The Next Phase of the Retail Apocalypse: Stores Reborn as E-Commerce Warehouses
wsj.com
wsj.com
This article seems to talk about the next logical step away from ship-from-store: turn the store into a shipping yard.
If something is on Amazon, why can't I pick up from Home Deport and have them ship inventory to Home Depot to replace the thing I just picked up...
https://corporate.kohls.com/news/archive-/2019/july/kohl-s-n...
I always wondered why more stores didn't do this. I had Best Buy have another store ship directly to my home when phones I wanted to buy weren't available in the local location, Bealls Florida fulfill an online order from three different retail stores, and I think I read a while ago of Walmart planning on doing this to fight Amazon Prime 2-day shipping but, otherwise, any online order would come from some warehouse somewhere no matter how many or few retail locations that company had near me. Your friend's experience of companies trying (and mostly failing, obviously) to build such capability inhouse would help explain this.
Such capability would also help retail customers by improving the accuracy of in-store inventories that appear online.
That way product is no more likely to sit in a warehouse than it is at the retail location, there's no ship backs and markdowns are taken at the retail location. As a result inventory stays fresh and there's little to no overstock.
This does not work for all retailers as you can imagine, for for boutique stores with a limited number of SKU's it's enough to keep them afloat while still turning inventory and keeping retail locations staffed.
It's not an efficient way to ship stuff. Wandering around a store picking an order takes much longer than an optimized warehouse.
Square footage is much more expensive retail than in a warehouse. So the area (if there's even room for it) where you pack and ship stuff costs more.
Shipping is more expensive because you are doing a few boxes a day instead of a semi-truck a day to UPS/FedEx/USPS
It just doesn't work that well. Fine as a stop gap for a small retailer dipping their toes in the online market. But for any sort of scale the warehouse model is much better.
I think the article is way off here. Yeah, some Sam's Clubs in the middle of nowhere were converted and a high end retailer has the margins to absorb the inefficiency. But the idea that existing retail is going to convert to warehouses at any sort of scale is laughable. The real estate costs are prohibitive and they'll end up somewhere an hour away where land is cheap.
If i'm understanding, the article is talking about using the retail outlet as a warehouse, where you have the items shipped from a warehouse to your retail outlet, and then shipped again to buyers.
But surely even better is both? Have an online warehouse handle most orders, but have the inventory system integrated across warehouses and stores, so that if it turns out that an item is a) available in a store in the same metro area as the customer, and/or b) is out of stock in the warehouse, a store employee can pick and pack the order during a free moment and have the order arrive at the customer the next day?
I think for me, the more everyday a purchase is, the less I care about if the purchase goes wrong in some small way?
I do see where you’re coming from, though - I’ve many times gone through the process of:
“I wonder if amazon has any <niche item>?”
...
“Oh, Amazon has literally dozens of different <niche item>s, cool”
For me, I still prefer Amazon if it is a high value item, I check the seller though. I prefer to have my contact information/payment information stored by a company I can trust to keep it safe and in as few places as possible.
What do you base that statement on? I order lots of stuff from Amazon and almost all of it is sold by Amazon and not a third-party. Sometimes I do have to pick Amazon from the list of alternate sellers.
It worked perfectly as I got it, and the model had been on the market past the early peak of the bathtub curve, so I kept it. Still works perfectly today, too. But it taught me a valuable lesson about how far Amazon can be trusted on high-ticket items.
These days the only camera gear I get from Amazon is trivial niche stuff like eyepiece diopters that aren't worth anyone's trouble to gray-market or counterfeit. For everything else, there's my local camera store, or B&H or Adorama.
In Germany they're mostly just as quick to deliver and sane return policies are required by federal/european law. And most importantly their inventory is way better - organized, curated, categorized and genuine.
When I pay a markup, I expect something extra like curating of products so I know what the low-mid-high tier options are without sifting through tons of search results and reviews. Or at least not commingling of stock, so I know what I’m getting.
It makes sense that if Amazon is just dumping the same stuff under fake brands, why not go to the source. But anything that uses electricity could burn your house down, couldn't it?
