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Next in Retail Podcast

Episode 1 - The Death of Free Shipping

The Death of Free Shipping with Retailers

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Publicis Sapient explores how retailers should approach the rise of free shipping. Retailers are swimming in a sea where they're considering supply chain optimization, e-commerce margins and data. Their list of concerns makes shipping a heavy anchor.

Transcript

Reva Bhatia:                

You're listening to Next in Retail from Publicis Sapient, the podcast that shares insights on unlocking what's next in digital transformation. As consumers, we've all been there. You're shopping online and go to checkout and to your horror, you see that you're being charged $10 for shipping. Even though you're buying $100 worth of merchandise, the shipping fee for some reason sets you off. Today, we're going to explore the rise and demise of free shipping. Joining me are Jon Reily, business and customer strategy Lead at Publicis Sapient, Hilding Anderson, retail strategy lead, and Andy Halliwell, retail strategy lead. I'm your host for this session, Reva Bhatia. Thanks for joining me. Now, let's dive in. I'm going to kick things off with a quick round table on your views on free shipping. Despite the fact that the offering is not sustainable financially for most retailers, do you think this is imperative for retailers to adopt? I'm going to start with you, Jon. Give me your take.

Jon Reily:                    

Unfortunately, it is not sustainable and required. Amazon has set the stage for everyone expecting free shipping, whether they pay for it or not –[they] pay for it via a membership in terms of Amazon Prime or in other ways like giving a company their custom. The fact is that whether or not  retailers can afford to do it or not afford to do it, and is it sustainable… The answer is that it is sustainable in that if you don't offer it, you probably aren't sustainable as a retailer, and unfortunately customers are trained to that at this point. But that said, that doesn't mean that thresholds are necessarily a bad thing. That doesn't mean that customers can't be retrained. It's just that the words “free shipping” are magic for conversion.

Reva Bhatia:                

Andy, what do you think?

Andy Halliwell:            

I think here in Europe, the answer to that question is a little bit more nuanced. I think because here in Europe we've got some markets which have come to e-commerce and online a little bit later than other markets, the incumbent retailers or the predominant retailers have had the opportunity to train their consumers to have certain different expectations. So, in the U.K. I think it is really important for retailers to at least offer some kind of a free shipping option, and we're also seeing the same thing in the Nordics. I think that in some markets, especially in places like France and Germany and Italy, I think free shipping to home is really viewed with  {a} level of skepticism and we're seeing in those markets a little bit more innovation.

Reva Bhatia:                

Interesting. Hilding what are your thoughts?

Hilding Anderson:        

Well, I think it starts with the consumer. I think Jon's right in the sense that it really does, that bar is being set by an Amazon loyalty program that makes free shipping, even same day shipping, a key part of the value proposition. That's the number one reason that people sign up for Amazon Prime is for that free shipping. But I think that the answer for retailers, as they balance profitability with the customer expectation is you've got to have a more nuanced strategy and you can tie it to a loyalty program.

Reva Bhatia:                

Great, Hilding and that's a really good segue into my next question. Do you think too many retailers are viewing shipping as binary, as in to charge or not to charge? In other words, should more retailers be experimenting with tiered shipping fees or rewarding their most loyal customers with free shipping, and when these schemes are employed, does that introduce too much complexity for consumers? Do they prefer either just knowing they're going to be charged for shipping or not? Or do you think more retailers should be open to audience training and getting them acquainted with more sophisticated shipping options? I'm going to start with you, Andy, what's your take?

Andy Halliwell:            

What we've seen recently is the more options you can provide customers, the more people expect these things to become free. We did some research recently with some Gen Z consumers where we provided them with a plethora of choices, , specifically in grocery shipping- do you want it on this day of the week? Do you want it at this time of day? Giving people all the options that they can choose. The more options you provide them, the more they would just expect things to be done cheaply, simply, quickly and ideally for free. But the research that we also did when we put  different delivery models in front of them, which were neweror they were more innovative or they were unusual delivery options --what we saw was that people were actually, just purely because they were different, people were willing to consider paying a fee for them because they felt that they had some other additional value add. And so for me what's really important is looking at what's the value exchange for the consumer, what is the perceived value that they're getting from what you're offering, and then making sure that you're pitching that accordingly; and then behind the scenes, making sure that operationally you are set up to make those different delivery models as efficient and as effective as you possibly can.

