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Thursday, August 20, 2015
Target's latest e-commerce weapon? More precise delivery windows
The discount retailer will test a program that will give customers more detail on delivery timing for items ordered online.
It’s super frustrating to order something online and then be told you’ll get the item in 7 to 11 days, a pretty wide time window, not to mention a long one.
So, in its latest attempt to get an edge in the e-commerce wars, Target TGT0.25% will start testing a new program in the fall called “available to promise” that aims to tell shoppers with more specificity when their item will be delivered to their homes, and improve customer satisfaction.
As part of the program, customers will receive an e-mail notifying him or her when a package is arriving within a narrower window, typically two or three days, potentially offering improved shipping times, but certainly removing some of the uncertainty in online ordering.
“We believe this capability will drive further increases in digital conversion rates, which are already improving rapidly, as guests respond to a faster and firmer delivery commitment,” Target CEO Brian Cornell told Wall Street analysts on Wednesday.
Target saw a 30% rise in digital sales in the second quarter, a decent clip, but below the 40% rate Cornell has set as a goal for the retailer in the coming years. Target has made considerable progress in narrowing its e-commerce gap with Walmart and Amazon AMZN-2.80% and is investing heavily to keep up in what amounts to an arms race: this year alone, it will spend $1 billion on building up its digital firepower.
The integration of stores and e-commerce has made managing inventory and getting it to stores or to customers’ homes extremely complex, pushing Target’s supply chain well past what it was designed to do back in the simpler, 100% “brick-and-mortar days,” when goods simply flowed from vendors to distribution centers to stores.
As a results, Target’s in-stock rate has deteriorated in recent quarters, which Cornell called “unacceptable.” Earlier this week, Cornell announced a senior executive shakeup that included John Mulligan switching roles from CFO to operations chief to improve the company’s supply chain. His mandate will be to attack in-stock problems but also optimize how goods flow between individual stores and distribution centers, all with a view to improving and speeding up e-commerce and making the best use of an item.
By the crucial holiday season, Target will be using 450 of its 1,800 stores to help fulfill online orders, up from 140 now. It already has equipped its stores to allow customers to pick up online orders there. All of which connects back to the central premise of the “available to promise” program.
“We want to give them the confidence when they order, they know it’s available to promise and we’re going to have it there for them when they need it,” Cornell said.