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This Month in Commerce: October 2015

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This month in commerce, fast-fashion companies like Zara are pulling ahead in retail against companies like Gap by revolutionizing the fashion industry and keeping consumers coming back for more, break a century old fashion cycle. German startup Number26 is turning retail shops into bank branches to create the bank of the future by changing the banking experience, allowing your bank account to be just as mobile as you are. Outdoor gear retailer REI is closing all of its stores on Black Friday in defiance of the biggest shopping holiday of the year, and will even prompt online shoppers to get outside despite still allowing them to place orders. The rise of digital commerce is straining logistics companies and cutting into merchant’s profits. Customers have come to expect retailers to offer free shipping on all returns, forcing companies like UPS to implement new pricing policies based on package dimension. Uber has launched a new service for small businesses in three American cities! Uber Rush allows merchants to use Uber’s couriers for deliveries in these urban centres to help them avoid bottlenecks in service during the busiest hours of the day, directly competing with the service of on-demand delivery service Postmates. For all the details from this month’s newsmakers continue reading the wrap-up below!

Fast-Fashion is a Retail Win

This clothing company, whose CEO was briefly richer than Bill Gates, is blowing the competition out of the water

Source: BusinessInsider

For a brief moment Zara’s founder Amancio Ortega surpassed Warren Buffet as the world’s richest man – now he’s the just the world’s second richest man. For those not in the know, Zara is a retailer that sells men’s and women’s clothing with over 2,000 stores in 88 countries across the world. While other retailers are struggling to get customers in the door, Zara is seeing sales explode. Fast-fashion companies like Zara are winning in retail by challenging traditional ones, eliminating all the risk associated with trying to predict trends a year in advance. This type of operational model ensures customers come back to shop the brand often, as they see the styles change frequently and worry that key pieces will sell out and never return. Zara is changing the fashion industry, breaking up a 100 year old cycle of fashion that slowed consumption down.

Number26 Revolutionizing Digital Banking

Number26 Turns Retail Shops Into Bank Branches For Its Bank Of The Future

Source: TechCrunch

German start up Number26 has been hard at work to improve the banking experience in Europe, with a novel approach. Number26 is partnering up with Barzahlen, a cash payment solution, to turn retail shops into branches, rather than put up a fight with brick and mortar bank branches. Starting this month you can visit retail chains across Germany, from grocery stores to drugstores, to withdraw and deposit your cash. Using the Number26 app you can go to a checkout and enter the amount of money you want to either deposit or withdraw by scanning a barcode. All of this requires your PIN code and then the cash will immediately be transferred. The Number26 app is better designed than other banking apps, and comes with additional features like navigation and 3D touch support on the iPhone 6S. Number26 raised $10.6 million in January of this year and currently employees 65 people.

REI is opting-out of Black Friday

REI will close all stores on Black Friday, encourage online shoppers to go outside

Source: Digital Trends

REI, the recreation gear and sporting good company, is raging against the machine this holiday season. In pure defiance of holiday sales and promotions REI is closing all of its stores on Black Friday, the most popular shopping day of the year. All 143 of REI physical locations will close on Thanksgiving and remain closed through the Saturday after Black Friday, providing their employees with paid time off. REI will also not be participating in offering online deals or doorbusters on Black Friday, but will instead greet digital shoppers with a screen encouraging them to get outside. Customers will still be able to place sales from REI online but of course these won’t be processed until the company opens again on the Sunday. REI CEO Jerry Stritzke asserts, “We think that Black Friday has gotten out of hand…”. REI is promoting their stance on social media with #optoutside.

Digital Commerce Stains Shipping Companies

The Rising Cost of Free Returns

Source: The Wall Street Journal

Customers shop online with the expectation that free shipping on returns comes standard. The reality for retailers online though is that free shipping on returns adds to their eCommerce fulfillment costs under tightening margins. According to the National Retail Federation about 49% of retailers offer free return shipping, despite the fact that footing the bill for companies has been a strain. Many consumers will judge a company on the return policy that they offer, which adds to the cost of eCommerce. Extra prices to make returns turn customers away. UPS and FedEx have both implemented a new pricing policy based on the dimensional size of a package, which increases shipping costs. Added shipping associated costs are straining for retailers who are gearing up for the holiday season, but customers who have the foot the bill won’t be returning to shop with that retailer again, creating an eCommerce conundrum.

Need a Delivery in a Rush? There’s an Uber for that

Uber finally unleashes its FedEx killer, Uber Rush

Source: Business Insider

Uber’s latest cutting-edge experiment “Uber Rush” is now a reality! Rush lets user hail a courier using their app and track your messenger too. Uber is looking to target businesses as customers rather than consumers. Uber Rush is designed to be your delivery driver, not just an app where your order is placed. How can the app be used by businesses? Say if a restaurant needs another delivery driver to get order out during lunch, they can then sign onto the Uber Rush merchant platform to get a courier to lend a hand with orders. Uber Rush will cost merchants between $5 to $7 per delivery and Uber drives will pocket 75% to 80% of that fee. Currently Postmates is Uber’s direct competitor in this realm as it uses a similar model. Uber Rush launched in three cities so far: Chicago, San Francisco, and New York. If all goes to plan Uber Rush can become a threat to giants like UPS and FedEx.

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