Scott Dushane, director of IT, Fairmount Tire & Rubber

“One of our biggest differentiations is when we answer the phone, it’s on the first couple of rings, every single time,” says Scott Dushane, director of IT.

But while that helps build personal relationships with customers, it’s not a scalable-enough business strategy to meet Fairmount’s goals. And those goals are ambitious — like providing an Uber Eats level of a transparent order and delivery service.

“Just like you can now go to Uber Eats, order a burrito, then know the driver’s name that’s going to pick up that burrito and then hand it to you in exactly 23 minutes, we want that same experience to happen for wholesale tires,” Dushane says.

“It’s a much less sexy industry, but the genie’s out of the bottle — we need to provide the same level of service and supply chain transparency that Uber is providing.”

Making strides in service and sustainability

Fairmount Tire & Rubber primarily serves the four-state region of Arizona, California, Nevada and Utah. It uses its home-grown self-service ecommerce site integrated with an online delivery management system to improve and expand its business. At the same time, it is drastically cutting out paper documents, increasing its sustainability and operating efficiency, Dushane says.

He says Fairmount is making significant strides in upgrading how it engages B2B customers online, matching buyers with the particular tire SKUs they need from a long list of options — such as the many tire brands, sizes, and applications like tread patterns for different types of weather — and providing transparency in deliveries, including same-day service.

Fairmount uses an online delivery management system that has streamlined and expedited the distributor’s delivery system and lets customers know through a GPS-based mobile app what tires are coming and when.

The delivery management system, from Descartes Systems Group, integrates through Google Cloud with Fairmount’s digital commerce platform and other technology systems and applications, including enterprise resource planning, product information management, customer relationship management and warehouse management.

Dushane says that, until recently, the most common call Fairmount’s agents received was “Where’s my tires?” But with the new system, Fairmount can replace those inbound customer service calls with outbound sales “rainmaker” calls often made by the same agent.

“This is real money,” he says.

No more shuffling paper for invoices

The old system had relied heavily on paper documents about customer orders and available delivery trucks, resulting in a difficult process for planning order fulfillment and delivery.

“For many years, it was a stack of papers on someone’s desk. And you would do the old shuffle and figure out how to route and how to build trucks,” Dushane says.

Fairmount now uses its integrated ERP, order management and delivery management systems to automatically coordinate how orders are delivered with the most efficient use of trucks and routes, he adds.

“It is an unbelievably difficult problem to route trucks throughout a city, like mathematically,” he says, adding, “Descartes comes up with sort of magical solutions that [we] never came up with for the last 30 years of running the same routes.”

As customer orders come into Fairmount’s B2B ecommerce login customer portal, at b2b.fairmounttire.com, the tire distributor’s financial software generates electronic invoices that the delivery management system allocates to delivery trucks based on their availability and capacity.

One advantage of the new system is replacing a system that used to require three sheets of paper for each invoice. When drivers make deliveries, they use mobile devices stored with order details and e-invoices to receive customers’ digital signatures and generate delivery confirmation notes.

“We totally eliminated paper,” Dushane says.

Reworking delivery routes for more service and sales

In addition, Fairmount speeds up deliveries by using its software to arrange multiple orders on the same truck in a way that makes them faster to unload at each customer’s destination.

And that has opened the door to more sales opportunities as well as greater efficiency, Dushane says.

“We have been able to start to run second and third routes because of Descartes … because we know when the drivers will be coming back and what the trucks can be filled up to — there’s no obfuscation,” he says.

“We have fixed costs,” he adds. “So let’s use those fixed costs to the best of our ability.”

This article is included in a special report covering B2B digital technology trends and a preview of the 2023 EnvisionB2B Conference & Exhibition.

Scott Dushane will speak during a panel and workshop on order management, fulfillment and delivery operations at the 2023 EnvisionB2B Conference & Exhibition.

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But a new survey shows that many small businesses face obstacles on the path to achieving sustainability. Meanwhile, another research report shows that left unchanged, the ongoing environmental impact from last-mile ecommerce deliveries will be harmful.