This is why grocery E-commerce distribution is usually done from a store estate (with the exception of occado, which has a higher cost to serve but also gives a better resulting service).
Wow this is so far off (as someone who works at an e-commerce company). Optimizing a warehouse is incredibly difficult and time consuming and often involves expensive and specialized equipment like sorters. Wayfair for instance STILL has only had like 2 profitable quarters and they specialize in e-commerce and fulfillment. Having your employees go pick things off of shelves and pack them and figure out which truck to go on is not a simple problem.
You simply aren't going to make any money if your business model is having employees physically go manually pick stuff off shelves and package them in boxes and ship them at $10 an hour.
What remains won't be vastly different, grocery will likely be the big anchor for most strip malls with small restaurants, personal care, and such filling out the rest. Pretty sure the Dollar* type stores and pharmacies will still keep their spot. Two generations and the gas stations and their tax base will be gone too but that is a different situation.
There may never be a better time to not live in cities. With the move to BEV transportation and online everything from work, shopping, and play, it will free up people to have more choices.
Suburbia also costs more to service from a cities perspective, with more pavement, miles of sewer pipes and so on, so we might very well see suburbs get more expensive than the cities too, since revenue starts becoming more about how many people live in a city vs the location of retail centers.
https://www.strongtowns.org/journal/2020/4/27/this-is-the-en...
Amazon has already lost me for products where I care about quality. The Pilot G2-05 pens I buy in store ($5 each in Australia) have never had any issues and all worked flawlessly until I drained them of ink. The Amazon 12 pack hasn't had a single pen reach the end of its life.
And how is this any different than the status quo?
Walmart, Best Buy, basically everyone but Amazon already tracks which inbound shipments correspond to which purchases so they can keep their brand reputations unpolluted by shoddy widgets and cut unreliable suppliers from their supply chain if need be.
This is a solved problem. It's just that solving it comes with some overhead and a particular major player thinks it's easier to not deal with the overhead up front and instead handle it after the consumer has the goods. It's yet to be proven how sustainable this approach is.
When my wife sends me to the store with the list, I have a hard enough time getting exactly what she wants, and I already have a pretty good idea what she wants since I live with her.
A poor hourly gig worker has no chance of getting it right.
First, their UI is confusing. I didn't realize at first that I could specify—for each item—if I would accept a substitution or not. And I got about 70% of my order right, 15% wrong, and 15% missing.
The second time, I diligently went through each item in my cart and set my substitution preference. This is another fail. The choices are (1) No substitutions; (2) substitute with same brand, different size; or (3) substitute with different brand, same size.
What I would like is “(4) Cancel the entire order if you can't fulfill this item” and “(5) These x items are all-or-none” But that's a logistical nightmare I assume. They're not going to have the pickers drop the cart as soon as they realize they can't find item #23 on my list. Nor can they criss-cross the store verifying the must-haves before moving on with the rest of the list.
And the failures are not just missing items. Substitution preferences are subjective and personal. On my first order, they didn't have Diet Coke. So I got regular Coke instead. When I got wise to setting the preferences, it still resulted in getting the chips, but no dip.
Perfect, real-time inventory won't solve this. I can order an item that's in stock, then get "front-run" by a shopper who's actually in the store.
FWIW, I have these issues regardless if it's Instacart or Vons' own delivery personnel (They use both). And I don't blame the picker one bit. I used to shop for my Dad when he could no longer drive. He was just as disappointed with my results as I am with theirs :)
https://archive.is/20200720034756/https://www.wsj.com/articl...
In comments, it's ok to ask how to read an article and to help other users do so. But please don't post complaints about paywalls. Those are off topic.
We're going through a very unique, but much needed, transition right now that will likely bring about the automated warehouses, distribution hubs, and transport depots we always read about in books and and sci-fi lore--and that so many feared. It also re-enforces the need for UBI now more than ever, something that not long ago was though to be impossible, yet is being pilot tested by Andrew Yang and Jack Dorsey as well as other places in the US, and even by YC itself!
