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Kurt Salmon Outlines ‘Santa’s Good List’ of Retailers

This holiday season has seen an uptick in online orders and an accompanying demand for increasingly shorter shipping windows.

With Cyber Monday sales topping out at over $2 billion and retailers managing to accommodate the e-commerce demand at record speeds, global management consulting firm Kurt Salmon conducted a study to uncover which retailers are excelling at peak season fulfillment.

The firm analyzed shipping times for orders placed on Cyber Monday from 59 retailers including box box and department stores, specialty retailers and online only sellers and found 10 that deserve a spot on Santa’s Good List for Holiday Shipping.

These retailers made multi-unit deliveries of Cyber Monday orders in an average of 2.6 days, more than twice the average retailer Cyber Monday fulfillment time of 5.7 days.

Google topped the list with deliveries made in one day, followed by Net-A-Porter and Walgreens who delivered orders in two days, and Amazon, Barneys New York, Cabela’s, Nike, Staples, TOMS and Under Armour with three day deliveries.

The need for this super speedy shipping is really being driven by affluent Millennials, a key demographic according to Steve Osburn, retail strategist at Kurt Salmon.

And Amazon is also playing a role in shortening shipping times.

Osburn said, “97 percent of on-line shoppers have shopped at Amazon in the last year. So even if you are not in direct competition with Amazon on your product, you are in competition with them on customer experience. That is causing retailers to step up their game in delivery timing, accuracy, communication and more.”

Free shipping, another element in the e-commerce matrix is “becoming table stakes for shopping cart conversion,” according to Kurt Salmon. This year, 78 percent of retailers offered free shipping on Cyber Monday, up from 70 percent in 2013—though only 51 percent offered free shipping on all orders, while the remaining 49 percent offered free shipping with a spending threshold.

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Buy online pick up in store (BOPUS) has become a popular delivery option too, and more retailers are offering the method as part of their omnichannel strategies. This year, 37 percent offered the option for select products on Cyber Monday, and some, like Best Buy and Lowe’s had orders ready for pick up within one hour, making even same-day delivery seem slow.

According to Osburn, “Buy on-line pick up in store works very well for a certain part of the population and in certain instances. If a store location is convenient and you know what you want, than this is the quickest way to get it. It seems to work well for many of the hard goods categories and big box retail, but most specialty apparel companies do not have this service.”

He added, however, “It is still a minority of shoppers that demand this type of speed. Ultimately, to get things to the customer when they want it and how they want it, retailers will need to figure out how to do all of these capabilities.”

Same-day delivery offerings still upped the shipping stakes, despite being slower than some in-store pick-ups as industry leaders like Google and Amazon, and even start-ups like Deliv, invested in their same-day ship capabilities.

“This year is the first year that this service [same-day delivery] is available in more than just a few pilot locations, but it seems like the service is working well. I would expect to see more retailers implementing this in 2015, and some of the retailers that have it will be rolling it out to more locations,” Osburn said. “However, there will be a limit to the areas where this service makes sense (based on population density).”

The faster deliveries did bring about some “turbulence,” the report found. On Cyber Monday, 16 percent of retailers had website issues, like crashes during check out, 15 percent of retailers identified out-of-stock items at checkout and 34 percent were unable to complete multi-item orders within two weeks of Cyber Monday, up from 25 percent in 2013.

To accommodate these shortened deliveries, Osburn said retailers will need to make certain supply chain changes: accurate inventory visibility at each location, pre-placed inventory close to the customer, transportation service for delivery (for same-day delivery), and systems to ensure flawless execution.

“This is an area where retailers have to be very careful,” Osburn explained. “When a customer orders something on Cyber Monday as a Christmas present there is some room for error with-in the supply chain. However, when a customer pays extra to have something delivered today there is little room for error. Retailers who are not ready to launch these services with really high success rates would be wise to take a step back, improve their systems and processes as needed and launch in a more controlled manor. The retailers and companies that are successfully executing these services today most likely started with pilots a year or two ago to ensure that they could satisfy the customer.”