Reva Bhatia:                

Interesting. Jon, what's your take?

Jon Reily:                    

The tricky thing is the cognitive load that you place on the customer and finding that fine line between, “I want to give you a lot of options so you can get what you want and hopefully serve my needs at the same time,” and “I want to take your money as quickly as possible so you don't change your mind while you're in the process.” I think that varies by channel and to Andy's point, that testing  to see what works and what doesn't and making sure that you get the right place at the right time. Conversion is a tricky animal and I jokingly refer to it as trying to feed a squirrel -- you don't want to make any big sudden movements or else that squirrel's going to run away, and conversions {are} a lot like that. If you put too much to the customer too fast or {are} just paralyzed by choice, that's a problem. Now, that's where testing t  to say, “we can try this and see how it impacts conversion and try that and see how it impacts conversion.” But to your initial question, whether or not retailers view shipping as binary, unfortunately, I think a lot of them do and I think that impacts success for them. They play with shipping thresholds of this or that. Not only is it not consistent, the customer doesn't know what they're going to get and might think, "Oh the heck with it, I'll just buy it on Amazon," even though it may be one or two or five or $10 more just for that convenience of the cornerstone of user experience, which is; “don't make me think.”

Reva Bhatia:                

Hilding, do you have a take on the matter?

Hilding Anderson:        

I do. I think we do the industry a little bit of a disservice if we just focus only on shipping options as if shipping options is this independent silo separate from the broader relationship that exists between the customer and the business. Jon Reily:  Totally agree with that.

Hilding Anderson:        

Jon, I'm sure you would agree. A lot of this becomes, and at least should be wrapped, into what the broader business strategy is and what role the type of retailer is playing in that life of the customer. And to the extent that we're seeing this shift {is} broadly between marketplaces where retailers are going for more scale and faster shipping and a larger footprint and brands where they're increasingly developing their own products that can't be cross shopped. Your choice of those strategic levers will have an impact on the amount of power that you have in controlling shipping and many other aspects of your business. For example, if you're selling products that nobody else has, {it} gives you a lot more flexibility, both in terms of pricing because you can't price compare, as well as in terms of how quickly you can get someone to actually touch that product. I just think you can't separate out these things completely and that it has to be in service of solving the problem for your customer and your broader business goals.

Andy Halliwell:            

I completely agree. One of the things that we've seen is the brands that have been most successful and have also managed to stave off the horrendous margin erosion that some retailers have seen by offering delivery online are those that are offering a service which is in harmony or sympathetic to the overall brand positioning. Good examples of that would be Argos here in the U.K. who have always had this model which is set up very much for small front-of-store, {and} a lot of stuff in a a warehouse behind the scenes which is served by in-store colleagues. It's the perfect model for being able to offer a large number of  SKUs for our click and collect model and that's where they've seen massive success. I think the latest statistics from the Sainsbury's Annual Report showed that nearly 65% of all of their sales touched e-commerce or were click and collect sales in some way, shape or form.

Reva Bhatia:                

You guys are starting to touch on the notion of not all retailers are created equal and there is so much diversity in the retail ecosystem. What differences, if any, do you guys think, say big box retailers have from grocers or apparel folk and how they should be thinking about structuring shipping?

Jon Reily:                    

That's precisely what I meant when I said the channel makes a huge difference because with grocery it's a much more of a, "I need it right now,"versus clothes or other general merchandise where I may want it right now, but I don't necessarily need it right now. There's a big difference between a gallon of milk and a shirt-- and through that lens, unfortunately, consumers are being trained to think of everything that comes out of the computer comes immediately, versus structured things where this comes at this speed, this comes at that speed…and it plays right into Amazon's hands, which is precisely why it's done that way. That said, with grocery specifically, there's a lot of other options. There's click and collect, there's delivery where they actually bring it to your house versus shipping.. When other brands think about structuring shipping, I think it behooves them to look at that from exactly what Andy was saying, which is “How is this going to solve my consumer's problem?” versus “How am I going get this product that my consumer bought to them?” Retailers that have stepped up to say “We're the problem solvers--you have an issue,  we’re your ‘whatever’ guy” as it were. You used to have a butcher, you used to have a specific grocery, you used to have a specific printing store, and that has all been mashed together thanks to the big box stores. I think retailers have a huge opportunity with consumers to be that problem solver and be their agent for that specific thing, and shipping's a great way to do that.

