Published November 5, 2014
By Jim Tompkins
CEO, Tompkins International
There was a brief news article last week (read it here) about the future opening of an e-commerce fulfillment center. What made the article jump off my computer screen were the uninformed statements made about American retail business. Let’s take a look:
- On the third line, there is a quote from the Governor of Illinois: “We are in the middle of the United States, with excellent transportation, and great air and rail connections.” The Governor does not seem to grasp the e-commerce mandate of “Get local” or the reality that the Illinois-based fulfillment center has nothing to do with air or rail transportation.
- The next quote is from a Senator from Illinois: “This is also our history — it’s Sears, Montgomery Ward, every retail giant comes here because they understand Chicago is the focal point when it comes to retail operations.” The Senator is actually suggesting that a reason for locating a fulfillment center close to Chicago is so you can follow in the footsteps of the “retail giants” Sears and Montgomery Ward.
- Quoted from lines 10 and 11: “The trends include the reshoring of manufacturing to the US …” is a reason to locate the new fulfillment center “into the middle of the US …”The “reshoring” thing has not been a huge success. Yes, some companies are bringing manufacturing “back” to the US, but more are moving manufacturing offshore or via nearshoring to Mexico. Nevertheless, this has nothing to do with a fulfillment center in the middle of the US.
There were several other areas that missed the mark about e-commerce:
- E-commerce sales only being only 3 to 10% of total sales, thus meaning e-commerce is not that important. Shopping is not about online or in-store, but omnichannel. The reality is that 94% of all US retail sales start online. So to say that e-commerce is not very important is far from reality.
- Similarly, the next statements about retail were made recently in a report entitled “On Solid Ground: Brick-and-Mortar Is the Foundation of Omnichannel Retailing.” The report includes mind-blowing statements such as:
- “Physical stores remain the foundation of retailing.”
- “Physical stores are clearly customers’ preferred shopping channel and a place where the most significant consumer and retailer value continues, and will continue, to be created.”
- “The future of retail is solidly anchored in the brick-and-mortar channel.”
Let’s be realistic about changes happening in retail and get informed on the consumer expectations facing the retail industry today. Today’s consumer won’t wait for anyone to catch up.
- Article: Alibaba’s Impact on Retail Supply Chains Is Bigger than You Think
- White Paper: Retail Backrooms: A Revolution in Roles and Business Value
Photo credit: Ross D. Franklin AP Photo