Benefits of customer flexibility during the pandemic

An article in ASCM Insights (https://tinyurl.com/yyneu93x) describes reasons why retail grocery customers might be stockpiling.  The article suggests that retailers should deal with each reason separately, with appropriate steps to reassure customers.    There is also discussion of smaller retailers and their opportunities to be competitive. If customers demand free delivery, due to their Amazon Prime expectation, how should retailers compete ? Who should pay for the store labor costs associated with curbside delivery to customers ? How many of these online customers will remain in that mode as the pandemic worries decrease ?

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47 Responses to Benefits of customer flexibility during the pandemic

  1. bmyczkow says:

    The interview highlights the importance of store to customer relationships, especially in the smaller business sector where the stores can be more personal and more direct with their customers. However, this customer relationship should not be overlooked even for the bigger retail giants like Target and Walmart. According to the article, one of the primary methods to retain customers and keep people from panic buying is to continue to operate the visible aspect of the operation as normally as possible. In other words, if Walmart continues to operate as normal, with stocked products, and the same prices, customers will be less likely to buy excessive amounts of goods, which in turn will lead to more stable supply chains. What the customer won’t see is that these stores need to change their logistical operations to better match the demand, increasing truck loads, using stocked inventory, and most importantly cutting their margins so as to avoid depleting their supply chains.

  2. cpeplin21 says:

    If customers demand free delivery, due to their Amazon Prime expectation, retailers will have to compete to reduce costs in other areas of operation. The article discusses automation and robotics for large retailers like Walmart and Target but other areas need to be considered as well. For example, a lot of food in the US is wasted. During the pandemic we saw farmers dumping out produce because they had no place to deliver it in their supply chain. Solving an issue like this, albeit a long-term solution, with a platform to connect farmers and retailers could help reduce the costs of produce and therefore give retailers the opportunity to recover the cost of providing free shipping and labor costs associated with curbside delivery. Even as pandemic worries decrease, it is likely that the demand for services such as free delivery and curbside delivery will continue to be there. It is not very often that you hear somebody say that they enjoy spending time going grocery shopping. It is a huge convenience for consumers to save time, so retailers really need to take a deep dive into determining how to recover these costs without increasing prices to the end customer.

  3. MW Li says:

    During the pandemic, the business mode has been changed dramatically from in store to online.
    Retailers should face the challenge per different reasons. Supermarket and grocery stores are experiencing peak time while the restaurants or other business got a huge heat because of stay at home order nearly frozen. If customer will to have free delivery due to Amazon Prime, the retailers can choose requiring minimum order value for free shipping which will increase sales and then improve the margin to cover shipping costs. This is the worst time but also the best time. The challenges can be the turning point since it is also a good time to collect goodwill. Transform store business to online business gradually is the trending. From the stand point of customer, they just need to click the mouse and browsing online to get the order which save much more time and convenient in a sense. Maybe they will purchase more when comparing going to store since they spend more time online and surfing the internet.

  4. Sheng Yu says:

    When talking about free delivery due to their Amazon Prime expectation, first we have to understand Amazon Prime is not free delivery – Amazon Prime does cost and might cost more than delivery fee if customers are not placing orders frequently enough. Amazon offers much less product in the grocery department – especially when we talk about live lobster, local chicken, and prime ribs, and the two-day delivery means ordering two days ahead – not always applicable when you are on your last roll of toilet paper. That’s how retailers can compete – offer those goods and offer same-day delivery while spread the cost through smart solutions. Collecting orders throughout the day and use only one full truck to deliver the goods, charging membership fees, or creating new demand (thus bringing new profit) through delivery service – those are some good solutions for example.
    It doesn’t matter who’s paying for the curbside delivery because the cost would ultimately be reflected on the grocery bills. However again smarter solutions can be applied – maybe let in-store salesperson be the curbside delivery guy to sell their products?
    And when talking about online customers – with the current delivery system in the US I highly doubt online shopping would be preferred after the pandemic. 2 days waiting time would be far too long for groceries, not to mention most goods take about a week to arrive. If the supply chain can not cut down delivery time, stores and retailers would still take those online businesses back once the pandemic is quiet down.

  5. Adam Hupp says:

    Customers have increasingly high expectations for delivery time and cost. Large retailers such as Walmart and Target have the scale and resources to compete on quick delivery and free shipping, but this is much more challenging for small retailers. However, small retailers have the option of selling on platforms like Amazon, and this is the easiest way for them to gain a wide audience quickly.

    New services like curbside delivery will be difficult to sustain without increases in revenue that make up for smaller margins. If free pickup enables Walmart to draw customers who previously shopped at competitors, then curbside can generate incremental revenue. Even at a lower than normal margin, this is still very beneficial for Walmart. However, if most of the curbside customers were already Walmart customers, then this results in lower margins for Walmart’s existing customers. (Though this service may still be necessary to prevent them from switching to a competitor.) There is a strong possibility that many customers will stick with curbside delivery in the future because of the added convenience. As this service remains in use, companies can make up for increased costs through increased automation, tailored product recommendations, and streamlining the process of trailer-to-curbside delivery.

