Commentary | Viewpoint

Walmart’s ShippingPass Has Ended. What Retailers Should Do Next.

Tags: Retail, Supply Chain Management, E-commerce, Logistics, Logistics Solutions Providers, Fulfillment, Retail Logistics, Supply Chain

Spencer Moore is EVP, Speed Commerce

The shipping wars between Walmart and Amazon are heating up. On Jan. 31, 2017, Walmart halted its ShippingPass delivery service in exchange for free two-day shipping—signaling their latest move against Amazon.

As more retailers offer free shipping, today’s consumers now expect online purchases to be delivered “fast and free.”

Evolving customer expectations for delivery are placing new strains on retailers and e-tailers alike. The cost of shipping, particularly at an expedited pace, is often high and can easily cut into a retailer’s bottom line—especially for small to mid-size businesses (SMBs).

Reconsidering Fulfillment

Walmart’s promise of free two-day shipping for orders over $35 raises the stakes for SMBs. To remain competitive, SMBs will need to get creative and reconsider how they conduct their e-commerce business from a fulfillment perspective.

SMBs should consider a fulfillment partner, which can provide the resources and infrastructure to help them compete with the big guys.

Outsourcing fulfillment can provide several benefits, including: increased flexibility and cost efficiency, a decentralized fulfillment footprint, better and newer technology, and increased and more efficient warehouse space.

Utilizing a fulfillment partner allows retailers to remain flexible while focusing on the businesses’ core competencies. Fulfillment companies have in-house experts in the various areas of supply chain management that help clients make better business decisions. Fulfillment partners can also help SMBs achieve greater freight efficiencies by leveraging technology that optimizes shipping costs as well as reduces carrier rates. In addition, they offer the buying power to optimize corrugate and shipping rates.

Fulfillment partners can provide an order management system (OMS) or certain capabilities of an OMS, saving SMBs from having to invest, implement, and hire a team to maintain and evolve omni-channel technology, which can be expensive and difficult to implement and maintain.

Order management systems allow allocation of inventory across channels and real-time reporting on inventory and order volumes, allowing SMBs to easily move volume from one channel to another.

No More Siloes

Historically, retailers had a system for brick and mortar and had to add a separate new system to support their e-commerce business. This forced them to track each business in a different system, which made it difficult to respond to stronger sales in one channel and to allocate inventory accordingly. 

Most SMBs cannot afford to localize their inventory (i.e. place more fulfillment centers around the country to get faster shiping and cheaper rates). A fulfillment partner can help in this regard as it has the multiple fulfillment centers to offer this solution and the software to orchestrate these orders to the correct facility.

The shipping wars have just begun and there are surely more moves to be made from Amazon and Walmart. SMBs should evaluate their current fulfillment operations and consider a partner to remain in the game and keep up with rapidly growing consumer expectations.