Sustainable ecommerce fulfillment comes at a cost many won’t pay

Delivery and logistics services provider DHL conducted a survey of 2,500 small and medium-sized businesses. It finds that 95% of companies say sustainability is important to their business. And almost half (48%) believe it’s extremely important. But when asked about the biggest challenge to achieving sustainable goals, 42% said the overall investment is the main obstacle. 11% said they had no clue where to start.

Sustainability is important to almost every respondent, DHL says. But “nearly half (47%) are willing to invest only 1%-3% of their operating budget into sustainability practices,” according to the DHL survey. “And 26% are not willing to invest anything” into sustainable ecommerce fulfillment.

If left unchanged, the environmental impact of the rising number of ecommerce deliveries globally will also cause more air pollution and human health issues.

A new report by Clean Mobility Collective and Stand.earth Research Group claims ecommerce and the associated emissions from last-mile delivery will continue growing exponentially. The report predicts global annual parcel volume could increase from over 315 billion parcels in 2022 to up to 800 billion parcels a year in 2030.

Without any greener changes to how these parcels are packaged and delivered, global ecommerce deliveries will emit up to 160 megatons of carbon dioxide per year by 2030, according to the report. That’s equivalent to yearly CO2 emissions of up to 44 coal plants.

“Approximately 1 billion trees would need to be planted and allowed to grow for 10 years to sequester the emissions of a single year of current last-mile parcel deliveries,” the report says.

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In 2019, Black Wolf Skincare invested in fulfillment software from ecommerce fulfillment services vendor ShipHero. At the time, Black Wolf processed about 1,000 orders per month.

Alex Lewkowict, co-founder, Black Wolf Skincare

“By my calculation, even at our volume of 1,000 orders a month, we saved more than $2 in shipping costs [per order] using their ecommerce tool,” he says. The tool helped Black Wolf Skincare find the cheapest available shipping carrier, he says.

“The plan started around $1,800 a month,” he says.

Using ShipHero’s software tool “was a no-brainer for us that paid for itself right away,” he says.

Shipping price fluctuations

Another pain point was price fluctuations, Lewkowict says. The men’s skincare brand could no longer ship from its one warehouse. Transit times were too slow or too expensive to ship to anywhere in the U.S., he says.

By the end of 2020, demand grew to more than 17,000 orders a month, Lewkowict says. And by the end of 2021, orders averaged about 25,000 a month. This prompted the retailer to outsource its entire shipping and fulfillment processes to ShipHero, he says.

By December 2022, Black Wolf Skincare averaged more than 40,000 orders a month.

With ShipHero, Black Wolf Skincare could inbound ship directly into any of its warehouses. Black Wolf Skincare manufactures its products in Florida.

Black Wolf sends its products to ShipHero’s West Palm Beach, Florida, facility. ShipHero then distributes shipments across its network of warehouses and carriers to ensure the fastest delivery times. As a result, Black Wolf was able to reduce the time it takes to ship orders to customers.

“Our average shipping time to customers went from five plus days to under three days for the same cost,” Lewkowict says.

That includes next-day shipping to anywhere in Texas, Florida, Georgia, New York and New Jersey, he says.

ShipHero ships Black Wolf’s orders using local carriers, Lewkowict says. “Customer satisfaction goes up as wait times decrease,” he says.

“I think a lot of brands are relying on 3PLs to bring in expertise that isn’t their expertise,” says Maggie Barnett, chief operating officer at ShipHero.

“It’s really tough to run a 3PL,” she adds. Third-party logistics services (3PLs) are the outsourcing of ecommerce logistics processes to a third-party company like ShipHero. 3PLs handle inventory management, warehousing and fulfillment operations.

“Companies want to concentrate on making the best product possible, not know what a routing guide is or worry about just-in-time delivery or that UPS is limiting your pickups, et cetera,” Barnett says.