  6. Yuchen Zhang says:

    The retailers should differentiate themselves with Amazon to survive as they do not have the same scale and capacity. In rural areas, there is no grocery delivery from Amazon and that is what local retailers should focus. They can add additional logistic cost to the products and still offer “free” delivery to customers. During pandemic, customers would not mind the extra cost to have the convenience of grocery delivery. Also, the local retailer can encourage the customers to subscribe the grocery with the benefit of free shipping. This can generate continuous and stable revenue.
    It would always be the customers who pay for the cost of additional service because they benefit from it. Those customers will always purchase in large quantity thus they would not mind paying extra. The curbside delivery is time-consuming for the store’s team member; therefore, they should be compensated. The additional service enables the customers to have alternative ways and they can choose based on their preference.
    If the pandemic worries decrease, online customers will remain in that mode because they still worry about other uncertainties. The pandemic just accelerated the process.

  7. Amazon Prime is a unique business function offering by Amazon, whose business was focused on e-commerce and delivery of goods long before the pandemic. Therefore, the purchase of its “fleet” of trucks came on time for the company and for consumers. However, if we look at the very value that customers need now, rather than delivery, we see that Walmart is also competing with Amazon, offering customers to pick up the goods themselves, without contacting a large number of people in the store. it can be cheaper for businesses to compete by offering their customers their own solutions that deliver value within their capabilities, rather than copying Amazon’s business model.
    Unambiguously, someone must pay for the resources spent on the delivery of goods. But who? I agree with Professor Ananth Iyer that the price for customers cannot be raised. Of course, the goodwill that a reliable company earns by just-in-time meeting the needs of its customers is much more expensive. And, we see that people are willing to pay for it. Over the past year, the price of Amazon and Walmart shares has increased significantly, by 92% and 23%, respectively. Thus, companies have the opportunity to offset their costs with the help of investors.
    It is very difficult to predict how many customers will continue to buy products online. But we can say with confidence that the vast majority of Purdue students, for example, choose to study on campus. Therefore, in my opinion, the human desire for real social interaction is still very strong. Thus, I believe that after a certain amount of time, the ratio of online and offline sales – with minor changes – will return to the level, which was before the pandemic.

  8. Szu Han Huang says:

    In the interview, we realize that what E-commerce benefits customers most are quick and free delivery. It provides the customer more safely way to shop during COVID-19 period. I agree with that it may cost a lot for a retailer to develop E-commerce. It also requires lots of data to optimize the best shopping experience for the customers. If the retailers don’t leverage well, they might lose the market again. However, I think retailers such as Walmart and Target can still take their advantages to serve the customers. For example, they can sell a kit or do some promotion event. Furthermore, they can strive for providing a safe environment for the customers to shop in person.

  9. laford says:

    If customers start to demand free shipping because of their Amazon Prime shipping expectation, then other companies will have no choice except to provide free shipping. Without this “price matching” system for shipping, consumers will be less likely to order from a companies ecommerce platform. To ensure they don’t keep missing out on potential customers free shipping will need to be offered. Who ends up covering this shipping cost? I believe that the retailer is responsible for covering the cost of curbside delivery and free shipping. To have an efficient supply chain the increased use of robotics and automation has helped cover some of these costs, but much further analysis is still needed to know what areas of their supply chain need to be improved. I believe that this mode of purchasing goods is here to stay in our market for a long time, so the amount of customers that will be utilizing the curbside pickup will increase.

  10. Zihan Lin says:

    Compared the Amazon prime free delivery and delivery options that provide by other retailers, people need to purchase membership to get Amazon free delivery service and this cost may slightly increase the margin of the product. While, during the pandemic, the other retailers need to consider how to increase turnover rate through delivery and reduce cost as much as possible instead of increasing any price.
    From this interview, large retailers such as Walmart can also provide online order and free delivery as a new marketing channel to achieve more customers. Also, using automation and intelligence can be an approach to lower the labor cost and raise the efficiency since the retailers need to pay for curbside delivery costs. But customers need to follow the settled pick up time slot. When the pandemic worries decrease, I think customers will still prefer the curbside delivery. The curbside delivery provides convince for customers and lower much time that spend on grocery shopping.

  11. Jorge Chamorro says:

    Retailers can afford the added cost of curbside and e-commerce offerings by reaching enough scale so that the labor cost per order is reduced. To do so, retailers will have to be creative to stimulate the demand. Some of my classmates have mentioned the benefits of immediate availability retailers have compared to the usual two-day delivery in e-commerce platforms. Also, the economies of scale could allow them to operate in tighter margins and keep prices low.
    I think the proportion of customers buying in the e-commerce (or curbside) channel will decrease after the pandemic worries decrease. There are several conveniences related to in-store purchasing that e-commerce is yet to provide.

  12. Shrey Bansal says:

    For better or worse, the U.S. economy and the global economy are in the throes of the “Amazon Effect,” a term used to describe Amazon.com’s success, which has upended retail practice and customer expectations, both online and offline. The online retailer’s vast selection, fast shipping, free returns, low prices and “Prime” subscription service all serve to create high customer expectations for any retailer hoping to compete.
    In order to remain competitive in terms of free delivery, large retailers should bear the additional labor or any associated costs to ensure best customer experience. Small businesses, who do not have huge capital as compared to large businesses, can interact more closely with customer to understand their demand requirements and ensure they have sufficient inventory to satisfy demands in order to remain competitive.
    Any kind of additional cost to the business is paid by the end customer. However, in order to be in the game, the retailers need to compromise with their margins to offer free curbside delivery to the online consumers.
    Although it is difficult to forecast how many will remain in online mode post pandemic, it is most likely that a large customer segment would go out to buy groceries because delivering such orders sometimes takes days. So, there is a trade-off between convenience and waiting time, which depends on customer-to-customer.

