Monthly Archives: January 2017

Neiman Marcus Shows Issues with Distribution

With a big luxury retailer like Neiman Marcus, the last thing you want to experience is an issue with distribution for high-end commodities.  However, this is what the retailer has released information about, incurring significant losses this year.

Neiman Marcus announced that it had first fiscal quarter losses for 2017 and it was due to the distribution problems that it is facing.  The article via Internet Retailer discussed how the retailer had challenges implementing a new cross-channel merchandising system, which costs Neiman Marcus up to $35 million during its fiscal first quarter.  It reported online sales accounted for 29.2% of overall sales in the first quarter, which ended October 29th.  This equates to $315.1 million, down from $315.7 million during the same time last year.In a filing with the U.S. Securities and Exchange Commission, Neiman Marcus revealed problems that related to the implementation of NMG One, its new cross-channel merchandising and distribution system.  It resulted in a negative impact on online and offline sales.  More specific numbers mentioned in the report were Neiman Marcus’ earnings, which  included:

  • A year-over-year total comparable sales decline of 8.0%, compared to a 5.6% decline last year.
  • Net revenue of $1.079 billion, down 7.4% from $1.165 billion.
  • A net loss of $23.5 million, compared to a net loss of $10.5 million.

Neiman Marcus stated, “These issues primarily related to the processing of inventory receipts at our distribution centers, the transfers of inventories to our stores and the presentation of inventories on our websites.  These issues prevented us from fulfilling certain customer demand in both our stores and websites that we estimate resulted in approximately $30 to $35 million of unrealized revenue.”  In a now technology-driven retail industry, traditional warehousing and distribution is not able to keep up with the demand for better omnichannels to facilitate online and offline sales.  There has to be a shift into more sophisticated distribution, which a retailer can experience a level of growing pains.

Some department store retailers are utilizing their physical store locations to act as close proximity warehouses and opting to implement Same-Day Delivery to meet online demand.  Macy’s for example, partnered with Deliv and now has same-day delivery in San Francisco, Los Angeles, Seattle, Houston, Chicago, New Jersey, Washington DC, and other major US cities.  Its sister company Bloomingdale’s also rolled out the service in cities like San Francisco, Los Angeles, San Jose, and Chicago.  With over 880 store locations, Macy’s has the store volume to fulfill orders from, instead of primarily utilizing distribution centers.  Neiman Marcus can do the same.

The popular retailer can partner with a Same-Day Courier like AQuickDelivery in Atlanta and have its online order fulfilled throughout the Georgia area.  The Atlanta Courier also is equipped to provide same-day delivery for retailers nationwide.  There may be many adjustments that Neiman Marcus has to make and implementing same-day delivery to generate online growth can be one of them.

Reference:  12.15.16, www.internetretailer, Matt Lindern, Distribution problems cost Neiman Marcus during its first quarter

It’s Official, Amazon Makes Its’ First Prime Air Drone Order

If other retailers have been pursuing Amazon into Same-Day Delivery, they will now find themselves being outpaced again, as Amazon announces it’s first drone delivery.

Fox News detailed the first official delivery of Amazon Prime Air via drone in Cambridge, England.  The drone was able to perform the delivery in an impressive 13 minutes.  This is revolutionary, being that most same-day deliveries, whether via a courier or even Amazon Prime on the ground, is done within an hour.  Amazon says that its’ drones won’t ever take no more than 30 minutes to deliver its’ packages.  The drone delivered an Amazon Fire TV and some popcorn, which weighed less than 5 pounds.  It was guided by GPS and flies no higher than 400 feet.

Amazon CEO Jeff Bezos tweeted the success of the retailer’s first drone flight today, but the flight actually took place on December 7th.  Bezos began creating and testing drone use in 2013, and now it is a reality.  The article mentioned that Amazon does only have a few customers in the UK that is privy to using them, however, the e-retail giant hopes to expand to a larger demographic.  Amazon has to be very careful with its’ drones use in inclement weather, such as no flying them in rain, snow, or ice, as well as flying in separate air spaces to avoid planes.

“One day, seeing Prime Air vehicles will be as normal as seeing mail trucks on the road,” Amazon says.  This means that we could potentially find drones flying in various parts of the country at one time making deliveries.  Shoppers will be able to have their online items delivered right to their front door within 30 minutes.  Drone delivery will be satisfying for the customers, however, it may have an adverse affect mall traffic and other physical store retailers without a heavy focus on e-commerce.

During the busiest shopping season of the year, this has already occurred in China.  Mall traffic went down last month, as more wealthier shoppers turn buying online.  Yet at the same time, the country’s largest e-retailer Alibaba, made $18 billion in one day.  Alibaba doesn’t use drones, but the idea behind the mounting increase of online retail is showing up globally.

Online retail is expected to reach $500 billion in the US by 2018.  It is inevitable that businesses will have to create omnichannel strategies in order to move product from physical stores.  With same-day delivery, brick-and-mortar stores can utilize the service like Amazon, with actually using their stores to fulfill online orders.  Companies can partner with a Same-Day Courier like AQuickDelivery to get their same-day services implemented quickly.  The Atlanta Courier has an enormous amount of delivery expertise and the latest courier technology to develop last-mile deliveries to propel traditional store retailers into modern trending e-commerce businesses that can keep up with drones.

Reference:  12.14.16, Fox News, Lulu Chang, From high-flying dream to reality: Amazon fulfills its first order using a drone