Andy Halliwell:            

Yeah, I completely agree. One of the things that I think is interesting in this space is that companies like Abel & Cole who are an organic produce delivery company here in the U.K., they've adopted a model which is a little bit like the milkman dropping off your pint of milk three times a week. They do runs where they come to your front door on a specific day and they always drop it off early in the morning -- between six and nine o'clock. They do that once a week or twice a month depending on the cadence that you specify. That model for them has been hugely successful, because it aligns with what the brand is trying to achieve and you don't necessarily need high quality fresh produce delivered five, six times a week. Then you look at other delivery models, like a Net-a-Porter for example, where we know  that in the apparel space, returns are a real challenge. Well Net-a-Porter, because they are the “premium” luxury brand offering, they now offer a service where they'll send somebody to your house and they will wait outside whilst you try on the products that you've ordered, and then any that you want to send back you simply give back to the delivery driver and they put it in the back of their van, or put it in the back of their bike and then they take it back to the DC. I think you're starting to see people start to really try and innovate in this space and come up with things which are going to borrow from other industries.

Reva Bhatia:                

How do retailers know what option to pick and what options fit for purpose given the type of retailer they are? How do they know whether to experiment with click and collect, or whether to experiment with keeping the delivery driver idle and waiting while somebody tries on clothes so they can manage costs of potential returns on the back end? How do they know how to build their strategy? Is it testing and learning? Is there a formula here? Just wondering what the best approach is for them to figure out what works and what will resonate with consumers?

Hilding Anderson:        

I think it depends on where they are on that maturity curve. We look at the industry  {in a} couple of different ways. But if you think about {it}, the more mature organizations have a lot more data and a lot more sophistication around the use of that data. They can also establish a lot more from a baseline perspective to know where they are today and then they can do that test and learn. Others really have to look outside their organization to get an understanding of that vision. Then, it becomes a question of “how do we execute,” and often there's a considerable backlog in terms of process, in terms of technology, in terms of even starting to talk the partners that you need to be successful. So it really, it depends on where you are on that maturity curve.

Jon Reily:                    

For sure. You also have to be very careful with the Pandora's box of trying things. To your point about the delivery driver waiting while you try on the outfit, that sounds like “Oh wait, we can get more customers that way. That's a fantastic idea.” But you try to scale that and it's an absolute nightmare. Those types of things  {are} a ‘tread lightly’ -- you don't want to be painted into a corner like a lot of the food delivery services are, where you have a cornucopia of different brands trying to compete for the same “couch eat” as it were;the same box of Chinese food. But it's not sustainable. You can't keep doing that forever. Those companies have created this model where they're in a race to the bottom. I would say that certain delivery models are just that, which is a race to the bottom, especially in terms of profitability because not everybody has the enormous war chest of the Amazon, Walmarts, and Targets to be able to do this. But they need to play in the same space that those big guys  play.

Andy Halliwell:            

You're totally right.

Hilding Anderson:        

I would look at a couple industries. One is you look at the food delivery, lunch delivery options in a large geographic country like the U.S.,and then look at airlines and what they're able to do with pricing around the checking of bags. Ten , 15 years ago we would look at that and say, "Oh yeah, there's no way you're going to be able to do that," but because they lack a digital competitor, like an Amazon, they're able to make that possible. Then on the food delivery side, this is the exact problem that Amazon and others have dealt with by having some thresholds around minimum package size, minimum margins on those products. I think that's baseline when I think about delivery for retail, to have that minimum value -- and it's not as simple as the dollar value--  {it’s} actually about the margin on the backend so that you can make sure you're not selling things that you're losing money on.