  13. Zi Wang says:

    Compared with large companies such as Amazon, smaller retailers have the advantage of ‘specialized’ and more interaction with customers. Before considering the delivery issue, smaller companies need to think about which products are able to attract more loyal customers under pandemic, and this is where the main competence comes from. Because of the long tail effect, it’s important for them to continuously find their own niche markets, such as local brands or unique products (Asian Market) and fresh vegetables (Fresh Thyme Market). It would be difficult for smaller retailers to offer free delivery service because of cost even though they reduce the staff and operation cost, but they can offer a delivery service at a reasonable fee. Depend on customers’ requirement, companies need to keep track of their product flow and make sure enough products are procured.
    Pandemic pushes people to change lifestyle and I think those habits may remain even after pandemic especially for those middle-aged and elderly people. Although some products are not proper to buy online, many people have been experiencing the convenience of shopping life necessities online. On the other hand, more companies are thinking out ways to deal with “The Last Mile” delivery aiming for fresh food. To a great extent, pandemic is a catalyst for social change.

  14. yujintao says:

    The article indicates that during this pandemic, retails may face some difficulties due to the increase of customer worries and uncertainty. For big retailers like Walmart, they can put emphasis on their online service and respond quickly to the change of demand in the stores. For small retailers, they may face a much more pressure on how to survive. In order to be competitive, they need to figure out who are their main customers and what they will buy. That’s why they need to use software tools to help them track the inventory information and understand customer data.
    As for the cost of delivery, it’s much more complex. In order to attract customers, retailers must offer free delivery, just like Amazon Prime. So, the cost must be paid by retailers themselves. But, they can set minimum consumption to reduce that cost and make customers buy more products. As time goes by, the pandemic will be under control and life will become normal again. Then people who purchase online will decrease. The cost will go down with it.

  15. Haowei Lai says:

    As described in the article, customers are stocking supplies like toilet paper because of multiple reasons such as concern for shortage and concern for price raise. In order to reassure customers, measures should be taken to confront these reasons individually. When customers demand free delivery, retailers more often than not have already included the expected delivery fee into the price of the product. For a few e-commerce business owners I know, free delivery often comes with restrictions for customers such as ordering above a specific amount, or the item’s price already included the average expected logistics cost. Because large platforms like Amazon usually have a lower cost in shipping, it is only possible to compete with them when a retailer offers faster, local delivery but it will be restricted to a certain region geographically. The end customer will always pay for the cost associated with curbside delivery.As e-Commerce became widely popular during the pandemic, customers will have more alternatives for retrieving products, and individuals choosing the style of mixing online and in-person will increase.

  16. Vincent Coltellino says:

    Humans have a mental barrier to overcome in the face of negative effects. For example, when plastic bags were beginning to get phased out in retail stores, the impact of charging people 5 cents per bag was much greater than giving the same discount for every reusable bag used. Functionally, the financial difference was the same yet people who were charged the 5 cents per tended to use reusable bags more often. It is clear that negative consequences are more impactful than positive ones in regard to human behavior, so although the consumer has a lot to gain from curbside pickup and various delivery services, they will likely latch onto the fact that they are being charged extra for the service.

    With that being said, as Dr. Iyer mentioned in the article, people tend to behave rationally. I would like to think that a part of rational thinking is knowing that goods and services have associated costs, and that being charged a fee for additional service is logical. This may be more relevant in association with small retailers where people have more of an emotional investment into their success. People have an understanding that smaller retailers have limitations that may raise the price of goods and services, yet they still shop at the local store and pay the premium. I do not know the answer to this question, but could it be that they would pay the premium for shipping/curbside delivery at one of these smaller retailers allowing the labor costs to be covered? Like many people mentioned, these small companies don’t have the resources to automate and cut costs like the Amazons and Walmarts of the world.

  17. zhixinli says:

    We all understand that it is relatively difficult for local small businesses to survive and compete against large-scale e-commerce companies such as Amazon. While Amazon is serving globally, the local business could aim to serve the local communities with a one-day direct store to home delivery. To cover the costs, local businesses could charge a reasonable delivery fee but should ensure the quality and efficiency of their service. Just like what has been mentioned in the interview, small business owners should understand customer needs. In terms of curbside delivery, this is very common in large-scale businesses like Walmart. Because people are reluctant to go out during the pandemic, the in-store workload has been significantly reduced. Businesses could assign some staff taking care of curbside delivery, but it would always be customers who pay for that cost. But at least Walmart has given the right to customers to shop in-store. Therefore, customers could weigh the pros and cons and shop the way they preferred. As the pandemic worries decrease, I assume that most people would turn back to the traditional in-store shopping, at least for groceries. It would be a nightmare to wait for your milk and bread to be delivered in 24-48 hours. But for large-size commodities such as tables, bed mattresses, and TV, most people would prefer to buy them online since e-commerce provides discounts and lower prices more frequently and it is way more convenient.

