Hot Topics Covered at Operations Summit, Growing Global 2016

Ops Summit 2016 roundtable
A breakfast roundtable discussion at Operations Summit 2016 in Cincinnati.

Figuring out how to make omnichannel operations successful and profitable, dealing with Amazon’s continual disruptions, creating a consistently excellent customer experience across operational areas and growing cross-border commerce were among the hot topics at Multichannel Merchant’s fifth annual Operations Summit.

The event was held in Cincinnati, an ecommerce operations hotbed, and drew more than 800 direct-to-customer and omnichannel operations professionals and providers. The conference featured sold-out tours of nearby facilities including UPS, Donna Salyers’ Fabulous Furs, Newgistics, TradeGlobal, Intelligrated, iHerb and Shorr Packaging.

This year’s Operations Summit was co-located with Growing Global, Multichannel Merchant’s event focused on growing ecommerce profits and brand globally and overcoming the obstacles in doing business across many countries.

Some of the most talked-about topics at the Operations Summit included figuring out omnichannel/unified commerce; distributed inventory; best practices in expanding your distribution network; balancing cost and delivery speed – and knowing whether free or fast matters more to customers; hiring and retaining in a tight labor market; how best to select and integrate new technology; creating visibility across the supply chain; and the impact of increasingly liberal/free returns policies.

The Operations Summit keynote power panel, moderated by Multichannel Merchant, set the tone and hit many of the most important topics for the event. The panel included senior operations executives from Cornerstone Brands, Hudson’s Bay Group, Vineyard Vines and UncommonGoods.

The panelists agreed that consumer expectations are at an all-time high – and not only when it comes to speed, price and selection. Merchants, they said, are under increasing pressure to serve up a single view of the customer across all touchpoints. People expect customized interactions, product recommendations, omnichannel returns and delivery options and loyalty programs across channels.

Panelist Sebastian Burzacchi, vice president of special projects for Vineyard Vines, said companies should look to tap “voice of the customer” data from the contact center to gain a better understanding of what they want. He also suggested using tools like Google docs to share this feedback among design, operations and IT teams, leveraging it to drive specific improvements. Another suggestion: Use as much data as possible to benchmark long-term customer value, and capture specific reasons why it’s high or low.

While omnichannel operations have become practically table stakes for retailers, most are still struggling to make it work profitably. Siloed operations are also an issue – not just stores and ecommerce, but IT and business management, according to Daniel Gerard of Bon Ton Stores in one of the Operations Summit sessions.

Some best practices shared at the the omnichannel preconference workshop: Adhere strictly to KPIs and metrics using business intelligence tools, and make sure stores are incented to buy in via compensation, according to Walter Wallace, ecommerce 3PL manager with Tory Burch. Another way to get store buy-in: Reserve/protect some high-value product from ecommerce sales, and use dedicated store fulfillment personnel, said Chris Koeppel, fulfillment services manager with Nordstrom. Implementing buy online/pickup in store, a fast-growing tactic, is another strong way to incent stores employees to buy in, panelists said, as it leads to increased traffic and incremental sales.

The new U.S. Postal Service price increases are impacting lots of small parcel shippers, but speakers at Operations Summit said shippers should not just accept published rates but realize that “everything is negotiable.” Some have found a way to mitigate the impact of the increase through negotiation, much like companies have gotten relief from UPS/FedEx dimensional pricing through custom arrangements.

On the customer experience front, speakers at Operations Summit said personalization is crucial from the click through to delivery and beyond. Creating a seamless returns process is also a huge growth and loyalty factor, attendees heard, removing all the friction and hassle for customers.

Growing Global

At Growing Global, Melissa O’Malley, director, global merchant and cross-border trade initiatives for PayPal, gave a keynote presentation on the company’s findings from its broad experiences and cross-border trade knowledge. Some interesting facts:

  • China’s shoppers are becoming even more cross-border-savvy with 35 percent of online shoppers claim to have shopped cross-border in 2015, vs. 26 percent in 2014.
  • Shoppers in India and Ireland have a high amount of trust for online stores in other countries, while Japanese consumers do not, and don’t like purchasing from a foreign website not translated into Japanese.
  • PayPal found 73% of global consumers want the option of paying in local currency or their own currency; 62% check currency conversion rates before making purchases in foreign currencies; and 45% would not feel comfortable making purchases online in a foreign currency.
  • Just over half of U.S. merchants do not include cross-border trade taxes in their checkout price and very few intend to.

Some other takeaways from Growing Global:

  • The panelists in the Canada session were adamant: Don’t treat us like we’re an extension of the U.S.! Ecommerce sellers will launch a Canadian site and not include the simple things like international shipping costs or duties and taxes, to their peril.
  • China’s ecommerce market is forecast to exceed $650 billion, growing 42% this year. Luxury consumers there will grow from 80 million in 2015 to 180 million by 2020. Price is the No. 1 reason for Chinese consumers to go online; on average, they look at 2-3 websites prior to each purchase.
  • India is the world’s fastest growing economy, and every second 3 more Indians experience the Internet for the first time. Also a large millennial population offers incredible opportunities for global marketers, including strong demand for American products.
  • Latin America is currently the world’s second fastest ecommerce market behind China. Internet penetration is still around 50%, so there’s huge scope for future growth. Another reason to forecast double-digit growth is the growing middle class: More than 87 million homes in Latin America with an annual income of $10,000-$45,000.

Mike O’Brien is Senior Editor of Multichannel Merchant.

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