DEATH OF PUREPLAY RETAIL

INTELLIGENCE REPORT DEATH OF PUREPLAY RETAIL LAST MILE

Unlocking Omnichannel Potential (Cont’d) Ship-from-store has allowed leading omnichannel brands to compete with, and in some cases surpass, Amazon’s vast last mile capabilities. In June 2013, Best Buy launched ship-from-store, transforming its stores into mini-warehousing facilities. At the time of launch, Best Buy’s average delivery time was almost double that of Amazon, but by October 2013, the retailer had leveraged its new fulfillment locations to cut shipping times in half and was consistently outperforming Amazon shipping speeds. 14 In 2012, Macy’s also launched ship-from- store and has continued to expand the program throughout its store network. As of May 2015, Macy’s can ship online orders from 886 US store locations, 15 making its fulfillment network 13 times the size of Amazon’s. 16 With a more comprehensive fulfillment network, Macy’s packages often have less distance to travel than Amazon purchases, enabling faster delivery at lower costs.

Death of Pureplay Retail: Store Warehousing vs. Centralized Fulfillment Centers Amazon.com and BestBuy.com Average Parcel Delivery Speeds June 2013—December 2013 ■ BestBuy.com ■ Amazon.com

8

Ship From Store Launch

6

4

2

Average Delivery Window (Days)

0

Jul. 2013

Jun. 2013

Aug. 2013

Sep. 2013

Oct. 2013

Nov. 2013

Dec. 2013

Source: StellaService.

Death of Pureplay Retail: Macy’s Ship-from-Store Locations vs. Amazon U.S. Fulfillment Centers ■ 2012 ■ 2013 ■ 2014 ■ 2015

886

775

500

292

70

Amazon Fulfillment Centers

Macy’s Ship-from-Store Locations

14. StellaService. 15. “ Macy’s battle for the ‘last mile’ leads to Amazon ,” NY Post, July 2015. 16. “ Amazon Global Fulfillment Center Network ,” MWPVL, November 2015.

Source: “Macy’s battle for the ‘last mile’ leads to Amazon,” NYPost.com, July 2015; “Amazon Global Fulfillment Center Network,” MWPVL, November 2015.

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January 12, 2016