Tag: on-line sales

OM in the News: Target’s New Online Staffing System

Target now sources 80% of its online orders from stores, not warehouses.

Retailers are trying to adapt to a world where shopper behavior is changing and competition for online spending is fierce, writes The Wall Street Journal (Dec. 2, 2019). Target, Walmart, and other retailers are staffing stores differently in an effort to meet new competitive challenges, as well as attract workers and control payroll costs amid the tightest labor market in decades. (Online sales reached $7.4 billion on Black Friday, up from $6.2 billion last year, while foot traffic to U.S. stores fell 6.2%). Big chains have posted strong sales in recent years by adapting to the shift to online shopping. They use their stores to handle deliveries or convince shoppers to pick up orders rather than wait for an Amazon package.

Target says it now sources 80% of its online orders from stores, not warehouses. At the Brooklyn store around 80 workers handle internet orders, collecting products from shelves or putting items into boxes in the backroom for delivery. Target retrained the bulk of its 300,000 U.S. workers over the past year, giving them new titles and responsibilities. It hopes to mold each into an expert for a specific area of the store such as the beauty department, toys or online fulfillment to offer better customer service and use labor spending more efficiently.

Under the new staffing system, more Target workers are responsible for the full chain of tasks needed to keep their department well stocked and shoppers happy, including finding products in the backroom and stocking shelves, tracking inventory and answering shoppers’ questions. Target added technology on hand-held devices to guide workers through the store more efficiently to gather or send out online orders. And more workers are putting products on shelves during the day, not at night, to be able to help customers at the same time.

Walmart uses stores to fulfill its online grocery orders, and is increasingly relying on stores for other types of e-commerce orders.

Classroom discussion questions:

  1. Compare Target’s approach to that of Amazon.
  2.  What is Target doing to increase operational efficiency?

OM in the News: New York City Chokes on Deliveries from On-Line Orders

An Amazon order starts with a tap of a finger. Two days later — or even in a matter of hours — the package arrives. It seems simple enough. But to deliver Amazon orders and countless others from businesses that sell over the internet, the very fabric of major urban areas around the world is being transformed. And New York City, where more than 1.5 million packages are delivered daily, shows the impact that this push for convenience is having on gridlock, roadway safety and pollution.

The average number of daily deliveries to households in NYC tripled to more than 1.1 million shipments from 2009 to 2017, writes The New York Times (Oct. 27, 2019), With households receiving more shipments than businesses, trucks are pushed into neighborhoods where they had rarely ventured. About 15% of NYC households receive a package every day.

Delivery trucks double-park on streets and block bus and bike lanes. UPS and FedEx alone racked up more than 471,000 parking violations last year. The main entryway for packages into NYC, leading to the George Washington Bridge from New Jersey, has become the most congested interchange in the country. Officials are racing to keep track of the numerous warehouses sprouting up, to create more zones for trucks to unload and to encourage some deliveries to be made by boat or at night as the city struggles to cope with a booming online economy.

Amazon is now moving toward 1-day delivery rather than 2 days for Prime customers and plans to spend $1.5 billion this quarter to reach that goal. As the delivery armada has ballooned, so, too, have the complaints.  “There is just not enough room for all the trucks that need to make deliveries, the cars that need to get past them and the people who live here,” said a NYC councilman.  From 1990 to 2017, carbon dioxide emissions from automobiles and trucks in the NYC area grew by 27%, making the region the largest contributor of driving-related carbon dioxide emissions in the country.

Classroom discussion questions:

  1. What are the impacts from the surge in on-line deliveries in metropolitan areas?
  2.  Ask students who live in high-rises how the deliveries have affected them. Solutions?

OM in the News: Recycling and Christmas Returns

Piles of inventory at a warehouse in Lanham, Md
Piles of inventory at a warehouse in Maryland

The Christmas gifts have been delivered, and Secret Santa is done. Americans returned $260 billion in merchandise last year, up more than 66 percent from 5 years ago–a quarter of which was during the holiday season! As e-commerce sales surge and free return shipping becomes the norm, shoppers are set to return even more this year. To get shoppers used to buying without touching, web retailers have offered generous return policies. Almost half of e-commerce sellers–including  Zappos, Macy’s, Target, Saks and Gap — now offer free return shipping in many categories. “Especially with electronics goods, a hot item becomes yesterday’s goods so quickly,” said an industry expert. “And who wants to try to sell a returned winter coat in February?”

Little known to shoppers, however, is that a majority of returned items never make it back to retailers’ shelves. Instead, the items wind their way through liquidators, wholesalers and resellers, many of the purchases ending up in landfills. As much as 2 million tons of returned items — most of it undamaged merchandise — are thrown away each year, enough to fill over 200,000 garbage trucks. Returns, in short, are not just a big loss for retailers. They are a big and growing environmental burden. So more and more companies are becoming players in the “reverse logistics” industry handling returns in the United States, one that is growing together with the rise of online sales, reports The New York Times (Dec. 29, 2015).

By amassing returns from retailers, recyclers are able to find takers for products with a lower resale value, like dented metal filing cabinets and other office furniture for scrap recyclers, which pay for goods or materials in bulk. Traditional retailers typically recover only about 20-40% of the retail cost of returned goods; recyclers help companies recoup 50-70% of the cost.

Classroom discussion questions:

  1. What can operations mangers do to improve the return process and lessen waste losses?
  2. Describe the reverse logistics industry.