funnel;
4. Determining marketing ROI.

The Four Key Metrics of eCommerce Strategy

Understanding the lifetime value of a customer:

Experts suggest that instead of calculating ROI based on single sales store owners would be better served by focusing on the ROI over the life of a customer. This metric is significant because the cost of getting a new customer far outweighs those of retaining present customers. The formula recommended for this calculation is rather simple CLV = Present Value (Average profit per year x Number of years) – acquisition costs. Remember, be precise when calculating your average profits and acquisition costs or the value of the metric will quickly be diminished. Additionally, e-tailers may find value in adding some customer experience metric, like NPS, to accurately assess and predict customer retention. Once you’ve gained a deeper understanding into your customer satisfaction levels you be more able to interpret the CLV’s you’ve calculated.

Monitoring Customer Satisfaction:

There are many tools available to help you understand your customers – analytics software that tracks demographics and traffic statistics, for instance – but the best option may just be to actually talk to your customers. In fact, studies of failed businesses often revealed that those businesses left customer service as an afterthought in favor of more business oriented strategies, or simply had entire department outsourced. Once you’ve gotten a feel for who your customers are it is a good idea to implement some satisfaction metrics. Survey and feedback requests are a good starting point but eventually you’ll want something more robust, again NPS may be your best bet.

Measuring Your Sales Funnel:

Use readily available tools, the advanced segments on Google Analytics, for example, to measure the size of your sales funnel. Tracking assets like landing pages, conversion rates, and site traffic can tell you a lot about how successfully your marketing efforts have turned into actual sales. Once you’ve determined your successes and failures you’ll be able to make better decisions about which tactics to continue, which to ramp up, and which to abandon altogether. In addition, make use of tools like A/B testing to really dial into what makes you most successful.

Determine the Marketing ROI:

To determine the return on your marketing investment it is a good idea to chart your average acquisition cost; the formula to use is AAC = Acquisition spending/ number of customers acquired. Once you’ve generated a number that represents how much each customer has cost you simply compare that value with your calculated CLV and adjust your marketing spending until the numbers lie where you’d like them.

Opening a business IS hard, that’s why so many of them fail so rapidly. But by studying successful businesses and mastering the shortcuts and heuristics they employ anyone can run a successful e-business.

To find out more about how the experts at Hara Partners can assist you with eCommerce Strategy please contact us.

According to eCommerce development industry reports, by the end of 2013 it is expected that more people will access the internet through mobile devices than through desktop or notebook computers, and yet, only 10% of all sites are currently optimized for mobile browsers.  In addition, analysts predict that by 2015 in excess of $31 billion dollars will be spent by those accessing the internet through their mobile devices.

eCommerce Development – Focus on Mobile Accessibility

Companies would be wise to invest in making their sites more mobile friendly; in fact, of users surveyed, 67% said they were more likely to buy from mobile-friendly sites than their less accessible counterparts and 61% said they were quick to leave non-optimized sites in search of a more comfortable shopping experience.  According to the survey data companies attempting to become more mobile friendly should focus on two areas specifically: company info (hours, locations, etc) – with click-to-call functionality; and ease of use (bigger buttons, save functions, and fewer clicks-to-target)