Selling on Amazon makes a difference

Black Wolf Skincare began as a direct-to-consumer brand. But in mid-2020, Lewkowict says it realized that the brand was losing sales by not selling on Amazon.com Inc.

“We were very against going on Amazon because we wanted to have value in owning the customer relationship,” Lewkowict says.

That viewpoint changed. A consultant told Black Wolf Skincare that consumers were searching for the brand on Amazon directly or clicking on Google ads and Facebook ads and then going to search for the brand on Amazon.com. But since Black Wolf wasn’t selling on Amazon, consumers opted for products by other Amazon sellers/competitors.

“Instead of finding our product on Amazon, they’d see competitor options that were also advertising using the same keywords,” Lewkowict says.

Black Wolf Skincare launched on Amazon in 2020. Amazon sales accounted for about 10% of Black Wolf Skincare’s overall sales, he says. Since then, that percentage has grown. Selling on Amazon has “added a tremendous amount of volume and revenue,” he says, without revealing more. The average order value for Black Wolf Skincare’s DTC website and Amazon store is about $65, he says.

Lewkowict says the men’s skin care brand has capitalized off Amazon traffic. Some customers only want to buy off Amazon, he says.

“So, whether they’re seeing our TV ads or a Facebook ad, they’ll always go to Amazon to comparison shop,” Lewkowict says. “Our strategy here is to encourage those Amazon shoppers to go and buy on Amazon. Traffic that comes off of Amazon helps our ranking [on the marketplace search results]. The more shoppers search for our products, the better our ranking.”

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Maggie Barnett, chief operating officer, ShipHero

“What we’ve seen with such a tight labor market in the U.S. is that we’re able to supplement [employment] gaps with robotics,” Barnett says.

ShipHero is a shipping and logistics vendor for more than 5,000 ecommerce brands and third-party logistics (3PL) providers. In 2021, it began using the inVia Logic Warehouse Execution System from inVia Robotics, which sells ecommerce fulfillment automation systems. The software system coordinates how materials, workers and equipment move throughout ShipHero’s warehouse.

In 2022, ShipHero added inVia Picker robots to help warehouse workers during the picking process. The picking process is where workers find and bring items to a central location on the warehouse floor. At the center of the warehouse is one or more robot stations. The inVia robots complete the fulfillment process, freeing up workers to complete other tasks.

Simplifying warehouse flow

InVia simplified the scanning step of ShipHero’s fulfillment process. At its Jacksonville, Florida, warehouse, containers needed to move and be scanned easily.

Lior Elazary, founder and CEO, inVia Robotics

“Scanning these items takes a while,” says Lior Elazary, founder and CEO of inVia.

Instead, warehouse workers now place items onto an input rack that feeds the robots. The robot picks up the containers and scans them.

Robots scan inventory and send it where it needs to go, Elazary says. This removes the task from warehouse workers.

The automated scanning/picking replenishment process was implemented within a couple of hours, says Kristen Moore, chief marketing officer at inVia. InVia’s robotics-as-a-service subscription model includes software updates that inVia performs remotely.

Employees are now at the wall picking 425 units per hour, according to ShipHero. That is up from 150-200 units per hour before using inVia, Barnett says.

ShipHero warehouse employees no longer have to walk back and forth in between seven to 10 aisles. Instead, they can now grab what they need from a single 72-foot-long aisle.

Software projects demand, speeds up fulfillment

In April, ShipHero’s inventory team began using data that tracks SKU velocity. This is how frequently a SKU item is picked over a certain period of time. The software predicts what amount of inventory is needed to meet projected demand.

After success at its Florida warehouse, ShipHero expanded inVia integration. ShipHero now uses the robotic picking system in its Allentown, Pennsylvania, and Las Vegas warehouses.

“People don’t want to own warehouses,” Barnett says. “They don’t want to take out leases and make sure there are always a certain number of people working in the building on any given day.”

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Amazon’s total sales include its own product sales, sales from its marketplace, as well as marketplace seller fees, advertising fees and revenue from Amazon Web Services (AWS).