  18. tiandai says:

    In the current situation, it may be difficult for small retailers to provide services that can compete with large companies (Walmart, Target), such as free shipping. However, small retailers can actively communicate with their customers from the perspective of understanding customer needs, enhance customer confidence, and share information with customers in a timely manner. Under normal circumstances, the additional customer service provided by the company can always be reflected in prices. However, facing the special circumstances of the epidemic, consumers are more sensitive to prices than usual. In this case, you need to be very cautious when choosing a price increase. The alternative is to compress one’s own profit margins and give up part of the profits to ensure the stability of the supply chain and ease consumer anxiety. I think that due to the long duration of the epidemic, even after the pandemic is over, many consumers who have adapted to online shopping will continue to maintain such consumption habits.

  19. Zhewei Tao says:

    Post by Zhewei Tao

    Due to the differences of business scale and capacity, small retailers are facing more challenges than company like Amazon does. However, it doesn’t necessarily mean that smaller retailers are going out of business. They can transfer their own unique characterizes into advantages comparing to larger scale retailers. For example, local retailers have better and more interaction with suppliers and customers. They might can come up with some curbside pickup service by taking either phone call or online orders. Under this condition, suppliers can have certain goods ready before sending those to the shop and customers will only need to show up and pick up at certain place in each window. Like professor mentioned in the article, it’s getting more and more important for smaller retailers to retrieve data from their customers. If they can further understand customers’ direct needs. Then those smaller retailers can sell products direct to them with less operation fee and less advertisement fees. With this lean supply chain, more upside profits can be expected. Also, if local retailers are expecting to expand their business during the pandemic. It might be a good idea to use the platform offered by bigger companies. As for the store labor cost, I believe most of the people understand the current pandemic situation and they don’t mind pay bit extra if they need to maintain their basic safe living level, so it’s reasonable for them to pay this part of money. If the vaccine can be produced soon in later this year, more people will feel confident to shop physically and thus online sales will decrease along with the cost.

  20. chizhang says:

    The interview mentioned people it is important for the smaller retailer to have a relationship with customers when competing with large companies like Amazon, but small retailers may not have enough budget for building a software-as-a-service tool or platform which is expensive. Popular social media such as Twitter or Instagram would be a better choice for small retailers, they can give their customers some gift after customer followed their social media account and update their inventory in the social media every day. So small retailer can have better interaction with their customers and customers will stop stockpiling after they know there are enough inventory. Besides large companies such as Amazon only provide their two-day delivery to their Prime membership which is not cheap for the. However local small retail could provide two-day or even one-day delivery without membership charge, and they can charge different amounts of delivery fee depending on how much customers order to cover the cost associate with delivery and encourage customers to buy more products. After the pandemic, I think a large number of customers will remain in that mode, the majority of people are preferring more convenience life, it like people who drive Tesla and use autopilot for a long time will not go back to traditional cars

  21. Mathews Oommen says:

    In order to compete with the likes of an Amazon Prime, retailers can offer free delivery for a minimum amount of goods purchased. They can join hands with Uber, Lyft which has the required infrastructure to carry out the delivery. There will be an additional cost associated with the delivery, but it can be covered in the long run with more customers and purchase orders.
    At this time of the pandemic, it may not be wise to increase the costs of the customer in order to meet the increased expenses of the retailer. Rather, a cut in the profit margin should meet the expenses. The goal of the retailers should be to stabilize the supply chain rather than to increase their profit.
    Even when the worries of the pandemic decrease customers may stick to online purchases due to the flexibility it allows. Hence, any investment made in that aspect will be beneficial to the retailer in the long run.

  22. hu431 says:

    The interview mainly talks about the effect brought by COVID-19 from two aspects, large business and small business. For big retailers like Walmart and Target, they applied e-commerce to satisfy customer expectations, because the product is out there. Thus has the cost problem, because the worker is doing the work that customers used to do by themselves. And for small business, understanding customer data is the most important. This means that small business retailers would want to build relationship with customers, could predict what product customers will be looking for when they come in to the store. Since small retailers could talk to customers face-to-face, the relationship would allow small retailers to know more information about customers. Thus, it is important to keep people coming to the store, and thus they would have a lower margins in order to survive in the long run.
    If customers demand free delivery, customers would be happy because it is free, however, all that free delivery added costs to retailers. To reduce cost, i have the following suggestions: paying member fee in order to have free shipping benefit as a lot of companies did, or set up a bottom price.
    And i think it is hard to say who should pay for the store labor costs associate with curbside delivery. In my opinion, the retailer offer product and service along with the product as a whole to customers, and thus customers are paid for not only the product, but also the store labor service cost. And thus customers paid store labor service cost from this prospective. However, labor cost is considered under the cost of the company, which means that labor cost is paid by retailers. From my opinion, i would say that the company paid store labor costs directly, while customers paid store labor costs indirectly.
    As pandemic worries decrease, i think that online customers would decrease slightly rather than significantly, because it is hard to change when shopping online has become habitat. People are used to shopping online, it is convenient, and you could receive what you want without going out.