Andy Halliwell:            

I do also think we need to look at the different markets and the different expectations of consumers in those markets because what works in the U.K. and the U.S.,which are broadly comparable, is not necessarily the same model, which is going to be successful in Germany or India or China. To Jon's point earlier, some of those options around having somebody sit outside the front door and wait -- it's not going to be scalable. Completely agree in a market like the U.S. Butin India or China where the workforce is significantly cheaper and is going to allow you to scale with a relatively low cost,it's not a prohibitive option, and I think that's the thing that you've got to think about.

Hilding Anderson:                                   

Many companies are eyeing international as a way of growing their business and growing their revenues, and those are the kinds of nuances that you have to be aware of when you're entering the international space. It's not going to work the same in Germany for example as it does in the U.K. It's not going to work the same in Germany as it does in India or Turkey. I think listening to the customers, understanding the marketplace, understanding the market you're entering, and then looking for the white space or looking for the alternatives that would disrupt the market is really important, rather than just trying to clone what everybody else is doing.

Hilding Anderson:        

Just this past summer we did pretty sweeping study of consumer behavior across 12 different countries, including some in Asia. One of the key things that we saw was how important hyperlocal shipping was, particularly in the Southeast Asian countries. {In} Singapore, Hong Kong, Thailand and Indonesia, 95% said it was very important or important to have within a few hours what we calledhyperlocal deliveries. Whereas in the U.S., just about half of all consumers thought that was the same degree of importance.

Reva Bhatia:                

What do you think the biggest bottleneck to retailers being able to crack the case of what will be most profitable and what will be the best shipping mechanism ? Do you think it's a lack of visibility on their supply chain? Do you think it's a lack of data? Do you think it's all of the above? Do you think it's a lack of consumer information? I would just love to get your take on where you think the biggest hold up is.

Andy Halliwell:            

I think at some point you're going to see last mile fulfillment cost bottom out and they're going to get as low as they can get. But in my opinion, the big inefficiencies in this space are in the supply chain itself.  Understanding where your inventory is and being able to minimize your working capital and to maximize your available to promise inventory at any point in time is where I think a lot of retailers have really under-invested over the last 10 years. To Jon's point, companies like Amazon -- but not just Amazon -- companies like IndeTech and Zalando as well have really started to make some headway in this space by using a lot of the data that you have around inventory that's coming in, inventories that currently in store, inventory in your DCs and your warehouses. Only when you've got a really accurate view of thatcan you then work out “where is the right place to fulfill this particular order from?” Because it's going to not only be cheap to ship, but it's going to prevent me having to mark that product down because it's a single one, or it's the last one in its size or color. Or how am I going to influence or nudge the consumer to actually do a click and collect, rather than have to ship it because I know that this store is local to where they work. My personal opinion is the supply chain and the inventory management side of this is really where the efficiencies are going to come from.

Hilding Anderson:        

Just to add, I think if you look at the market, if you take a wider aperture and you look at certainly the U.S. market, the companies that are surviving and thriving and really winning  --the Targets and the Walmarts of the world and the Amazons of the world -- are ones that over the last 20 or 30 years have continued to invest in technology. And the companies that are really struggling are the ones that have viewed technology as a cost of doing business, not as a strategic enabler.

Andy Halliwell:            

I saw an article on CNBC today from Brian Cornell, the CEO of Target, where they were talking about how they've reduced the cost of online shipping by nearly 90% just by nudging people to click and collect, and to same-day options which are effectively pick up in store or ship-from-store fulfillment

Hilding Anderson:        

We've seen behind the curtain of both these world-class leading retailers as well as the smaller “billion dollar,” $2 billion apparel retailers and the difference in the availability of data is remarkable. Some of those smaller companies just don't have the ability today to make those promises to the customer, and they are losing huge opportunities by not having that. But nor can they afford what a Walmart or Target can afford from an investment standpoint. That's really I think the challenge and is part of the opportunity for the leaders to look at that space.

Reva Bhatia:                

Given online shopping is really the common frontier at this point, do you guys think that retailers should just start building in shipping into their cost of product? In other words, should they beef up the cost of, say, a pair of pants to account for the shipping fee and have the illusion of shipping being free or low cost? What do you guys think the implications of this type of an approach would be?