Amazon reported net income of $3.2 billon in the first quarter, a dramatic swing from the $3.8 billion loss a year earlier. Ecommerce sales dropped 0.06% year over year to $51.093 billion in Q1.

Amazon revenue breakdown

Amazon’s results suggest the company’s efforts to reduce costs are starting to bear fruit. Operating expenses increased 8.7% in the quarter, the slowest pace in at least a decade. The company’s North America segment was profitable on an operating basis for the first time since late 2021.

Amazon Web Services generated $21.4 billion in sales, a 16% rise from a year earlier and higher than the $21.2 billion analysts had expected. The cloud-computing division is the company’s largest source of income. Despite AWS’  better-than-expected Q1 performance, Amazon said it began laying off employees in the AWS operation amid slowing sales growth in its most profitable division.

That 16% rise from Q1 2022 is the slowest growth rate reported since Amazon began breaking out the segment and the fifth consecutive quarter in which growth slowed year-over-year.

Earlier this year, chief financial officer Brian Olsavsky warned that AWS growth would slow in 2023.

Advertising sales rose more than 21% to $9.51 billion in the quarter. Revenue from third-party seller services — which include commissions, shipping services and other fees that Amazon collects from sellers on its marketplace — jumped 17.7% to $29.8 billion in Q1.

“Amazon did what it needed to do in Q1 by reversing — or at least stalling — its most troublesome declining growth trends,” said Andrew Lipsman, an analyst at Insider Intelligence, told Bloomberg News. “Amazon’s stronger-than-expected performance for its key profit centers of AWS and advertising indicate that the enterprise and the digital ad sectors may be turning the corner.”

Amazon is No. 1 in the 2022 Digital Commerce 360 Top 1000 database. The Top 1000 ranks North American web merchants by sales. It is No. 3 in the Digital Commerce 360 Online Marketplaces database, which ranks the 100 largest global marketplaces.

Amazon announces BNPL option

Several hours before releasing its earnings, Amazon announced a new buy-now-pay-later option called Citi Flex Pay on Amazon Pay. Under the program, eligible Citi credit card members can pay over time with Citi Flex Pay when using Amazon Pay during checkout at participating online retail sites. The deal with Amazon marks the first time Citi credit card members can use Citi Flex Pay through a digital wallet.

Amazon already offers BNPL through Affirm. Amazon also accepts Apple Pay, and in March Apple announced a BNPL plan of its own.

Operational changes at Amazon

Amazon has made several moves in recent months to cut its operating costs, most notably by laying off thousands of workers from its ecommerce unit. In early January, CEO Andy Jassy said planned job reductions totaled 18,000 workers. That’s a full 1% of Amazon’s workforce — and well above earlier expectations that Amazon would slash 10,000 jobs.

The Seattle-based company employed almost 1.47 million people as of March 31, a decrease of 10% from the period a year earlier and down from more than 1.54 million workers three months earlier.

Second-quarter guidance on Amazon revenue

Seattle-based Amazon said it expects sales in the current quarter to reach between $127 billion and $133 billion, keeping in line with analysts’ forecasts.

Other news from the first quarter

On April 26, news site The Verge reported Amazon had decided to close its Halo division, which sold fitness- and sleep-tracking devices. Amazon had stopped selling its three Halo products and plans to lay off portions of the Halo team, the news site said.

“We have made the difficult decision to wind down the Halo program, which will result in role reductions,” Melissa Cha, Amazon’s VP of smart home and health, told staffers in an email The Verge obtained.

Some analysts said Amazon has more work to do. “We keep waiting for profit and cash flow to turn here,” Stefan Slowinski, an analyst at BNP Paribas Exane, told Bloomberg. “With all of the headlines on restructuring and closure of businesses, we’re really not getting that coming through in the numbers.”

Amazon earnings

For the fiscal first quarter ended March 31, Amazon reported:

• Amazon revenue from third-party seller services of $29.8 billion. That’s 17.7% increase from the comparable quarter of 2022.
• $9.5 billion in revenue from advertising services, a 21% jump from a year earlier
• Operating cash flow of $54.3 billion for the trailing twelve months, an increase of 38% from the $39.3 billion for the trailing twelve months ended March 31, 2022.

