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The holiday season—a time of joy, celebration, and, increasingly frantic online shopping.
Black Friday, Cyber Monday, and the lead-up to Christmas mark the busiest time of the year for e-commerce. Amid the rush to ship millions of packages, issues like stolen deliveries and returns surge to the forefront, challenging even the most prepared retailers.
Rainbow Shops' Journey to Frictionless Shipping
Rainbow Shops, a fast-fashion retailer with a significant urban customer base, faced one of the most frustrating e-commerce problems for customers: stolen and lost packages.
On a recent episode of The Frictionless Experience, David Cost, VP of of Digital and e-commerce at Rainbow Shops, joined hosts Chuck Moxley and Nick Paladino to share exactly how the company achieved this result and what retailers can do to streamline operations and create frictionless customer experiences.
TL;DR The solution they implemented was deceptively simple—a FedEx "Hold at Location" feature that allowed customers to pick up packages from secure third-party locations. With this small change, Rainbow Shops reduced their shipping losses by an incredible 75%, transforming what was once a financial and operational headache into a success story.
The Holiday Season Challenge: Volume and Vulnerability
The holiday season is a make-or-break time for retailers, especially in e-commerce.
The stakes are high as millions of packages flow from warehouses to customer doorsteps. Yet, with this volume comes vulnerability—stolen packages, or "porch piracy," spikes during this time.
For many customers, especially those in urban or high-density areas, this problem is all too common. Rainbow Shops, which caters to a predominantly urban and mobile-first audience, saw the issue reflected in their lost package claims.
David Cost, Vice President of Digital and E-commerce at Rainbow Shops, explained:
"Imagine you're of more modest means, living in an urban area. The apartment building you live in might not have a package room or any safe place for delivery people to leave your items. They throw them on the floor in the lobby, and if someone else recognizes the brand and wants some free stuff, they just grab the bag. That happens way more than you'd think."
It's not just customers who suffer. Lost packages mean added costs for refunds or replacements, reduced margins, and strained customer support teams. Porch piracy and package theft represent a growing, multi-billion-dollar issue that undermines trust in online shopping.
The Simple Yet Transformative Solution: Hold at Location
To address this issue, Rainbow Shops introduced FedEx's "Hold at Location" feature.
Instead of having packages delivered to their home addresses, customers could choose to pick up their items at secure locations like Walgreens or Kroger stores. These third-party pickup points provided a safe alternative for customers who couldn't ensure the security of deliveries at home.
While initial surveys showed moderate interest in the feature—only 12% of respondents expressed a preference for alternative delivery points—the actual impact was staggering. David shared:
What's remarkable is how a relatively small percentage of users opting in—just 2%—had an outsized impact:
"These are people who know they live in areas where package theft is a real problem. They immediately said, 'I just want my goods.' They self-selected the free and secure option, and now they can securely get their stuff on the first go-around."
For Rainbow Shops, this wasn't just a financial win but a customer satisfaction victory. By offering a flexible option, the company empowered its audience to take control of their deliveries, reducing frustration and building loyalty.
The Broader Lesson: Small Features, Big Impacts
What makes this feature so powerful is its simplicity. It didn't require overhauling Rainbow Shops' logistics systems or significant investment in new technology. Instead, it leveraged an existing FedEx service to solve a common pain point for a targeted segment of customers.
Retailers can take a few lessons from this approach:
- Listen to Customer Pain Points: Rainbow Shops identified package theft as a key friction point for their audience through surveys and customer feedback. Understanding your audience's challenges is the first step to solving them.
- Offer Flexible, Secure Options: Even if only a fraction of customers take advantage of an added feature, the ripple effects can be profound. Options like "Hold at Location" are particularly relevant during high-risk times like the holiday season.
- Think Beyond the Final Mile: Many e-commerce strategies focus on warehouse efficiency or shipping speed, but the last-mile experience—how a package gets to a customer's hands—can make or break the transaction.
A Complementary Strategy: Amazon and Kohl's
Rainbow Shops isn't the only company innovating in delivery and returns. Amazon, the undisputed leader in e-commerce, has found a way to turn the traditionally inconvenient process of returns into a win-win scenario—partnering with Kohl's to accept Amazon returns at Kohl's stores.
The concept is simple: Amazon customers can bring items to any Kohl's location for free returns, with no packaging or return label required. While this partnership streamlines Amazon's process, it also drives significant foot traffic to Kohl's stores, which have traditionally struggled to attract younger shoppers.
David compared this tactic to a classic retail strategy:
"So much of retail is just getting someone inside your box. Once they get in, they might buy something."
The results for Kohl's have been impressive. Reports show increased foot traffic and a boost in younger, tech-savvy shoppers. During the holiday season, when returns spike after Cyber Monday or Christmas, this partnership helps Kohl's capture incremental sales while enhancing Amazon's reputation for customer convenience.
Applying These Lessons: Key Takeaways for Retailers
The examples of Rainbow Shops and Amazon illustrate a broader principle: small, customer-focused innovations can deliver outsized results. Here are a few takeaways for retailers:
- Optimize for Convenience: Features like "Hold at Location" or Amazon's Kohl's partnership eliminate friction in the customer journey. For retailers, convenience isn't just about speed; it's about offering flexible, intuitive solutions that address real-world challenges.
- Think Strategically About Returns: The holiday season is notorious for an uptick in returns, with items ranging from ill-fitting clothing to unwanted gifts making their way back to retailers. Handling these returns efficiently can turn a pain point into an opportunity. Consider partnering with other businesses or offering in-store returns to boost foot traffic.
- Leverage Data to Drive Decisions: Rainbow Shops' decision to implement "Hold at Location" came after surveying customers and analyzing patterns of lost packages. Retailers should use customer feedback and purchase behavior to identify gaps and opportunities for improvement.
- Build Trust Through Security: Offering secure delivery options shows customers you're committed to safeguarding their purchases. This trust-building step can foster loyalty, especially among urban customers or those in high-theft areas.
- Collaborate for Mutual Benefits: Amazon and Kohl's demonstrate the power of partnerships. By combining their strengths, they've created a seamless returns process that benefits both parties. Retailers should consider how alliances—whether with shipping carriers, logistics providers, or other businesses—can enhance their operations.
The Holiday Season Ahead
As the holiday season approaches, the stakes for retailers are higher than ever.
Millions of packages will be shipped, returned, or exchanged, making delivery reliability and convenience paramount. Rainbow Shops' success with the "Hold at Location" feature highlights how even modest changes can have a transformative impact.
Similarly, Amazon's partnership with Kohl's showcases the value of thinking outside the box—literally and figuratively. By addressing logistical pain points creatively, these companies are setting new standards for e-commerce efficiency and customer satisfaction.
As David aptly put it:
For retailers, the message is clear:
- Focus on the customer experience.
- Address pain points proactively.
- Look for innovative ways to streamline every step of the journey.
The result? Happier customers, healthier margins, and a stronger competitive edge to convert more customers and increase revenue.
During the holiday rush, every shopper matters
Optimize the customer journey before the eCommerce event of the year.