  23. Antoine Minier says:

    If customers demand free delivery, due to their Amazon Prime expectation, how should retailers compete?
    Retailers need to invest heavily in technology to offset of the cost of the delivery. Indeed, during a pandemic, it is very difficult for retailers to increase prices because people pay more attention to their finances. However, home deliveries create several cost for retailers like preparing commands and the logistic to deliver commands. Because it is a new market for retailers, they should try to corner this market by being the most competitive and therefor propose the best deal to the customer even though it implies to lower margins. On the long run, by gaining experience in this field and creating a pool of regular customer for their delivery service, retailers will be able recover some of their loss when the pandemic will be under control.
    Who should pay for the store labor costs associated with curbside delivery to customers?
    As explained previously, retailers should absorb those cost at the beginning and try to reduce them as much as possible.
    How many of these online customers will remain in that mode as the pandemic worries decrease?
    The number of online customer will decrease when the pandemic decrease but I think that because of this new service, retailers will be able to attract new customers for the long term and therefore make their investment worthwhile.

  24. Robert Waggoner says:

    The pandemic brought forth many challenges for retailers such as demand forecasting, shortages, supply chain operations, health and safety regulations, etc. specifically noted throughput the interview. Looking back, we should really appreciate the great success the large retailers such as Walmart, Amazon, Target, Kroger and others were able to have. Even with the hardships of the pandemic, basically all of the top retailers had enormous gains in revenue and profit, regardless of the extra costs of dealing with the virus. Walmart for example, not only destroyed analysts forecasts on revenue, but also killed it in EPS and ecommerce sales over the last 2 quarters. It will be interesting to see how the Brick and Mortar retailers compete with Amazon in the coming years, now that many of them are adopting new free pickup and delivery operations at majority of the locations. Sales are definitely showing growth in ecommerce for these companies thanks to the pandemic, and a lot of these sales are from customers who don’t regularly shop there.
    As for smaller retailers it will always be difficult to compete with the big stores, however there is still hope for success. As mentioned in the interview, Implementing better information systems for inventory control and focusing on customer relationships can make a huge difference for these stores.

  25. yutzu_huang says:

    In the article, the key of the solution in the pandemic time right now is to maximum the margin despite extra cost caused by protection steps, such as full truckloads, scheduling third-party pickup, investing e-commerce/automation. The company should find out the data or think how the customers will think. Small business which have less resource and supplier connections can be harder to complete with bigger companies. As long as their whole supply chain is running full, this time can be brand exposure opportunities for them.

  26. Shannon Hadley says:

    It is no longer an “if” customers demand free delivery because of Amazon, because they do and this is not new and it’s not going anywhere. Because customers are demanding free delivery from retailers, the most common way to address this is to build the labor/shipping cost into the price of the item. Customers will happily pay $30 on amazon with free shipping, yet still complain about a $5 shipping fee on a $20 item. While it is not practical to raise the price for something to be shipped freely to customers during a pandemic, higher demand has forced prices on essentials to rise for them to even have a spot in the store while many customers may not fully understand the reasons behind that raised cost. The cost of shipping has to be incurred somewhere, in a customer’s mind a $2-$3 more expensive product with free shipping is better than a $2-$3 less expensive product with $2.99 shipping. For larger retailers, the shipping costs should be incurred by the customer; they are already paying for it without knowing it on a regular basis. As for smaller, single location businesses that are recently adding options for delivery and online ordering due to having to adapt to customer expectations in the midst of a pandemic, seeing a service or delivery charge should not be shocking to a customer who is aware of this new service meant to keep the business afloat during a pandemic.

  27. Atharva Sabnis says:

    While Amazons and Walmarts leverage AI and other algorithms to predict and even manipulate customer demand, small stores and their closer ties with customers can indeed be used as a way of calming customer panic-buying by either having inventory on shelf or a quick chat reassuring availability of their preferred products. What is crucial for these small retailers is that even if they can’t have more product variety, customizations, free deliveries and returns, they have a connect and customer loyalty backing them. If they can be temporarily prepared to absorb a smaller margin and yet function at maximum efficiency, they will maintain or even grow customer goodwill by providing deliveries or curbside services.
    When the prices go up, it is perceived as a decline in availability of products, which further causes panic buying and aggravates issues. So, charging the end customer with the cost of services during a pandemic would not be the right way to go. However, a one-time fee like the one by the online Walmart Grocery, is seen as a service charge/convenience fee and hence, could be used to balance out the cost of additional services.
    There is a lot of resistance among customers who have been accustomed to buying their own groceries in the store, and despite circumstances, and availability of services like curbside or delivery, these customers still prefer shopping in-person. However, a large segment of people who prefer an online cart over a physical one would continue with online deliveries as it saves time and improves planning and visibility. The only challenge would be balancing the cost of these services against their demand.

