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Benchmark Brands selects Upstream Commerce

BY Marianne Wilson

New York — Omnichannel retailer Benchmark Brands has chosen intelligence provider, Upstream Commerce, to maximize Benchmark’s price and assortment optimization.

"We chose Upstream Commerce for their experience with large high fashion and apparel retail companies in the US," said Christine Mueller, VP, Benchmark, which specializes in footwear and related products for baby boomers and seniors. "Upstream Commerce fits our goals of providing the best omnichannel shopping experience to our customers while driving profitable growth.

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Apple Pay: What retailers need to know

BY CSA STAFF

By Howard W. Herndon, BlackLine Payments Advisors

While much of the attention at this week’s Apple press conference was on the iPhone 6 and the company’s new smartwatch, we believe — along with many industry analysts — that the most important news of the splashy event was Apple Pay, the company’s new mobile payments system.

When a giant like Apple decides to revolutionize the way we do things (in any sector), one thing is for certain: change is inevitable. Using near field communication (NFC) technology, the new iPhone 6 and Apple Watch will be able to interact with payment terminals with a simple tap. While much of the technology is not new, Apple’s unique ability to make existing technology and processes easier and more effective is sure to ignite consumers’ interest in mobile payments and speed up adoption.

As advisors to companies that take, process or issue credit cards, including merchants, payment processors and banks, focused on helping them lower costs, increase security and add profits, our phones began ringing after Apple’s conference. In the article below, we’ve provided answers to many of the questions we received in response to Apple’s game-changing move.

Does it require a hardware upgrade?

To accept payments from Apple’s NFC-equipped mobile devices, most merchants will need to upgrade their payment terminals with a hardware add-on to support NFC. As merchants already must upgrade their terminals to support the chip-and-PIN system (also known as the Europay, MasterCard and Visa, or EMV, standard) to meet the October 2015 deadline set by the payments industry, many may now consider looking at systems that incorporate both technologies.

In addition, merchants must consider where the equipment is placed, as consumers will need to wave their phone and tap it against the reader. And, as with any new technology rollout, staff training will be critical to realizing a proper return on investment.

Is it secure?

Apple has done everything in its power to make Apple Pay secure. Instead of storing credit card numbers on the device or Apple servers, a unique “Device Account Number” is assigned, encrypted and stored in what Apple is calling a “Secure Element” on the iPhone or Apple Watch. According to Apple: “Each transaction is authorized with a one-time unique number using your Device Account Number and instead of using the security code from the back of your card, Apple Pay creates a dynamic security code to securely validate each transaction.”

In addition, the Touch ID fingerprint sensor will authenticate purchases. Cashiers won’t be able to see customers’ names, credit card numbers or security codes during the transaction, and Apple won’t collect purchase history data.

Will it be widely accepted?

Apple has struck deals with the three major payment networks, American Express, MasterCard and Visa, and several issuing banks, including Bank of America, Capital One Bank, Chase, Citi and Wells Fargo, representing 83% of credit card purchase volume in the United States. Several major retailers, including Macy’s, Staples, Target and McDonald’s, have already begun deploying terminal equipment necessary to accept Apple mobile payments.

The technology will work at the 220,000 retail locations across the United States where contactless payments are already accepted. However, with 8 million business locations across the country accepting electronic payments, the 220,000 locations still represent just a fragment of the entire payments ecosystem.

Should I accept Apple Pay?

Your decision to accept Apple Pay should encompass a variety of considerations, from your current technology, the type of customers you presently serve and those you wish to attract, to your desire to be seen at the cutting edge of the retail experience, including payments. However, Apple’s timing is no coincidence. With the EMV compliance deadline of October 2015, merchants are already in the process of reevaluating their payment technologies. As with any change, merchants should use the opportunity to evaluate their entire payments strategy — including partners and fees — to ensure the most beneficial contract terms.

Howard W. Herndon, president, BlackLine Payments Advisors, an electronic payments advisory firm. He can be contacted at [email protected].


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UPS and retailers ready to deliver Christmas

BY CSA STAFF

Every holiday season is filled with uncertainty, and this year is no different, except when it comes to e-commerce, where the only unknown is the size of the sales increase.