Percentage changes may not align exactly with dollar figures due to rounding. Check back for more earnings reports.

Bloomberg News contributed to this report.

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The courier has for decades operated an express package business separately from its ground unit. FedEx acquired the ground unit in 1998 and depends on third-party contractors to make the last-mile delivery of parcels. As of June 2024, it will be “a single company operating a unified, fully integrated air-ground network under the respected FedEx brand,” the company said April 5 in a statement.

“FedEx is at a pivotal moment in history,” Subramaniam said during an investor meeting in New York. “There is significant value in FedEx that’s being unlocked for shareholders.”

The plan to boost profit addresses a commitment to investors, led by activist shareholder D.E. Shaw, that FedEx made only two weeks after Subramaniam took the helm. It promised then to boost dividends, rework its executive pay rules and reduce capital expenditures. Under the agreement, D.E Shaw named two board members.

D.E. Shaw has cut its holding of FedEx to about 63,000 shares from a recent peak of 1.25 million shares at the end of 2021.

FedEx delivery networks unify to improve margins

FedEx has trailed United Parcel Service Inc. on profit margins even though its larger rival has a unionized workforce and pays its drivers more than twice what their counterparts at FedEx’s ground network make. Many analysts point to the efficiencies of UPS’s single delivery network as the reason. In the latest quarter, UPS reported adjusted operating margins of 13% compared with 5.2% for FedEx.

The reorganization is a turnabout from the strategy of founder Fred Smith, who defended having multiple networks as a competitive advantage. Critics often noted that an express driver would stop at the same location as a ground driver, creating inefficiencies. Under Subramaniam, FedEx accelerated the shift of packages from its Express unit, where FedEx owns delivery vehicles and drivers are on the company payroll, to the contractor-led ground business.

FedEx is trying to regain its footing after Subramaniam was forced to scrap profit growth goals outlined last September due to declining package volumes. He had unveiled those targets just after he officially took over as CEO in June.

The company expects to achieve $4 billion of permanent cost reductions in fiscal 2025. FedEx said it seeks to save an additional $2 billion from revamping its delivery network by 2027. The savings will include initiatives to move more ground packages by rail instead of truck and provide contractors with better forecasts on volume to reduce the need for emergency help to deliver packages.

FedEx head count

The company didn’t give details in the statement on job cuts and a spokesperson offered no specifics on the scope or timeline. FedEx already had been reducing its workforce in recent months, including shedding 10% of top management jobs.

“We will continue to focus on responsible headcount management in our operations as well as corporate functions,” spokesperson Rachael Simmons said in an email Wednesday.

FedEx’s board also approved a 10% increase in the annual dividend for fiscal 2024 to $5.04 a share.

FedEx said Richard Smith, son of the founder, will be in charge of Airline and International and John Smith will be in charge of all ground operations, including FedEx’s standalone freight business.

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The post Why some retailers use — and avoid over-using — stores as fulfillment locations appeared first on Digital Commerce 360.

Letitia Webster, senior vice president of ecommerce, omnichannel and master data, Tractor Supply Co.

With nearly 2,100 store locations, Tractor Supply’s customer is increasingly a hybrid shopper that shops in store and orders online, Webster says.

Tractor Supply shoppers opted for buy online, pick up in store (BOPIS) well before the pandemic, Webster says. During COVID-19, the retailer expanded this to include curbside pickup.

“[BOPIS and curbside] are the most popular fulfillment methods with our customers even today and continue to be a primary avenue,” Webster says.

Conversion in 2022 for BOPIS and curbside pickup was 60% greater compared with home delivery, Webster says.

This boost is due in part to the farm and ranch retailer’s mobile app, she says. The app has driven convenience to a new level, Webster says. Customers can place their orders within the app. It notifies the customer when their order is ready. Through the app, customers can alert the store they’re on their way. Store employees have in-ear devices from software vendor Theatro that alert them to have the items ready for in-store or curbside pickup.

