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A sale isn’t completed until an item gets to a customer’s door. After all, a lot can happen in the miles a product travels in between. And even after it arrives, there are reviews, returns and hopefully the next purchase for a brand or retailer to consider.
It all means that, when it comes to building trust with customers, the post-purchase experience is just as important as what happens before a customer clicks “Buy.”
That post-purchase experience is the base from which AfterShip has been building solutions for more than a decade. The company currently works with more than 14,000 merchants, including brands like Harrys, TOMs, GoPro, and Kylie Cosmetics.
AfterShip started by helping brands and retailers gain visibility and efficiency on the path between the distribution point and the carrier. Founded in 2012, the company launched with a shipment tracking API solution. At this point, it was involved in label generation and creating tools that allowed retailers to onboard multiple carriers from a single interface. Alongside a predicted delivery date API, this offering remains a core focus today. With integrations with more than 1,030 carriers, it is used by platforms such as Amazon, Etsy, eBay and Google.
Today, AfterShip has 440 employees across seven offices, including a U.S. headquarters in Austin.
More recently, AfterShip has built out solutions that allow merchants to add visibility and new capabilities to the post-purchase experience for their customers. These include automated shipment notifications, logistics visibility dashboards, branded tracking pages and automated returns.
These features are designed to provide the latest information on where a package is, and when it will arrive. For instance, AfterShip customers can provide SMS notifications if a package is delayed. Such tools also serve as an additional touchpoint for customers. A branded tracking page can include item listings, bringing the potential for a check-in on an already-purchased item to result in another sale.
It all points toward allowing any merchant to deliver an “Amazon-like” experience, Joe Wyatt, head of digital solutions at AfterShip told The Current from the floor of the NRF Big Show 2023.
“We break down the barriers for any merchant to do that, from the smallest to the largest,” Wyatt said.
Looking ahead, Wyatt sees returns becoming a much more important focus. The combination of ecommerce growth and generous policies is leading returns to come in at unprecedented levels.
On one hand, returns are necessary at this point. Studies show that 60% of customers read return policies before shopping. On the other hand, sending already-purchased items back is leading to challenges in the supply chain. Those generous policies have led to a whole new set of behaviors that can generate waste. In one, called bracketing, consumers buy the same item in a number of sizes and colors, then keep only the one they like.
Given this dynamic, merchants are looking to create more return options to serve customers and cut down on logistics costs.
This is ushering in a new wave of solutions, such as return bars where items can be quickly dropped off in-person, or post-purchase options that rout consumers toward exchanges. AfterShip launched a new suite, called Returns Center, that allows brands and retailers to implement these capabilities.
It's a sign of how the company continues to build after a decade. As the post-purchase continues to gain importance, AfterShip aims to add tools to help brands and retailers deliver for customers.
Trending in Operations
Sortation centers are helping the retailer build on its stores-as-hubs strategy.
Like many retailers, Target undertook a massive digital buildout during the pandemic as ecommerce demand spiked.
The new capabilities proved to be the launchpad for impressive growth. In 2020, store pickup grew 600%. Same-day fulfillment grew 400% from 2019 to 2021. By 2022, the company was ready to double down on digital. It announced plans to invest up to $5 billion to scale operations, with store-based fulfillment capabilities among the big areas that would receive a boost.
It was an example of how the pandemic’s digital shift left a lasting imprint that would change a retailer’s footprint well into the future. But it’s worth remembering that Target already had the strategy that shaped this operational transformation in place well before COVID-19 arrived.
In the mid-2010s, Target adopted a stores-as-hubs strategy that put brick-and-mortar at the center of all operations, including digital. This meant that ecommerce orders would run through the store, just like in-person shopping. This has remained in place, and only grown. In the first quarter of 2023, more than 97% of sales were fulfilled by stores.
Stores-as-hubs was a radical approach at the time it was introduced. CEO Brian Cornell faced criticism that the two channels would cannibalize each other, and was out-of-step with the massive warehouse-based fulfillment network that Amazon was building. But in the end, Cornell was vindicated. The strategy put Target not only in position to capitalize on the pandemic’s digital shift, but to continue to see its stores be a destination when consumers returned to in-person shopping when restrictions were lifted.
At this point, Target’s nearly 2,000 stores are cemented as the center of ecommerce operations. But as it seeks to gain efficiency and speed in delivery, the retailer is bringing additional facilities into the network.
Now, Target sees opportunity to build ecommerce from the inside out.
Scaling with sortation centers
This year, evidence is emerging in the form of Target’s sortation centers. Positioned downstream of stores, these facilities combine technology and process logic to triage packages for last-mile delivery by the Target-owned service Shipt. Orders are still picked and packed at the store, but the sortation centers serve as the staging grounds that get packages out the door for delivery.
On the company’s first-quarter earnings call with investors, Target COO John Mulligan stressed that these centers are not highly automated.
“In fact, it's because of the relative simplicity in the design of these buildings and the efforts of an incredibly innovative and energetic team that we've been able to scale the number of these buildings so quickly,” Mulligan said.
Target is placing a big bet on these facilities. In February, it announced plans for a further investment in the supply chain of $100 million, focused on the sortation centers. It is enabling rapid growth. In 2022, the company had three centers, and now has nine. By 2026, it expects to have 15 centers in place.
These facilities are also serving as testing grounds as Target seeks to scale the delivery network.
A new facility in the Atlanta area is serving as an extension of the sortation center that has enabled Target to reach 3 million customers with next-day delivery.
“With this new facility, online orders that have been packed by Atlanta area stores continue to flow to the sortation center, where they're sorted and delivered via our national carrier partners or a ship driver,” Mulligan said. “However, a portion of local orders falling outside the sortation center's last-mile delivery area can now be transferred to the Smyrna extension, where Shipt drivers can pick them up and serve additional neighborhoods.”
Target and Shipt are also refining the path that packages take to reach customers. Shipt vehicles are being shifted to high-capacity models such as SUVs and minivans. These were used in 65% of last-mile deliveries in the first quarter, compared with zero a year ago. The vans service nearly five times as many packages, and enable route optimization that increases the number of packages delivered per hour.
It all adds up to reduced service costs for Target, and the company is continuing to build and refine processes at the sortation centers.
“Based on the success of these efforts, we're developing plans to begin testing high capacity vans at a larger scale,” Mulligan said. “In addition, we're developing a standardized faster way to load those vans, enabling package containerization and easy identification of the correct packages at delivery. In addition to simplifying the load process for the drivers, this new process will enable us to safely move a larger number of Shipt drivers in and out of our sort centers in a given amount of time, expanding our last-mile delivery capacity in these markets.”
Improving the ecommerce experience
To expand this last-mile capability, Target won’t be building massive fulfillment centers like Amazon. It already has large stores that offer proximity to large swaths of the population. Those can be outfitted to serve the same functions as large warehouses, and sortation centers help to expand them. Add in a delivery network via Shipt, and the pieces are in place to continue expanding and optimizing capabilities.
A scaled logistics network on the backend could also improve Target’s ecommerce experience on the frontend. For instance, increasing fast delivery could also open up more opportunities to deliver items with a shorter shelf life such as groceries, which is an area where Target is looking to expand. As Amazon has shown, consumers are also more likely to buy if they receive items in a convenient manner. Target’s stores have long benefitted from customers associating the shopping experience with their affinity for a retailer, just as much as they do the products they buy. Through fulfillment and delivery, it can extend the Tarjay cachet online, as well.
Ecommerce has always held the promise of being able to bring the store home. Target’s logistics strategy is putting that idea into action in a very literal way.