One of the great things about online shopping has been the free shipping, often via retailer promotions (‘free shipping over $50’) or programs like Amazon Prime.
Isn’t it terrific? You can be prancing around doing whatever one does when one prances, and should a random thought pop into your head like “man, I really need a Teflon fly-swatter”, you can just go online, order it, and before you know it, like Bugs Bunny waiting at the mailbox for his order from Acme, a Teflon fly-swatter arrives at your doorstep, typically in a box big enough to hold a microwave oven.
Long Haired Hare (1949)
Well, you may want to get your impulse shopping Jones satisfied now, because the sad news is that free shipping as we know it is likely to be changing. Reality bites.
This past week FedEx announced it was changing its freight policy to include not only weight, but also the dimensions of the shipped product. This will result in increased shipping costs on about 1/3 of items, particularly large but lightweight products (e.g. toilet paper) that fill up trucks or planes but don’t represent as much revenue (or profit).
Similarly, Groupon, which also sells a few things from time to time, has increased its free shipping threshold from $20 to $25.
Why the changes? Well, the short answer is that you can’t download stuff you order online.
Amazon might have the most amazing distribution centers, but stuff still has to be shipped with pre-internet technology like TRUCKS and AIRPLANES and HUMANS. And the cost of fuel of all of these mechanisms is going up, as are fees, taxes and everything else. Like a bridge that goes 99% across a river, that final 1% really makes or breaks the whole program.
– there are related impacts as well: retailers will likely now need to stock more box sizes (to reduce over-sizing), which carries inventory costs.
SO – someone has to pay for these increased costs. And ultimately you know who that is: you and me.
What is likely to happen is that costs will be increased throughout the system, for example:
– Shippers like FedEx incorporating package dimensions to increase fees (and UPS likely to follow)
– Retailers raising thresholds for free shipping (like Groupon)
– Retailers increasing prices in other ways (Amazon Prime going from $79 to $99)
– And plain old increased costs of merchandise to cover shipping
There will very likely be increased use of shipping as a promotional tool, but over time costs will inevitably need to increase. There’s just not enough profit in the system right now.
Until some equilibrium is reached, however, you may still notice overt signs of covering costs – – like $50 for a $2.50 order of screws (actual cart total – – and yes, it was abandoned). So keep your eye on the ‘shipping cost’ line for the time being.
This is the time of year where instead of being productive, people put together lists.
So here’s my look back at 10 events in 2013 that provided (purposely or not) great learning.
2013 Lesson 1: Measure Twice, Cut Once. Make that: Measure three times. Healthcare.gov rollout
(honorable mention for Chicagoans: Ventra public transit card rollout).
– So many lessons here. It’s the lesson that keeps on giving. Reminder: even if your brand isn’t one-sixth of the national economy you probably still want to test a new e-commerce site. Test, test and then test again.
2013 Lesson 2: A brand CAN do a 180 in a Single Day Miley Cyrus
– And in this case it took about 5 minutes. The recipe: take one tweens’ idol named Hannah Montana. Remove most clothes, liberally add makeup, a big foam finger and nationally televised awards show; mix aggressively using the body and add a large dash of idiot grin. Voila! You’ve now transformed from Hannah Montana into what looks like the love child of Gene Simmons and Dita Von Teese, without the charm.
The winner: probably Miley and her handlers, but hard to know yet. The clear losers: Millions of formerly innocent Hannah fans. Also, the general cultural level in the US.
So yes, it is possible to completely change your brand’s image in a day. But it might involve twerking.
2013 Lesson 3: There is such a thing as too much transparency Lululemon
– Due to quality control snafus, Lululemon’s yoga pants delivered a little more than was supposed to meet the eye. The media, always a model of sober restraint when it comes to high-minded topics like see-through clothing, did its best to spin this story as salaciously as possible. Ultimately it went viral, resulting in loss of gobs of market value, as well as Lulu’s top management. At least they kept their sense of humor about it. (actually, there is a real lesson here: at the end of the day it’s about the product – and you can never take your eye off the ball).
2013 Lesson 4: The early bird still catches the worm – – if he tweets about it. Oreo cookies
– We now live in an era that enables, and requires, real-time marketing. As has been reviewed ad nauseam (guilty!), Oreo slam-dunked it with a timely tweet during the Super Bowl blackout. Meanwhile, given the opportunity of Marco Rubio’s magic cotton-mouth TV moment, the Poland Spring ad team not only didn’t stick the dive, they missed the pool entirely.
