The Importance of

by Ken Cassar

Real-Time Shipping Information

APRIL 5, 2016 • RAKUTEN INTELLIGENCE, INC. • WWW.RAKUTENINTELLIGENCE.COM

MAY 2018 • RAKUTEN INTELLIGENCE, INC. • RAKUTENINTELLIGENCE.COM

 Thanks to Amazon Prime’s standard two-day shipping, e-commerce superiority is no
longer only predicated on who sells the most, at the best price, but also who ships the
fastest and least expensively. The problem is, faster shipping is more expensive and a
bigger logistical hurdle, which begs the question: is it worth it?

With our in-depth, unparalleled, and near real-time shipping data, Rakuten Intelligence
has the answer to that very important question for both retailers and carriers, and some
examples to back it up.

The Amazon Effect

Amazon changed the e-commerce world in 2005 when it announced its Prime
membership program would be offering members free, two-day shipping. In hindsight,
this move was a major driver of the current status Amazon holds in e-commerce: dominant.
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Between April 2017 and March 2018, Amazon had 38 percent of all U.S. online sales. In
categories where items commonly fell below minimum shipping thresholds, Amazon’s
share was even stronger. Amazon’s e-commerce counterparts quickly realized that in
order to stay relevant online they had no choice but to emulate Amazon’s fast, free
delivery approach.

And the companies that are enjoying online success are doing just that.

Advance Auto Parts uses cheaper shipping to zoom past AutoZone online

Advance Auto Parts and AutoZone are two of the leading auto parts retailers in the
country. Advance Auto Parts has 5,400 stores and $9.4 billion in sales in 2017; and
AutoZone, with 6,000 stores, had sales of $10.9 billion in 2017. It would appear that
AutoZone is out-performing Advance Auto Parts, but when we look at the e-commerce
performance of these two companies, Advance Auto Parts holds a substantial advantage
over AutoZone.

From May 2017 to April 2018, Advance Auto Parts had four times the online sales
volume as AutoZone. What drove this? It wasn’t shipping speeds, as Advance Auto Parts
and AutoZone delivered with near-identical speeds. It was shipping costs.
 Lower shipping fees help Advance Auto Parts outpace AutoZone online

Between November 2015 and April 2018 Advance Auto Parts’ average shipping &
handling fees were between $1 and $2, implying most orders were shipped for free.
AutoZone, however, had average shipping & handling fees of around $12 until Q4 2017.
Could this be negatively impacting its ability to compete online with Advance Auto
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Parts?

AutoZone drops shipping fees in an attempt to challenge Advance Auto Parts

By 2018, Advance Auto Parts and AutoZone had the same shipping speed and shipping
pricing, but as of April 2018, AutoZone’s market share hadn’t rebounded. Only time will
tell if this correction was too little, too late.
 Faster is better: ULTA gains on Sephora thanks to improved fulfillment speeds

Our second case study dives into two beauty category giants: Sephora and ULTA. Both
retailers operate many locations -- Sephora has 706 nationwide and ULTA has roughly
1,000 -- and both retailers have similar shipping & handling fees. What the two beauty
retailers don’t share, however, is fulfillment speeds, which is a major contributor to
Sephora’s massive online market share advantage.

Historically, Sephora has delivered orders far quicker than ULTA -- the average click-to-
door speed for Sephora in 2015 was 3.5 days, compared with 6.1 days for ULTA -- but by
the end of 2015, ULTA worked to narrow the gap in fulfillment. Between January 2016
and April 2018, ULTA cut 1.1 days off of its delivery time and, with the help of Sephora
slowing their delivery time down nearly half a day, had closed the gap to just 1.1 days.

ULTA improves fulfillment speeds to try to gain market share

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By increasing their click-to-door speeds, ULTA was able to take market share away from
Sephora. From January 2016 onward, after ULTA increased its delivery speed, there was a
corresponding six point improvement in market share.
 ULTA’s faster fulfillment eats into Sephora’s market share
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What Can Atlas Show Retailers?

These case studies show that in some cases, cutting costs by investing less in shipping
and fulfillment can cost retailers market share. Using Atlas, retailers have the insights
they need to not only improve their customer satisfaction, but optimize their shipping
patterns to smartly manage their logistics networks.

These two case studies show that there is no substitute for fast and cheap shipping
when it comes to online dominance. But there are other categories were speed is less
important to the consumer, so shipping savings can be realized. If retailers want to carve
out space for themselves in the ever-changing landscape of e-commerce, Atlas will get
them there.

What Can Atlas Show Shippers?

There is a clear path toward success for shipping companies who use Atlas, and it all
starts with knowing what to offer current and prospective clients. With this exceptional
and unmatched data, shipping companies can be the guiding light to retailers looking
to optimize their shipping options, as well as invest in infrastructure that will support
the faster and cheaper shipping requirements e-commerce retailers are starting to demand.

Atlas will give shipping companies the ability to better serve their clients, and position
themselves for a future where optimized shipping options aren’t desired, they’re required.
 About Atlas

With a panel of over 5.5 million US online-shoppers, Rakuten Intelligence collects the
most detailed, accurate, and current shipping data available in the market. With data
showcasing over half-a-million packages a day, you get a real feel for how quickly
shipments travel, how they are transported, and at what cost across more than 80,000
brands. See everything you could ever want to see -- from the initial scan to the notice of
delivery -- in near-real-time. In the world of e-commerce and fulfillment, any edge can be
the difference in the battle for market share and this incredible data is the edge you’ve
been looking for.
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Ready to optimize your logistics? Let’s talk: ri-info@mail.rakuten.com

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