Quarterly earnings from major brick & mortar retailers were reported recently. Big players such as Walmart, Gap, and Target revealed a growing trend among retailers as they continue to compete with the behemoth that is Amazon.
For example, Macy’s began expansion of their “vendor direct” shipping in Q1 with plans to fully implement it by the end of the year. CEO Jeff Gennette noted that, “Where (it’s) taking us is the opportunity to massively expand our SKU (stock keeping unit) counts online and then use data to hyper-personalize that at a customer level.” He added that the number of Macy’s individual units online is now six times that of an average store.
Macy’s vendor direct shipping is essentially dropshipping. Suppliers fulfill orders and products directly to customers, rather than going through physical stores and distribution networks. This is the “endless aisle” play that many major retailers are working towards, ultimately resulting in shorter delivery times and larger product offerings. The concept of the endless aisle is part of what makes Amazon the giant that it is.
Retailers are adopting the idea of an “endless aisle” because it provides them with the greatest chance of taking on marketplaces like Amazon. As Gennette mentioned, it allows for a far more enhanced customer experience. With personalization and big data at play, it only makes sense to utilize these resources in a way that creates the ultimate experience for customers on a personal level. Perhaps the most obvious benefit is the substantial increase in SKUs without a need for increasing floor space.
Amazon has created a marketplace that contains virtually anything a shopper could want. They take steps to ensure customers can find anything they need, all without leaving Amazon. This is what retailers like Macy’s and Target are hoping to achieve, as they introduce new products, new categories, and new experiences for online shoppers.