Jon Reily:                    

To Andy's point, operational efficiency is a better way to accomplish that rather than raising the prices {of} a product. To try and build that cost in {and} pass it onto the consumer is probably not going to go as well. It's very competitive on price as it is. We're seeing that already with the beginnings of the Black Friday sales that cost is very important to people. Consumers are very, I wouldn't say conservative necessarily, but that flavor is starting to come back, so people are aware and cross shop about prices. Rather than raising prices in order to accomplish that, I think finding operational efficiency and “looking in the couch cushions” as it were to get those dollars is probably a better way to do that. But to your point, it's got to get done. One of the common threads with this conversation is none of us are saying that a company can charge for shipping- just flat out say this is going to cost you $9.95 no matter what you buy. I think that threshold is important to train the customer that if you spend this much, you get that much and that's fine -- but they've got to find a way to pay for that and to take some of the sting away from that lack of profitability that exists today for those table stakes that have been created.

Hilding Anderson:        

Yeah, , all consumers want free shipping, but I don't think that the answer on the retailer side is just to give it away. I think it is about connecting it and understanding that there's a range of options from a product perspective. Not all products have to have free shipping. From a location perspective, buy online/pickup in store  is an important tool to help reduce the margins- {but} there are a lot of different ways… connecting it to a loyalty program so that you actually have people pay… that also helps you accelerate that flywheel value for customers. By  {learning}  more about the customers, you can send them more deals, you can send them a better targeted offers- that win-win type of solution is a good approach.

Andy Halliwell:            

I think we're going to see a couple of different models rise up over the next couple of years. I think you're going to see some companies that are going to basically say “this is the cost of product and however you want it, wherever you need it delivered to you, that's all going to be included in the cost and this is the price.”. But we're starting to see a trend with some of the more sustainable brands here in Europe. Companies like Patagonia, are exposing with complete transparency the cost of the product and what it's going to cost to get it to you. They'll give you a breakdown on the product details page of the fair trade price that they paid to the manufacturer. Then the cost of shipping  to the manufacturer cost them another X percent, and then another X percent went to their overhead, and then other X percent went to their store estate, and then another X percent went to the fulfillment and so that's why they are charging you Y price. I think consumers are savvy. I think they're smart and they're switched on and they understand that nothing's free and so they are going to prefer one model or the other. They're going to either want to know where they are spending their money and what is going on, or they are just going to want to turn a blind eye and they're just going to want it to turn out when it does. But I think the transparency trend, especially with younger consumers, the Gen Z consumers, I think is going to be a really interesting trend that we are going to see a lot more of over the next few years.

Reva Bhatia:                

We've talked a lot about retailers managing shipping products to consumers, but what about returns management -- consumers shipping unwanted products back to retailers? What kinds of schemes have you seen that work here? Have you seen anything creative? Is there any area where retailers should be exploring more deeply? Because obviously this is a growing concern for retailers in terms of how to manage margin erosion in general.

Hilding Anderson:        

Can I set the table the size of the problem?. The data shows that it used to be returns and apparel were around 6% of all orders were returned and that number now is closer to 30, sometimes as high as 50% for some categories. It's a massive problem just to level set the conversation.

Reva Bhatia:                

Yeah, but how to solve that massive problem, Hilding. Any suggestions?

Jon Reily:                    

We can thank Zappos for that, and just send it back as many times until you need it to get it right.

Reva Bhatia:                

I do that all the time. I will say I'm the type of person who will buy a small, medium, large of a shirt and return the two that don't fit.

