Curtis Spencer Spencer: “You have to deal with the realities of your scale and then marry that against what it is you want to do with cost, capability and promise.”

JERSEY CITY, NJ—Getting the product out of distribution and fulfillment channels and into the consumer’s hands is the focus of early adopters in the e-commerce space, IMS Worldwide Inc. president Curtis Spencer tells Spencer will moderate the “E-commerce Last Mile” session during NAIOP I.CON: Trends and Forecasts here on June 9. We sat down for an exclusive chat with Spencer about the benefits of being an early adopter in the e-commerce space and what others in the industry can learn from their experiences. What are the benefits to being an early adopter in the e-commerce space?

Spencer: Early adopters in this space are Amazon, Walmart and Target, as well as Home Depot. The strategy that the brick-and-mortar guys have been using is fulfilling the last mile from their stores. They use the back end of their store for the last mile because they have 70 to 80 percent of their inventory there. Amazon, on the other hand, is doing fulfillment centers, sort centers and last mile. It’s two completely different strategies because Amazon doesn’t have the brick-and-mortar presence. Amazon has really been dialed into the millennial need for instant gratification and as a result, they have several tens of millions of customers paying $99 annually for their Amazon Prime service. How can early adopters’ experiences in the markets where they are deploying solutions benefit others in the industry?

Spencer: Everything you want to do as a retailer involves scale, in terms of delivering product to the customer when the customer wants it and how they want it. You have to deal with the realities of your scale and then marry that against what it is you want to do with cost, capability and promise. If you’re a small brand – say, a boutique apparel firm – unless you scale up to where Amazon is, you could never be able to promise same-day delivery. A small brand like that couldn’t ever deliver that requirement that fast, so their option is to look at a third-party logistics provider (3PLs) and other ways of tying their promise to their scale so that orders can be fulfilled effectively. Not everybody is going to be able to promise same day; you’ve got to balance your promise with your scale and then continue to look for alternatives to deliver more promise with the same scale. Almost all of those alternatives will be on the 3PL side. Which industry sectors will have the highest demand for last-mile delivery? Who will be the winners and losers, and why?

Spencer: Staple consumer products will have the highest demand, and there’s an opportunity for grocery, but it’s not there yet. If you work full time and/or have kids, you have no time.  But you still need consumer staples and probably have brand loyalty. You don’t have the need to go hand-select those shelf items. It’s a different story with fresh fruits and other produce. For those, I think we’ll always be inclined to go the brick-and-mortar route.