I'm actually optimistic, and believe if we play it right it could in fact be the seeds that allow for a Post-scarcity economy one day on Earth, as so much is lost in critical supply chains, and having these over-extended international based ones may have done more harm than good, as they accelerated a race to the bottom system in terms of price and quality (even on critical things like Medical Supplies/Drugs) as so much went to China but also made most countries entirely dependent on the CCP and has way more Geo-political consequences than we can predict.
Right now I'm taking a course in Supply Chain Operations and my final will be analyzing the consequences from the displacement of critical manufactured goods (PPE) to China and the affects it has had during the onset of COVID, and now also recently due to the massive flooding in Wuhan and the surrounding areas of China [1].
The most optimistic delays in lead-time are 2-3 weeks, but if COVID showed anything, as we saw with Medical staff in the US and even Australia having to go months without PPE and wearing trash bags in lieu of actual medical grade PPE, is that its best to actually double that to get an accurate time.
But it wasn't all bad as it also saw many 3D printing hobbyists use the technology for ACTUALLY MEANINGFUL potential instated of printing trinkets you use to clutter a work desk. And some other companies, mostly in the automotive Industry, pivoted to making breathing apparatuses.
1: https://www.msn.com/en-us/weather/topstories/record-china-fl...
Could you expand on this some more?
I realized you spoke a bit about this issue in the rest of your post, but I would love to read more specifics.
I could talk about this for hours, but I'll keep it as short as I'm still in midterms week. The basics of Lean and Sigma Six are damn near antithetical to the the Chinese model business model of flooding the Market with sub-par quality, albeit incredibly cheap products. There are many reasons why this has worked for them so far, but in the case with PPE it is literately a life and death situation so it should be one of the few Industries that remain in the nation.
So, rather than fumble with delays in leadtime, bad QC/QA and constant shipping delays it is my contention that trying to bypass these incredible losses [1] is a much better solution for all involved (including the Environment), which inevitably leads to this [2] and we finally accept this [3] and we can strategize with key talent that is now fleeing Hong Kong due to the CCP's constant belligerence as they flow into Taiwan, UK, Australia and the US and help them create far more viable and sustainable business models with proper equipment and eventually displace the need for China in this sector.
I think it can be done for food as well, as that is what I was primarily focused on during my Ag apprenticeship (local, sustainable food/Ag supply chains) and my return to culinary as I worked on farm to table models in Europe and the US, and then tried to gather more info from Big Food Multinationals when I was at IBM's Blockchain Lab program, which failed to live up to it's potential and I got fed up with the status quo that made it's 'food safety' program a total farce and instead returned to the Culinary Industry after I shuttered my startup. It was a shame as they had so many Food multi-national's excited about the tech and would it could do to for their bottom line: consider 40% of all food in transport is lost due to perishability and fluctuations in temp/humidity.
Had my plan worked I would have been at SpaceX right now trying to learn their internal logistical network of their food and beverage program to eventually join Squareroots in the future, I was working at Kimbal's place, and try to help be a part of the Team to create a sustainable model for the container gardens for Mars colonization. Suffice it to say I can really nerd out on that sector more than PPE but I'd probably end up doing a Grad Level dissertation instead of actually doing the work.
1: https://www.businessinsider.in/india/news/after-50000-ppe-ki...
2: https://www.bbc.com/news/world-europe-52092395
3: https://nypost.com/2020/04/18/why-america-desperately-needs-...
Thank you for the reply — it got my gears turning in a very good way.
Best of luck with mid-terms!
So how good are these new outfits at that?
The problem is, if you order flour, milk, and sugar, and then they don't bring the sugar, you can't make the thing you wanted to make. But you also can't return the partial order.
I have ordered all of my groceries since March using various online services because my wife and I are both high risk for covid (asthma + pregnant). This includes Instacart, Whole Foods Delivery, Whole Foods pickup, and now Stop and Shop Pickup (effectively Peapod delivery).
Instacart is by far the worst in terms of reliability. Sometimes the substitutions make absolutely no sense whatsoever. The integration with the stores just aren't good enough and it relies too much on the individual shopper to to pick something reasonable it seems. I have had good shoppers and I have bad shoppers that take too much leeway. I don't blame them though, its just what it is. In my experience the item catalog for my local stores is also inconsistent too. Items with the same name at different prices for example. What am I buying?
