E-commerce is growing at an exponential rate and consumers have developed a taste for shorter and shorter delivery cycles. Fulfillment and logistics companies are leaving no stone unturned in order to keep up with the cut-throat pace of the retail and e-commerce industry. With big names feeding into the need-it-now economy, speedy delivery has never been more important. Embracing faster service levels (same-day, next-day, or 2-day delivery) may be accomplished in a variety of methods. Alternative delivery locations and modes of delivery are gaining popularity and are improving customer convenience. Experiments like Walmart’s announcement about using store staff for last-mile fulfillment, Starship technologies’ delivery bots, Click to Collect, Parcel Delivery Lockers and delivery drones have been some recent developments. Are these just a fad or are these here to stay? Is last-mile fulfillment going to be disrupted by new players? Consumers are spoilt for choice. They want free shipping and they want it fast. Their expectations regarding speed, security, cost of delivery and flexibility of shipping are getting complex by the day. According to a survey in 2016 done by shipping platform company Temando, “Many customers would like the flexibility to shop in-store and have items shipped home or have the ordered items shipped to a different location, such as an office, a self-service locker, or other pick-up points. Many prefer that deliveries take place on weekends or after business hours when they are home to avoid exposure of the package to weather and potential theft.” Is fast and free e-commerce order delivery here to stay? - the answer is yes, absolutely. The "next big thing" by the way is the role of artificial intelligence in taking verbal orders from consumers and instantly routing those orders to the best fulfillment solution among many alternatives, any one of which is available to pick, pack and ship all or part of each order, but everything optimized for fastest delivery at the lowest cost. A way to think about this is inventory available at many locations much like many Uber cars available to pick up a rider - it is a well-crafted app that calculates what goes where, when and how.
- John Lindberg, President/Owner - Efulfillmentservice,
Retailers face an array of hurdles when trying to meet consumers’ delivery demands. Small retailers who lack distribution centers struggle with high shipping costs. This reduces their bargaining power and they end up losing to larger competitors. Retailers, big and small and moving away from carriers like FedEx, UPS, DHL, etc. due to increased rates and dimensional weight fees. Some retailers are rising above such problems and continuing to flourish in the last-mile fulfillment area. I do believe that delivery methods will continue to progress with more independent drivers handling last mile delivery. Fulfillment companies, distribution centers, retail locations and other purposely developed order-consolidation checkpoints can serve as pick-up locations for independent drivers who are looking for the income source, same as Uber and Lyft drivers. With the huge shift towards online buying, parcel delivery lockers or pick-up points should gain in popularity for those who seek the security or appreciate the privacy aspect. These pick-up points may work for both scenarios, for drivers to pick up and handle last-mile or customers picking up direct. I'm not a huge believer in drones with what would become very crowded airspace, but I at the same time I wouldn't be surprised if drones became a part of the overall solution. Time in transit will continue to get pushed by the big players and customer expectations will change along with it. Innovative solutions will come as they always do!
- Jay Catlin, President/Owner, AMS fulfillment
Tim Werkley from Swan Packaging said, “Retailers need to get products into their customer’s hands quickly and without incident. Consumers aren’t bothered about how it gets there. But, they also don’t want a wind gust crashing a drone into their kids in the backyard.” I think there are still many technical and regulatory hurdles to be overcome before we will see drones delivering packages at any scale, but they will very likely be part of the mix at some point. Each of these new solutions will have a place & utility that will contribute to the quickly growing package delivery market, particularly in urban neighborhoods where drop-off presents different challenges, however, I don’t think home delivery will be displaced to a large degree. One of the major reasons people shop online is for convenience, making the trip to pick-up your order from a locker or store somewhat defeats that purpose. When ordering food from home and delivery is an option, how often do you take-out?
- Tim Werkley, President, Swan Packaging
Last-mile fulfillment is rapidly evolving and new business models are continuing to emerge. While Tim says consumers don’t care how the product gets to them as long as it’s quick, Linda Williamson from Fulfillment Strategies International says last-mile fulfillment, in the end, boils down to giving a good consumer experience. Here’s what she says: Consumer purchasing has been responsive to the shorter delivery timing offered by the big online players, particularly Amazon.com with their Prime shipping. However, this is not a fit for all consumer goods. Many of our clients do not want to release control of their brand by delivering to the marketplace in a plain brown wrapper. Retailers prefer to customize the experience, creating a moment for the receipt of a package containing their merchandise. This can be done simply with the use or inclusion of a label, tape, sticker, tissue paper, colored packing material, anything that promotes the brand and the feeling of exclusivity vs. a commodity purchase. Most online purchases are emotional in nature and creating an emotional experience at delivery will always be well received. The quick timing delivery does get a lot of hype, we ship to those DCs for clients every day. Smaller, more flexible fulfillment companies allow retailers to maintain control of purchases made on their website and other channels, giving them a reputation of value in the marketplace and develops brands that have staying power. The larger players have no capacity to support this type of work, with them it is quick and plain vanilla. Speed to market is not merely a trend, we believe it is here to stay. FSI also manages large volume internet marketers that specifically want speed and accuracy out the door. However, these clients do want to retain control of their inventory, orders and cash flow. To prepare, fulfillment companies need to focus on the trends, learn from them, keep at the front side of industry technologies to offer great options for retailers no matter how they want to go to market. It’s not just packing, shipping and tracking boxes, it’s thinking far outside of them!
- Linda Williamson, Director of Business Development, FSI
As new business models in last-mile fulfillment continue to crop-up, technological innovations like drones, and advanced analytics will continue to be leveraged. Delivery bots and driverless cars are expected to be adopted as well. Innovation in last-mile fulfillment technology will continue. But the way these technologies are deployed will gradually change. Factors like environmental impact (carbon-emissions), government regulations, etc. will continue to affect the deployment. Subscribe to our blog for interviews from fulfillment industry leaders where they explain how the last-mile fulfillment industry evolves. Have an opinion of your own and don't want to be left behind? Write to [email protected]. We’ll send you the next topic and you can be a contributor.
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