  28. Miheeth Gala says:

    The major point for all business right now to remain in the market is the 4th C – competitiveness. It is a call for small businesses to decide whether to reduce margins and stay business, hoping for normalcy or to shut down businesses. I believe customers have got used to free delivery, curbside pick up etc and will continue to expect the same even after the pandemic ends. Large players such as Walmart might be able to suck all the losses, but small businesses have a grave concern of finding out solutions. The best option for these retailers is to clubbing products and selling as packages. In this way, although the margins are less, the products sold would be high. Packages should be formed wisely and may be one product out of 5 products in the group could be a little costly which covers the cost for the rest. Retailers have to analyze the current demand of products and customer demand to decide on packaging different product together. This idea of kind of turning the business model to wholesale and increasing the number of items sold seems like the most plausible and best option out for the retailers currently. In this way there is a chance that retailers

    • Miheeth Gala says:

      … might be able to continue to survive the pandemic and be able to fight their way out in the highly competitive scenario. Thus these small retailers will be able to fund their expenses of curbside delivery or free deliveries.

  29. Wenzheng Jiang says:

    Post by Wenzheng Jiang,
    This article provides some valuable suggestions and details for retailers. It’s important to keep customers flexible during the current pandemic. Retailers need to study customer data and needs. On the premise of survival, profit reduction is acceptable. In addition, Amazon Prime itself requires membership fees, which retailers may learn from. The end customer will pay for the store labor costs associated with roadside delivery. In the current pandemic situation, many people will continue to buy online.

  30. Aishwarya Marreddi says:

    If the customer wants free delivery, the retailer has no option but to offer it. In today’s competitive e-commerce sites if the customer satisfaction which would bring in new or even continue the existing customers. If free shipping is what they expect, it is better the provide it and find a way to sustain by compensating those costs else where. With the internet at the disposal to customers, they would always compare and buy a product. So, to keep the customer satisfied must be given top priority or else the business would not sustain.
    To hold on to the customer it is better that the store pays for the curb-side charges. With the pandemic situation, the restaurants have cut down/shut the dine-in options. Maybe the resources which were previously deployed can be shifted and utilized here. With almost everyone’s household income going down now, customers would really appreciate the prices remaining constant. The store gets to keep another loyal customer.
    Online shopping which was a comfort way of shopping has turned into a necessary mode now. These high numbers which we see now, may or may not continue but it is for sure that this impact is to carry for a at-least a couple of more months if not years. It is essential for businesses to gear up continuously and have sufficient stock available to meet the demand. Customer demand is rational. Even if it is not through online, the stock will be sold else where. We will have to wait a little longer to see how the new normal looks like and see how the numbers would settle down.

  31. Although automation, robotics, and big-scale logistics collaborations are options for big retailers like Walmart and Target, the small retailers don’t have the flexibility to undertake these initiatives because of the cost that comes with these. A few ways the small businesses can still compete with giants without sacrificing margin:
    • Deliver excellent customer service & personalization at all stages of buying. Focus on selling experiences rather than just products
    • Make the entire process of shopping easier and more convenient, include rewards & offers to build long term relationships
    • Build a community, an open space where people can come together and share their experiences
    • Hone in on niche products that customer would want to experience and that’s exclusive to just you

  32. Achraf Lokmani says:

    Any small business that hopes to stand a chance of surviving this pandemic needs to be willing to absorb the costs of offering free, flexible delivery and come up with a game plan on how to recover those costs in the long run. The e-commerce customer, which many of us have become these past several months, will turn to other big-box companies or even smaller businesses who have decided to offer free delivery.
    When a business starts thinking about biting that free delivery cost up-front, there are a few things to consider. Firstly, Prime does have a yearly subscription fee, which also includes the benefit of having no minimum order amount to qualify for the free, 2-day shipping. The small business may have to strike a balance between free curbside pick-up with no minimum order and requiring a minimum purchase amount for free delivery in the hopes of mitigating some of the lost margins. After all, popular grocery delivery services like InstaCart charge delivery fees and also allow customers to tip their shoppers, so a small minimum amount for free delivery may not be so off-putting to customers as one might think.
    Ultimately the cost for this service needs to be eaten by the small business until they are able to resolve their lost margin long term by investing in something such as software-as-a-service option or partnering with a service such as InstaCart.
    After the pandemic, it’s likely that the need for on-demand delivery will wane for many small businesses so it is advisable for businesses to be willing to accept the lost margin for now and struggle through these times with the assumption that in-person shopping will resume in time.

  33. Aman Pawan Arora says:

    Customers’ increased need for product during the pandemic should be taken in a positive light by the retailers both big and small. In case of big retailers, since they have inventory cover of 80-120 days in the supply chain, the challenge is to ensure that the inventory moves across the chain faster than before. This might mean that individual stores order LTL so that they are more responsive to customer demand and this leads to lesser margin, and this is the time to accept this lower margin to ensure the topline is as high as it can be. For smaller retailers, since they interact with the customers and understand them better, they should again ensure availability of inventory although they might have higher logistical costs due to lower volumes. At the same time, providing confidence to customers is crucial to reduce this panicked demand over time. As far as free delivery is concerned, that is now the baseline for customer satisfaction and every retailer needs to offer that and ensure the perceived value of goods is such that they’re able to recover the delivery costs in the long term

  34. hsuehmouhuang says:

    It’s getting more and more important of e-commerce and data information to retailers. Amazon and Walmart have developed a strong and advanced system to deal with data so that they can keep track of the actual market demand and respond it quickly. Even investing in e-commerce is the expensive thing and probably they can not make ends meet in short term, retailers are going to meet demand effectively and efficiently in long term because ones who can meet actual demand will get better in their profits. However, we must notice that retailers are going to catch up with e-commerce because sometimes when we want to place an order to some items, we find that it is actually out of stock. Therefore, just like professor said, product is a real things that we should care more about how to make product always become available and not just invest in building a cutting-edge system but mismatch the products and e-commerce.