The most reliable system for me is Whole Foods pickup. I have to go to a whole foods that is about ~20 minutes away instead of 10 minutes away, but the pickup basically has unlimited slots. I have never not been able to pick any slot I want, even same day. Delivery is much tougher to get slots, so I don't even try anymore. Whole Foods lets you select the actual item you want them to substitute with, although they only give you the closest ~5 options, which sometimes aren't perfect. For example, if you are trying to get lactose free yogurt, not all the replacement options will be lactose free. You also can't talk to the shopper, you can only approve or deny substitutions when you leave the item on "substitute best available". The cons basically come down to selection and price. The selection seems a lot more limited than in store which can be annoying. Prices are obviously Whole Foods prices. Another unfortunate thing is that you can't tip the shoppers. I tried to leave money in my trunk for them to take, but its against the rules I guess, so some would take it and some wouldn't. I ended up stopping because I didn't want to put people in a position where they they could get in trouble. You can tip on delivery and I always assumed that some of that tip went to the shopper, but I guess not.
Stop and Shop pickup is a close second. It's run by their Peapod service, but you just pickup curbside instead of waiting for delivery slot. Much better selection and prices, but there is no way to pick substitutions, you can only say "Do not substitute this item". I will probably use this more often going forward to supplement my Whole Foods orders. I can hit both stores for pickup in less than hour. The people that do the shopping and delivery curbside can accept tips.
Working with Westfield back in 2008 there was talks already of redesigning mall footprints to have smaller stores that can act as pop-up shops/ collection points etc. However there was an overall equilibrium achieved as malls started playing into the idea that their differentiation was on "experience".
Shopping and going to the mall remains a highly social activity. And I believe will survive well past the pandemic. And perhaps stores will be smaller individually and act as both in-store sales, collection points for online purchases and pop-up stores to market new products.
I hope that there will be both types of stores in the future for the city center to flourish. Imagine going as a tourist to a city which only had e-commerce and not stores that would probably not be as fun experience as a live city with local shopping.
Instead, I prefer to save that money to do something here locally. Maybe go get a nice dinner at the French Laundry. Or rent a convertible and cruise around in Californian weather. Yes, just because it’s local doesn’t mean that it’s any less. If I lived in Paris, I would want to check out my own city thoroughly. Explore corners of Paris every weekend.
Traveling is overrated IMO. I hate the logistics, I somewhat dislike the experience as a whole but maybe some places are fun. Especially like going to Asian cities where it is a whole another world.
Here in America where I live, there is so much stuff to see already. Just do a cross country road trip for 3 weeks. Totally unmatched experience.
Tourists, no matter how “covert”, are basically treated like a commodity and no one really gives a shit about you as a tourist to come and explore the culture.
Tourism was incredible 40 years ago probably when mobility wasn’t that accessible. $400 flights to Asia and Europe has killed it for me just by the virtue of explosion of tourism. I want genuine connection with foreign cultures. Off beaten paths are actually quite beaten up, despite of what you think.
> Just do a cross country road trip for 3 weeks. Totally unmatched experience.
It sounds like you do like travelling, but dislike the tourism industry. It’s quite possible to get the same tourism experience you describe for Paris in any major US city. It’s also possible to travel in Europe without feeling like you’re visiting a theme park— ditch the guidebook and just wander.
For the most part I agree that travel is overrated. Most translations I've read of Lao Tzu suggests that he agrees too - we're in exalted company on this one.
Apparently your definition of "travel" means "leave the country where I live".
The USA is almost 3000 miles across and on the order of 1000 miles from top to bottom. It isn't surprising that there would be a lot of stuff to visit and see within its borders, but a "cross country road trip" is hardly not travelling.
If you were in Europe and took the equivalent journey, you'd be more than 1/3rd of the way across Russia.
"I live in a big country, and I'm happy to explore it rather than fly overseas" might be a more accurate thing to say than "I [... ] dislike travelling".
https://www.marketscreener.com/WALMART-INC-4841/news/The-Nex...