Andy Halliwell:            

ASOS have a massive problem with this. I was lucky enough to be talking to ASOS recently and their returns levels are through the roof. Even higher than the numbers you're talking about, Hilding. What they're trying to do is that they're trying to isolate those consumers that are dilutive to their business. We've been working with a couple of the different technologies recently that allow you to calculate the value of that consumer to the business over time and not just look at the fact that they bought  £1,000 worth of product, but the fact that they returned like £900 worth of product means that they are a bad customer. So, we're still looking to see people implement solutions where you're being penalized if you are a serial returner. But then on the other side of things, I think you can't just penalize those people who are negative or bad for your business. I think you need to provide people with tools to make better choices as well. So again, the ASOS example, what they've done is they've looked at their returns data and they've analyzed it by product and then they expose that information  to the consumer and say, look, we know that you typically buy a size 14 dress, and people that bought this dress  on the site in the past who also buy a size 14 like you typically return.  Forty percent of them typically return a size 12 and 60% typically return the size 16 so we think the right choice for you is a size 14 dress. Providing that kind of information or allowing consumers to make their own mind up I think is going to be a key facet of how  you help consumers make more informed choices.

Jon Reily:                    

Definitely true, but tread lightly on that. When you're making assumptions of what the customer wants, that's a tricky, tricky business. One of the things that we've seen through this is we have an entire industry now based on the fact that you get something in the mail and then send that back. Rent the Runway and all those other “rent” products that tap into that consumer interest, to get something and then return it. The tricky part will be the prediction. Exactly what you're talking about, Andy, {the} “what we think you're going to want,”, I think that is the Holy Grail of all of this- to be able to predict what it is that you need. I jokingly would say that was what Amazon's Echo camera was because when that Echo camera looks at me, it knows that that couch behind me has not changed in size, but I have. Even though I'm ordering the size 42 pants, it's going to go “well, he probably needs the 44 this time, so we're just going to send him that.” Those are the kinds of things you'd create. You asked, Reva, what are the creative things? I suspect that's one of those creative things.

Reva Bhatia:                

That sounds horrifying, by the way.

Hilding Anderson:        

I would just add that I think that there's multiple pieces of this. One is consumer behavior shaping, making sure they make better choices. You could show them the carbon impact of ordering three products instead of one, there's a lot of different kinds of tactics and techniques you could try to segment. Best Buy does that in the U.S. where if you've got serial returners you can segment them, charge them more on a number of different options that you have. But the other piece of this is on the inbound processing side, making sure that when you do get returns that you quickly and easily get them back either to a reseller and re-processor, or directly back to customers and that's whereencouraging people to return in the store or coming up with some other options where you can very quickly turn that back.  Some of the investments that we've started to make has been around using AI and ML to do a better prediction and understand based on where they're returning from, and some of their options;where you need that product and how quickly you can clean and have it ready for the next customer. All of those can play a role into driving higher profitability in that returns area.

Andy Halliwell:            

Or, I was going to say the other alternative is you take this to its logical extreme and you have companies like The RealReal who are effectively setting their entire business up on the assumption that you are just renting products or you're purchasing product only for a short period of time and then you're going to be returning it. Their whole model is set up to try and make that consumer journey as efficient as possible. Which I think isreally interesting because consumers are, as I said earlier,  not stupid. They're going to recognize that there is an environmental impact to buying something and returning it. There's a sustainability impact to buying multiple things at the same time and only keeping one and returning the other two or three.

Reva Bhatia:                

What are you trying to say about me, Andy?

Hilding Anderson:        

Reva's been caught.

Reva Bhatia:                

Clearly no friend to the environment over here. You know what? I demand my clothes to fit well.

Jon Reily:                    

There's nothing wrong with that. But that's also an interesting point. One of the major costs to retailers is returns. If they can maybe create a little bit of a conversation of “Yeah, you know, you could return this or you could be nice to the environment, which one would you prefer?” that's interesting messaging. I'm not saying anybody would necessarily do that, but that can't be understated of the cost it takes to return it and plus just the hassle. Reva, when you said that, I thought to myself, I'm looking at on my credenza, three boxes that need to go back and have been sitting there for four or five days just cause it's a hassle to do that. That's another factor of “Is it worth my time to return that or not?” In this case, maybe, maybe not. But you know, there's an opportunity for retailers if they want to streamline the process, or maybe they don't, to make it even easier for me to get to that product back to them.

Hilding Anderson:        

I think that it's such a growing problem for retailers that if you don't address it, it's just going to get worse and there is value here. I would just note that it also depends a lot on the type of retailer that you are. If you're a women's apparel luxury versus women's apparel, price-sensitive…if you're a children's clothing line often they don't have a major returns problem. It really just depends. If your home furnishings- it's a different problem set. Technology can be used to address a lot of the challenges, but how you apply and how big the problem is what varies.