Tractor Supply fulfills three-quarters of online orders in store

The retailer fulfills 75% of ecommerce transactions through a store.

“That’s significant based on our store base,” Webster says.

Tractor Supply’s online average order value is about three times the store’s, Webster says. Tractor Supply ranks No. 102 in the Top 1000, Digital Commerce 360’s database of the largest North American online retailers by web sales.

Mobile app downloads reach 4 million

More than 4 million shoppers have downloaded Tractor Supply’s mobile app since it launched nearly three years ago, Webster says.

1.9 million shoppers downloaded the app in 2022 alone. Webster says half of online sales come from mobile shoppers and half are desktop shoppers.

The retailer has a large rural customer base, Webster says.

“We’ve always had a big mobile balance,” she says. “Some of that has to do with previous limited access [to internet] in rural communities.”

After the pandemic, internet coverage reached into more markets the retailer serves.

Neighbor’s Club loyalty program boosts bottom line

The biggest driver behind the app downloads is the retailer’s Neighbor’s Club loyalty program, Webster says. Over the last two years, Neighbor’s Club membership has increased 47% to more than 28 million members, according to the company’s earnings call for its 2022 fiscal fourth quarter ended Dec. 31.

“I think it stands to reason that if you’re a retail business with an app, your loyalty shopper tends to be your biggest app user,” Webster says. “Because they’re your most loyal customer. They want simplicity.”

The app includes information about the loyalty program. This includes how the shopper is progressing through the different tiers of the program. Shoppers can see what rewards they’ve earned and they can redeem points and buy within the app.

Shoppers can also tap on a button within the app for other quick pickups like propane tank refills at propane refill locations, Webster says.

The app also serves as a way for customers to find associates while using the “in-store mode.”

“The app alerts team members through their devices that a customer is looking at something and needs assistance,” Webster says. This is particularly helpful for customers buying medications for animals, she says. There is a separate “My Pet” section located in the app that allows pet owners to complete reorders and connect with a vet. Webster declined to share what portion of mobile app sales are pet related, but she says pet food is a large percentage of pet-related sales.

Just under 20% of all ecommerce sales are attributed to the mobile app alone, Webster says.

Some categories are more popular within the mobile app than others, Webster says.

“Livestock feed and food, like chicken feed, something you run out of more quickly,” she says, “you can set that as a one-touch reorder option [in the app],” which encourages engagement with the app.

Neighbor’s Club accounts for 75% of total sales. The majority of Tractor Supply’s Neighbor’s Club sales are in store. Neighbor’s Club customers accounts for about 7% of online sales, in line with the retailer’s overall ecommerce sales, Webster says.

Prioritizing fulfillment centers over using stores to fulfill online orders

Tractor Supply has a network of fulfillment centers across the U.S.

“Every one of them has the ability to ship to a customer’s home,” Webster says.

Three are dedicated to online orders, she says. “But all [fulfillment centers] have the capability of fulfilling an ecommerce order,” Webster says.

What Tractor Supply is not doing is reallocating additional store space to process ecommerce orders, Webster says.

“We just learned to leverage stores differently,” she says.

For example, for nearly three years, 95 Tractor Supply stores have shipped small parcels to customers using store inventory, Webster says.

“And out of that 95, we have the ability to reach the country within a day,” she says. “That’s why we don’t [ship] out of every store. We have 95 stores that can strategically do this.”

Webster says 235 stores also offer team-member delivery services. Tractor Supply employees adorned in their red store vests deliver orders using store trucks and trailers.

“That’s whether the order originates in a store or originates online,” Webster says. “This has given us the ability to have a nice branded delivery program.”

Tractor Supply’s branded delivery is in addition to the other shipping methods the retail chain uses. This includes shipping companies XPO Inc., FedEx Corp., and Roadie.

