Retailers Increase Fulfillment Technology Spending to Keep Up With Amazon

Total Retail’s recent survey and subsequent report, The Amazon Effect: How Retailers Are Adapting Their Businesses to Better Compete With the Industry Leader, found that retailers believe that Amazon.com has changed consumers’ expectations when it comes to the cost and speed of delivery. Eighty-six percent of respondents said that shoppers are either "significantly" or "somewhat" less likely to buy without shipping in two days or less, and 91 percent feel shoppers are “significantly less likely” or “somewhat less likely” to buy without free shipping.

With these demands for fast and free shipping, retailers have been forced to invest in their operations and fulfillment teams to ensure they can keep pace. Part of keeping pace means having software systems that are optimizing efficiencies throughout the supply chain. The chart below analyzes how retailers’ spending on order fulfillment and delivery technology has changed as a result of Amazon's lead position in this area.

Although 89 percent of respondents say that Amazon has changed consumers’ expectations for order delivery (they want their items ASAP), more than half (53 percent) haven’t adjusted their technology spending on order fulfillment and delivery. The encouraging sign is that 40 percent of retailers are either somewhat or significantly increasing their investment in this area, leaving just 3 percent that are either somewhat or significantly decreasing their investment to lag behind.

Investments in technology throughout the purchase journey, from product discovery to post-purchase, are needed to keep up with Amazon. Over the next few years, the number of respondents increasing spending on technology for order fulfillment and delivery should grow.

Download the full report here.