  35. Karun Nambiar Manikoth says:

    If customers demand free delivery, due to their Amazon Prime expectation, retailers have to react by dropping operating costs to match. The demand increased for certain products increased significantly during the pandemic, and the expectation for free delivery did not change. Retailers have to find ways to compete and ensure business. Large retailers like Walmart may not suffer in this sense, due to their large resources and customer base. Small retailers may suffer, so a suggestion could be to move onto Amazon’s platform, to utilize their large customer base to meet their operating costs. It’s difficult for small retailers to compete with large retailers who offer free curbside delivery.

    Using automation and robotics can help lower labor costs in the long-term and improve efficiency, meaning small retailers can then use the savings made to provide free deliver and/or curb-side delivery. But there will likely be other areas of operations in the supply chain to improve as well to meet those delivery costs.

    I do believe it will take time, well after the pandemic issues decrease, to see customers retract from using curb-side delivery of items, and move into grocery store shopping. People gravitate towards comfort and ease, and this may well be the reason free curb-side deliveries exist for a few years after 2020 and is also often used by customers.

  36. nishchaykhona says:

    From my perspective:
    1) When it comes to customers demand expectations like Amazon Prime, in shorter term smaller retailers can focus on products which a) have higher margin in order to mitigate additional cost b) are repetitive in nature of ordering by customer and preserve customer loyalty. In longer term, as customer relationships are built by smaller retailers, logistics network on smaller scale can be built on order to ensure 2-3 hours product deliveries to nearby customers and this can be a USP as compared to bigger brands.
    2) Labor costs ideally should be bear by retailers since customers will prefer online shopping with deliveries option rather than curbside pickups if they are being charged pickup costs. Just in time concepts can be used in order to optimize no. of labourers required for a particular shift.
    3) It is being perceived that customers are making a permanent shift to online mode as they bring ease and consume less time for shopping. While this may depend based on products like clothing, food etc. more consumers will be preferring this mode.

  37. Mrunal Vaidya says:

    1. With the given situation, free deliver has become a must for the customers.This will undoubtedly force the retailers to sell at a low margin, but keeping the business running is more important in this hour. Once they are through, it would definitely be more smooth sailing.
    2. The labor costs must be bourn by the retailers but laying of people in such situations is also not an option. Target has been hiring people that lost their jobs due to the pandemic and that has created a perception that the company is responsible and considerate. That being said, small scale retailers can think of outsourcing or selling through a bigger brand with low margins to keep up with the costs.
    3. Online shopping is undoubtedly convenient, with the continuous sale offers many a times cost effective and reduce the shopping time. With free returns and delivery it looks to be the future of retail. I cannot agree more that knowing your customer and building goodwill is the only way to keep the sales up by catering to the need to the customer. An approach like Zara’s would work the best in my opinion in such conditions. Changing the product line to best suit your customer base is the way to go.

  38. Matt Wright says:

    Retailers *must* compete with Amazon by offering delivery to those seeking it, as these customer will find a different retailer if such services are not available. The advantage grocery stores have is that *most* people still default to brick-and-mortar stores for any food products. Therefore, even if the store must increase prices to allow for delivery, the consumer will likely use the grocery before Amazon. Groceries can offer similar services like pickup, or implement order minimums, to make the process slightly more efficient.
    From my standpoint, the last thing stores want to do is tag delivery fees on to the end of orders. Most stores have seen increases in revenues due to decreased restaurant dining and increased home cooking. Therefore, they should be able to absorb some of the delivery costs. If they cannot, they might want to consider raising prices of individual items by small amounts for online orders. This will look less jarring to customers than a fee at the end of the bill.
    Most customers will probably return to shopping in-store once the pandemic improves. If stores wish to accelerate this process, they can work to learn why customers still use online services, and use this information to encourage customers to return to the store. For example, if customers do not feel comfortable shopping in-person because they think the store is not clean, the store can advertise the measures its taking to maintain cleanliness.

  39. nishchaykhona says:

    Observed store sales can be used to reduce stockouts via: a) Demand side: There will be a need to verify whether the consumption pattern observed for specific products in stores is a temporary or a medium-longer term thing. Customer surveys can be a tool utilized to gauge this shift by providing customer with some incentive to filling out surveys. This shall help to analyze the firm demand patterns. b) Supply Side: Once critical SKU’s are known, investments can be thought of at vendor’s end in order to ramp up capacity, alternate sources can also be evaluated. Optimization of shipping lanes can be explored in order to ensure smoother flow of products to stores. Vendor Managed Inventories (VMI) can also be negotiated in order to ensure optimal stocking levels.

    As VMI provides suppliers a control to maintain necessary inventory levels and align their production plans accordingly, it can be helpful in navigating through current challenges. Companies can reduce labor costs at own end due to lesser responsibility and this can lead to reduce spending.