2013 Lesson 5: When life gives you lemons, make lemonade. When your meatball supplier tries to slip you some horsemeat, clean house IMMEDIATELY. IKEA
– When IKEA learned that some of its famous meatballs (150 million annually!) might contain traces of horsemeat, it immediately got rid of all meatballs in inventory, whether suspect or not. Cost of write-off? Probably pretty high. Benefit to reputation by immediately taking action? Priceless. Sales of meatballs since then? UP.
2013 Lesson 6: Hint: ‘Fail Fast’ is really just a euphemism for Test and Learn. It doesn’t mean your goal is actually to fail fast. JC Penney
– Here is a retailer that tried to do a 180 without twerking. Or more importantly, without considering that its customers preferred periodic discounts. Boom.
Easier to adapt to customer preferences than to try to force them to adapt to you.
2013 Lesson 7: There is No Such Thing as Bad PR (at least for Jeff Bezos) Amazon
– Amazon’s eerie delivery drones cleverly debuted on ’60 Minutes’ the day before Cyber Monday. Never mind that if you give it about 5 seconds’ thought, the barriers are significant (snow? wind? power lines? privacy issues? teen boys with slingshots?) – what it really shows is that in addition to any product you can think of, Amazon’s mission apparently also includes delivering PR to all homes.
2013 Lesson 8: If you go for the ‘wink-wink, joke’s on me’ approach, and people don’t get it, then ‘wink-wink, the joke’s on you’. Honda/Michael Bolton Holiday campaign
– If you didn’t see them, these spots feature the man of the strained tenor and shorn mullet singing soulful holiday-esque tunes from atop a Honda, next to a Honda, in a Honda showroom, behind a piano, behind a guitar, all to the indecipherable reactions of surprised, baffled, younger presumed car shoppers. It’s difficult to tell what the point is. The obvious assumption is that this is a quid pro quo: the 60-year old Bolton (perfect for a younger target!) has a new album that needs promoting (true) and Honda needs some breakthrough quality in the holiday car ad environment that generally features obnoxiously gift-wrapped luxury cars (true again).
But what’s Bolton doing up there on that car? Apparently, according to Adweek, this campaign is ‘poking fun at itself with melodramatic guitar solos and idiotic lyrical gems like “This special time of year, it’s filled with joy and cheer, for me and you and you and you, too’.” Well, I know something about misplaced melodrama and idiot lyrics and I didn’t catch it. If there’s a wink in there somewhere, it’s subtle enough as to be invisible.
So we’re left with a spot with bland cars, being promoted by bland music – – a perfect match, but I suspect probably not what they were going for.
The American public as a rule doesn’t respond well to ‘subtle.’ Witness, if you will, Ron Burgundy for Dodge – – a more effective celebrity hookup.
2013 Lesson 9: When in Rome, do as the Romans do. When trying to break into Southern California, and your name contains the word ‘Fresh’, don’t pre-wrap the fruits and vegetables. Tesco Fresh & Easy
– This one already has a coda. Big UK retailer Tesco created its Fresh & Easy chain in late 2007 to penetrate the Western US market with a fresh new smaller format store, famously after significant consumer research. The experiment failed when consumers didn’t respond well to new formats, new food presentation, and in some cases, truly foreign concepts. Ultimately F&E was sold to Yucaipa, which has added “competitive pricing, improved hours, fresher foods and assisted checkout” according to management. Everything, it appears, has been changed except the name.
– The obvious lesson – – listen to your customers (see Lesson 6).
2013 Lesson 10: You can say Social Media and B2B Marketing in the same sentence Maersk Shipping
– Maybe it’s the exotic locations where its ships are shown. Or maybe it’s just the fact that deep down we’re all little kids and are awed by really cool big boats. Whatever the appeal, big freight shipper Maersk found a way to go from zero to one million+ in Facebook likes in about a year (good Forbes article here). Of course, no one places container orders on a Facebook page, but for very little cost (repurposing archival company photos) this enhances the Maersk brand, distances it a bit from its competitors, and likely provides meaningful recruiting and morale benefits.
Probably the big lesson for 2013 has been that while many old conventions are being challenged (e.g. static campaigns, role of social media), the key marketing fundamentals are still alive and well: understanding your customers and their needs is the surest way to success (or at least avoiding being in next year’s write-up).