One indication that retailers can count on double-digit growth this year — even as they are challenged to drive store traffic — is the extensive preparations that have been underway at UPS for the past year. The global logistics leader has invested $500 million this year on a range of initiatives to increase forecasting, capacity, visibility and communications during the peak holiday season and beyond, explained Mark Wallace, UPS VP of engineering for U.S. domestic operations. The company also plans to hire between 90,000 and 95,000 temporary workers for the October through January time frame to cope with the surge in e-commerce-related volume.

“We are ready to deliver, and we have been working on our peak [season] plans since Dec. 26,” Wallace said. “We really feel very confident that we are ready for peak with all the performance initiatives we have in place.”

Peak season is between Thanksgiving and Christmas, when roughly 74% of e-commerce sales occur. Shoppers’ elevated expectations regarding the shipping speed, cost and supply chain visibility have created new challenges and opportunities to delight — and disappoint — customers. To ensure it is not the latter, UPS is placing a tremendous emphasis on collaboration and commitment. Planning for peak [season] goes on all year, but the e-commerce landscape is changing so rapidly that Wallace conceded that even its “largest retail customers are having a hard time forecasting.”

To address the situation, UPS is meeting earlier with its customers than it ever has, and is holding monthly and weekly forecast meetings to understand such variables as the growth of ship-from-store capabilities — which influence distribution patterns — and the mix of ground and air volume. According to UPS, it now has more than 70 retail customers offering ship-from-store services at more than 20,000 locations, some of which may ship as many as 400 packages daily.
The extensive forecasting process also is about reaching mutual volume commitments so UPS can understand how much volume its network is likely to see during peak season.

After shoppers procrastinated and retailers made promises about delivery cutoff times — causing a spike in demand — the UPS logistics network couldn’t accommodate last year, which in turn caused some packages to arrive after Christmas. The potential for that situation to repeat itself is greatly diminished by increased collaboration with retailers and agreements around mutual volume commitments.

For its part, UPS is able to commit to handling increased package volume this year due to a wide range of initiatives that increase capacity by 10%. For example, one of the most obvious ways to do that is with more delivery vehicles, and UPS has said it will add 6,000 drivers this peak season. The company also is increasing the use of contract carriers and in some cases equipping vehicles with technology. The goal is to improve visibility on trailers arriving at distribution centers and enhance communications with drivers. In addition to more drivers, those drivers will be operating more efficiently due to a new route optimization technology rolling out to the fleet called on road integrated optimization and navigation, or ORION. “Forty-five percent of our drivers will be on ORION this peak, and it is a big deal because it makes them more efficient,” Wallace said.

One of the most interesting capacity initiatives involves the use of mobile distribution center villages. The MDCs can be thought of as pop-up distribution centers. Long sections of large trailers are shipped via rail to a destination and linked together in a “U” shape. Merchandise can be received at the base of the “U” and then flows along conveyors through either side of the “U” where UPS trucks can be loaded.

According to Wallace, the MDCs take only a few weeks to set up and give UPS flexible capacity to serve between 60 and 90 delivery vehicles. “The MDCs will provide us with flexibility that we haven’t had in the past,” Wallace said.

UPS also is increasing the capacity of an already massive facility in Louisville, Ky., known as Worldport. The 5.2 million-sq.-ft. distribution facility handles next-day air shipments, and each night beginning around 11 p.m. roughly 110 planes begin arriving from throughout the United States and the world.

The planes are unloaded and then merchandise is processed by 6,000 employees before going on a roughly 13-minute ride throughout the facility’s highly automated sortation system, which includes 150 miles of conveyor belts. The packages are loaded into containers and go back on aircraft, which then depart about every 60 to 90 seconds until 5 a.m. Some of the planes are on the ground for as little as 45 minutes during a process UPS folks describe simply as “the sort.”

UPS does “sorts” at Worldport, as well as at six regional air hubs, and plans to increase activity at those regional hubs. According to Wallace, there will be 50 additional sorts across the UPS air and ground network this season. Four of the sorts take place on “Super Weekend,” the Saturday and Sunday before Christmas when the Worldport facility is an around-the-clock frenzy of activity.

In addition to all the capacity gains and collaboration activities, the other factor working in favor of retailers and UPS this season is additional operating days and delivery days between Thanksgiving and Christmas. This year, Black Friday will be a full operating day for UPS’ unionized work force, according to Wallace, where it wasn’t in the past. There also is an extra weekday prior to Christmas. That gives UPS 18 peak operating days this year, versus 16 last year, and 19 total delivery days, versus 17 last year.

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