    As there are spending pressures, it seems that share of revenue via contractors will be impacted since customer will conserve cash and shift to DIY mode majorly. New enrollments of contractors can be stopped and as it seems that this shift can be a permanent, trimming down of workforce might be necessary.

  40. Rishabh Jain says:

    Amazon in light of its known customer obsession has been relentlessly trying to raise the bar of competition. One of the critical things to WIN or RETAIN a customer is to decrease the lead time. Amazon has raised customer expectations for the delivery time and they are able to manage the cost because of the optimized operations and economies of scale. While big retailers like Target and Walmart can still compete with the delivery SLAs utilizing the volumes and available treasure chest but this will impact the small retailers that capture a very small market share in the e-commerce market. For these, they will need to decrease the operational costs by exploring the inventory management, consolidation of products for logistics and better forecasting. The reduced costs here can help in improving margins and the ability to provide faster shipping without losses. Once you have a growing market share, your costs of transportation and other things will eventually decrease (Amazon’s virtuous cycle: https://images.app.goo.gl/tABNQJNLTyrLLKbx6)
    Since e-commerce is a very convenient way of buying things, I believe that its growth rate will not wane even after the pandemic because people will be used to this comfort in shopping

  41. Diego Palacios says:

    Diego Palacios

    I believe Dr. Iyer’s comment regarding the rationality of customers is extremely important because it allows companies to be proactive on how to address them. Although everything was (and still is in some degree) uncertain for everybody, this assumption enabled companies to respond proactively. Actions taken by companies in this situations can really strengthen the brand, or can generate big losses (goodwill).

    This situation has been eyeopening for many people, and might drive customer habits more towards online shopping. on of the key takeaways I would highlight, is the need of retailers on rethink how they are going to cover the costs of doing the “work of the customer”. This might be also a great opportunity for new companies to enter the market focusing on doing the “customer’s work”. As an example, the Colombian company Rappi, has been a key player in this market (It is one of the few Unicorn companies in South America). In the case of Peru, Rappi has been able to outperform by far Uber Eats as it is much more flexible.

    Lastly, this crisis situation will be very interesting to analyze looking behind, as it will allow companies to understand better how consumers behave in crisis situations. It is the first time in history, that companies can collect this amount of data in a global crisis and could be fundamental to create crisis management plans / disaster planning.

  42. lvargass says:

    Delivery purchases have come to stay and continue in the retail market, not only due to great offers as the free delivery, but even more related to convenience and time effective for so many people who works during the day, and the last thing they want to do is used their free time at the grocery store. Amazon Prime great deal of free delivery is a very well calculated service, where this company has the capacity and scale to be able to offer such service. But for smaller retailer this might not be as easy, but it’s a service that right now could increase their margins of sales, especially during Covid times.
    The need to incorporate online sales plus delivery service are key for the survival of business right now. The cost associated to it must be difficult to bear without any cost associated to the customer, but there are ways that could leverage this and find the opportunity to connect with customers who may want to continue purchasing from their stores. For example, offering free delivery with a minimum amount of purchase, or even free delivery with a monthly membership fee, that would actually make customer want to keep using the service since they already have a membership.
    I believe that the percentage of new online customer have discover how beneficial is to purchase online and only pick up or deliver to their home, that even after the pandemic would continue using and preferring this system of retail purchasing, so business have to really think for the future and how to utilize this technological tool to reach and connect with their customers.

  43. Guillermo Cerutti says:

    Large retailers, like Target or Walmart, have the resources to compete (Think of Walmart now having a new product to launch: Walmart +) but they can opt to offer a different option to customers and differentiate from Amazon in other aspects. They are still offering free delivery (Walmart I think it does with purchases of $35 or more in total).
    Smaller organizations that have more constrains can use the platforms of Amazon or Uber Eats to compete and offer something that again, differentiates them from the competition.
    All the organizations will have to transform at least some part of their supply chain structure due to the pandemic, it remains to be seen just how much and if this can be used to gain more market or not.

  44. Rujuta Mamadapur says:

    As mentioned in the article, conversation and active customer engagement are key. The smaller retailers can have a repository of their regular customers in the form of email ids and send out notifications regarding their stock information. That way, the customers will be assured that a stockout will not happen and they won’t hoard supplies. Amazon prime also comes for a 1-time yearly cost for free deliveries. Walmart groceries has also adopted deliveries for a year at a priced membership. If a similar approach can be taken by smaller retailers, they can compete with e-commerce giants with regard to deliveries.

    Labour costs associated with curbside deliveries is something that the retailers will have to pay for. If the customers pay for it. the prices will have to be increased and it wouldn’t be conducive for the goodwill and customer relationship during a pandemic. To absorb the disruptions in the supply chain and maintain a steady flow of customers will need a trade-off in terms of cost allocations for various components in the supply chain.

  45. Sheng-Yang, Chou says:

    According to the article, at this time of the pandemic, it may not be wise to increase the costs of the customer in order to meet the increased expenses of the retailer. The company should find out the data or think about how the customers will think. Using popular social media such as Twitter or Instagram would be a better choice for small retailers, they can give their customers some gift after customer followed their social media account and update their inventory in the social media every day. Hence, any investment made in that aspect will be beneficial to the retailer in the long run.

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