Does this scenario sound familiar? You can’t open your front door because there are so many UPS and FedEx boxes blocking the entryway. You lug in all the packages, open them up, and lay out your haul — toilet paper, diapers and toothbrushes in one box. The new Jonathan Franzen book in another. Box number three contains several coloring books and puzzles for the kids. Winter boots in box number four. Bottoms and tops from Target or J. Crew in box number five. Box number six holds the week’s meals — refrigerated. Boxes seven and eight are enormous. One holds a half-folded mattress; the other a designer dress, rented for an event this weekend.
The good news: The “theoretical” amount of time my wife thinks she saved by ordering all this great merchandise digitally and having it delivered to our doorstep.
The bad news: The actual amount of wasted time, caused by all this packaging — boxes to be broken down, packing material to be bagged up (it’s often not recyclable), paper to be thrown away, plastic to be unwrapped and a few items that have to be returned. Wait, where’s that box? Did I toss the return label? Oh, and I can’t fit all the now broken down boxes into the garbage so I have to make a trip to the dump — not convenient – on the weekend.
Maybe we should have just gone to the mall?
A “better” consumer experience? Not exactly. In fact, we’ve all traded away what seemed like an inefficient process of physical shopping into an inefficient process of receiving. We’ve turned our entryways, garages and doormen into small-scale warehouse operations. But our homes and our apartment buildings (and our interests) are not set up for this type of work.
I’m certain this modern consumption phenomenon is playing out not just in my house and my neighborhood in suburban Boston, but in every city, suburb and rural town, around the globe. In fact, Forrester Research and Morgan Stanley predict digital commerce will explode from $300 billion in 2015 to more than $1 trillion by 2025. That’s more than triple the volume – imagine three times the number of packages arriving in a day.
As with most tectonic economic changes, the solutions will evolve over many years. Fortunately, entrepreneurs are hard at work trying to create solutions to this package tsunami, and there are a number of initiatives currently in flight that I believe will start bringing us relief in the near term.
In the not-so-distant past — say, five years ago — when I was at Target to buy Halloween costumes for my kids, I’d also pick up the candy and decorations, and probably a few basic apparel items and last-minute groceries. There was too much time involved to drive all over town just to save a few bucks. In the digital retail world of today those barriers are gone — I might as well quickly search online to see if 64 packs of Hershey bars are cheaper somewhere else. And Amazon Prime has exacerbated — in a good way? — this phenomenon by reducing the “penalty” associated with single-item purchases in the form of shipping cost.
But has the penalty really gone away? The result is a deluge of packages.
Increasingly, though, new innovative mass marketplaces with the right pipes and plumbing to their partner merchants will encourage the consumer to build bigger baskets, rather than shopping for single items (as digital commerce has until now trained us to do). This change in behavior, driven by increasing consumer savings as the basket gets larger, will improve the merchant’s economics and, as result, the cost to the consumer, while allowing for bundling so that a single (or at least only a few) packages are sent to your home.
At Jet.com, founded by Diapers.com entrepreneurs, the company is seeing demonstrably bigger baskets (double the average basket size of Amazon) where items are aggregated and shipped from Jet’s own warehouse (for most consumables) or from a single, other merchant who can ship the goods most efficiently — more items at lower prices in fewer boxes. As a result, the winning merchant has a profitable order, the consumer saves money, and fewer boxes show up at home.
Another way to fix the “box paradox” is via last-mile fulfillment services: Innovators like Postmates, Uber, Lyft, Instacart, Caviar, Shyp and Parcel, which will, in time, become consumer-facing “store-and-forward” operations, receiving all your disparate digital commerce orders, unpacking and consolidating them, and delivering the goods to your doorstep or doorman in a one-hour window of your choosing. Initially we’ll see time-starved wealthy urban consumers paying a premium for this option to save space and waste, and optimize for convenience.
Eventually, though, as has happened with free shipping, this service will become a consumer expectation that retailers and brands will have to build into the consumer checkout process and factor into their pricing and subsidize — unless, like Jet, they are facilitating a larger basket of goods that can be fulfilled from a single facility in a single box. One can simply look to Europe and the preponderance of store-and-forward (“click-and-collect”) depots to get a sense of where we’re headed.
Yet another force for change is the growing reality that for Millennials, in particular, renting versus owning is an inexorable new behavior. Each major area of consumption now has its rent-versus-own high flyer – Airbnb for travel, Uber for local transportation, Netflix for films and Rent the Runway for clothes and accessories. Rent the Runway’s new unlimited subscription service, for example, lets shoppers have access to a large selection of everyday designer fashion, all housed in their “closet in the cloud.” Women get the items they want, when they want them, with fewer packages, less clutter and far lower cost. Services are proliferating that deliver a curated selection of goods, in a single box, to the shopper — Trunk Club for men, Stitch Fix for women, Birchbox for cosmetics, BaubleBar for accessories and BarkBox for Fido.
Hopefully a combination of more efficient marketplace operators such as Jet.com, store-and-forward delivery innovations like Postmates, and growth in rent-versus-own behavior driven by services like Rent the Runway will make a huge dent in shopper’s box-load.
So what else is coming that can reduce the delivery deluge? While it may be more than a few years away, I wouldn’t be surprised to see 3-D printing extend to home use for on-demand creation of consumer products — why have that new set of Marimekko-patterned tableware from Crate & Barrel delivered, in a box, tomorrow when I can simply click, pay and print it all out at home on my 3-D printer right now?
For now, let’s just hope that as digital commerce becomes an even bigger part of our everyday shopping life, the most innovative retailers and brands will continue to advance their approaches for getting product in the hands of their customers. I look forward to a world of shopping that is faster, less wasteful and far less cluttered.
Scott Friend is managing director at Bain Capital Ventures, which is an investor in Rent the Runway, Jet.com, 4moms, Persado, HookLogic and MediaRadar.