Reva Bhatia:                

To wrap up, we covered a lot of ground here, but I'd love for another round table where you gentlemen sum up your thoughts on the key considerations for retailers on their approach to shipping. I'm going to start with you, Andy.

Andy Halliwell:            

I'm going to reiterate what I said previously. I think retailers are really good at understanding their consumers in the local market when it comes to their core business. But I think there are interesting innovations and interesting customer journeys out there that they could start to bring to market that would allow them to differentiate which are in harmony and in service of their brand. Do a good job of creating these deeper, more interesting relationships with the consumer with a slightly different value exchange, which I think will allow them to escape this downward spiral into the pit of eroded margins and free delivery and everything being on the consumer's terms. My soapbox is: inventory across the organization is critical to that. Understanding your inventory in the supply chain, understanding your inventory in warehouses and DCs and in your stores and then being able to maximize your efficient use of that and minimize your working capitalk is going to be a really critical piece for retailers over the next few years.

Reva Bhatia:                

Cool. Jon, your thoughts?

Jon Reily:                    

The long- term answer is to do what's right for your company. And no two responses to this are going to be the same, I think. When we were of course chatting about this earlier, you all were teasing me, you know that old joke, you can have it free, you can have it fast or you can have it good. And I said, "Well really consumers want all three." But ultimately, you know what works for Walmart didn't work for Target. And what works for Amazon doesn't work for Walmart. Target- they're a brick and mortar store. They want to bring people to the stores. So their shipping changed. They wanted to change their consumer behavior and drive more people to do ‘buy online pickup in store,’ and that sticks with their model and their culture and that's been very successful for them as we've seen in their earnings calls. That's turned things around for Target. Walmart, on the other hand, is a grocery heavy company. So finding a way to integrate grocery into the shipping conversation has worked well for them. When I think about this and I start to think about retailers and when I'm asked about specific retailers, there's no concrete “here's a SKU , here's a barcode” answer of “this is what you need.” Rather, every individual brand needs to look at how it works for them and how they interact with their customers. Also, to echo what I said earlier, coming back to the point that “I seek as a retailer to be a problem solver for you and in that relationship we create an expectation of what that shipping is.” Whether it's a $35 free shipping threshold, whether it's a free shipping threshold over a longer period of time, that's not two day...Something that works for you as a customer and works for me is the company.That I think is the way to go rather than just this  expectation that everybody has to offer free two or one day, or a 60 minute or 30 minute, or it actually prints out in my house shipping where we're in that race to the bottom because nobody wins there.

Reva Bhatia:                

Hilding, bring us home. Bring us home.

Hilding Anderson:        
I think this is a great conversation. I think there are a lot of factors. I would just encourage companies to think about that customer experience first. I think Jon and Andy summed it up well and some of the dynamics there. Second, I think you can look at your own operations and realize that most retailers can see a positive ROI by addressing some of those internal processes using some of these new technologies that just didn't exist five years ago, 10 years ago -- around algorithmic models that let you predict both outbound and inbound shipping and optimize that, updating that supply chain technology and making sure it's fit for purpose  in this new return and buy anywhere world. Then I think it's worth noting the huge opportunities that  we're seeing around grocery, and this new behavior of doing online ordering in  grocery and how much that's going to completely change the way that grocers work. In terms of redesigning the store, in terms of investing in fulfillment centers, in terms of new consumer habits and trends. Really now is the time, if you're a grocer, to be looking hard at that digital journey and making sure that you're in a position to build and sustain that relationship that you've built over the last 50 years in some cases with your consumer and making sure that you sustain that in the digital channel.

Reva Bhatia:                

Awesome. Well, Andy, Jon, Hilding, thank you so much for joining today. This was a great dialogue.

Hilding Anderson:        

Thank you.

Andy Halliwell:            

Well, thanks for you and thanks for having me. Really appreciate it. It's been fun.

Jon Reily:                    

It was fantastic. Thanks for having me.

Reva Bhatia:                

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