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“The data our report uncovers confirms the growing discrepancies between what consumers want and what ecommerce merchants are delivering,” Shippo CEO Laura Behrens Wu said in a press release. “It’s clear the economy is the primary driving factor for these concerns, as supply chain disruptions, decreased capacity and labor constraints take a backseat.”

Results are based on a survey of 1,191 ecommerce retailers across apparel, food, jewelry and electronics, and responses from 1,000 shoppers in November and December 2023.

Prices are the biggest factor

The cost of shipping remains a key factor for both consumers and retailers.

62% of shoppers said they won’t consider purchasing from a retailer that doesn’t offer free shipping. Another 35% said they prefer it, and just 3% of consumers said they don’t care about shipping costs. Digital Commerce 360’s August 2022 consumer poll had similar findings. 76% of the 1,116 consumers surveyed ranked free shipping one of the three most important factors in online shopping, more than any other option. Delivery speed was a distant second place at 43%. 

Customers are willing to make concessions to reach free shipping. According to Shippo’s data, 42% are willing to join a loyalty or membership program to get free shipping. Nearly half, 47%, said they would add products to meet a minimum cost threshold for free shipping. 

Shoppers overwhelmingly prefer free shipping to fast shipping, at 75% versus 25%. They ranked shipping cost as the most important information a retailer should share, over average shipping time, when the item will ship, and when it will likely be delivered.

Retailers cited the cost of shipping, too. 41% of respondents said shipping cost was their biggest challenge in 2022, more than any other response. About a third said it would be the most pressing challenge in 2023, while another 20% were more concerned about decreased consumer spending. Despite the costs, retailers largely offer free shipping.

Nearly three-quarters of retailers that rank in Digital Commerce 360’s Top 1000 database offered free shipping in 2021, though 45.1% of those retailers required customers to reach a minimum purchase threshold for the perk.

Consumers still value online shopping

Consumer survey responses indicate online shopping is still valuable for its convenience, according to Shippo’s data. 60% of respondents said they do at least half their shopping online, a significant increase from just 41% in 2021. 

61% of shoppers prefer online shopping over visiting a store when they have the choice.

Consumers want as much information as possible

Survey results show ecommerce customers want as much data as retailers can share about their orders. 68% of surveyed customers want to be notified when a purchase has shipped, and 45% also want to know when an item is delivered. 

Shoppers want to keep tabs on their purchase while it’s in transit. 59% of consumers say they want to receive shipping updates, and 39% track their orders once per day. Retailers largely comply with this desire from customers. 85% share some kind of tracking information, either through a branded link or through the shipping carrier’s service.

Consumers responding to the survey valued up-to-date information on their orders over fast shipping times. Just 10% of shoppers want same-day or next-day delivery, down from 18% in 2021.

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The new hubs will be operating by the end of 2026, Target said in a Feb. 22 statement. Target already has nine sorting centers, which are located in Colorado, Georgia, Illinois, Minnesota, Pennsylvania and Texas. Target opened its three most recent sorting centers in Chicago and Denver in 2022 as part of an expansion since the first center opened in 2020. The company is still selecting sites for the new ones.

Target delivery investment in sorting centers

The sorting centers are designed to further Target’s strategy of using its stores to handle online orders as it vies with Amazon.com Inc. and Walmart Inc. for sales. Amazon is No. 1 and Walmart is No. 2 in the 2022 Digital Commerce 360 Top 1000. Each hub typically retrieves packages from 30 to 40 local stores, then gets them ready for delivery to local neighborhoods. Target said shipping from these sorting centers is usually up to 40% cheaper than shipping them from big distribution centers. 

“I bring it back to our stores-as-hubs strategy,” Gretchen McCarthy, Target’s chief global supply chain and logistics officer, said in an interview. “The sortation centers are pulling that work out of the back rooms of the stores.” Target store employees can then focus on packing pickup orders for customers, the company said.

Target’s sorting centers delivered 26 million packages in 2022, the company said in a press release. The existing hubs are expected to double their delivery volume to more than 50 million packages this year, with a growing number of items being delivered to shoppers the day after they place an order.

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