Supply chains and carriers keep the global economy working amid the unprecedented conditions resulting from COVID-19, but they can seize up under extreme strain.
Much of the focus has been supply chain resilience (large grocers and pharmacy retailers undergo increased scrutiny as the pandemic and our actions to contain it wear on)—but how will a disruption like COVID-19 impact the final mile, and how can retailers adjust their strategy?
E-commerce sales accounted for 11% of all retail sales in 2019, according to the U.S. Census Bureau. Imagine that most of the 89% of in-person purchases also happened online. Or, consider if all grocery and household purchases occurred online rather than in-store. That’s what retailers face as consumers shop from home during the COVID-19 quarantine. It has the potential to replicate a holiday peak, but beyond the normal four to six weeks.
To add complexity, consumer product goods are often heavy, bulky, and more costly to ship than apparel, which accounts for more than 30% of e-commerce shipments. While the capacity exists for the long-haul moves necessary to move the product over distance, the true constraint is at the local level during the final-mile delivery, which is labor intensive, has cube constraints for neighbourhood delivery vehicles, and may be governed by regulatory constraints, limiting time on the road.
LAST-MILE STRATEGIES THAT RETAILERS CAN USE DURING PEAK DEMAND ARE:
- Move as much purchasing as possible to buy online/pick up in store (BOPIS), which removes reliance on carriers and uses stores as forward stocking locations.
- Find ways to consolidate shipments leaving the warehouse.
- Improve the packing or cube utilization of packaging.
- Improve delivery density and decrease reliance on shipping to residences by shipping to alternative retail pickup points, such as lockers or retail access points.
RETAILERS SHOULD ALSO CONSIDER THE FOLLOWING:
- How does your company stack up in implementing flexible delivery methods to reach your shoppers?
- Can you use brick-and-mortar stores as pickup points for shoppers looking for easy pickup experiences, perhaps with minimal person-to-person contact?
- Are you making the most of your transportation dollars through consolidation and efficient packaging?
- How would your organization react to a sudden need to deliver more shipments to residences when carriers’ last-mile resources may be constrained?
- Can you re-route shipments flexibly to another location that shoppers may feel safe accessing?
Contactless and Flexible Delivery Options
According to Retail Info Systems, “Contactless delivery is the latest retail tech buzzword.” Many direct-from-store or fresh meal delivery companies that are app-driven rolled out the ability for shoppers to select contactless delivery.
Brick-and-mortar stores are now following suit, making Amazon’s recent technological investments and developments prescient. They include security systems like Ring, home automation, front-door and in-car delivery technology, and unattended safe locker delivery in key locations. These technologies improve security, flexibility for shoppers, and durability when final-mile delivery personnel are unable to work.
Approximately 36% of Americans have had a package stolen from outside their home, according to C+R Research. Many may assume that porch piracy is less likely now that they’re self-quarantining at home; however, an increased demand for contactless delivery will produce more unattended packages.
Have you integrated technology that allows you to communicate package status to your shoppers, including the important-but-often-missing “out for delivery” message? Does your carrier have the means to proactively notify recipients of important statuses for you? Does that require shoppers to opt into carrier-specific services, or can shoppers come back to your website to administer their shipments (e.g., package release, reroute to another location)?
Think Outside the (Shipping) Box
Business as usual is no longer an option. Now is the time to reevaluate what your business needs are in this new normal, especially because shopper expectations may change for good when they experience flexible and agile options from their go-to retailers. Part of preparing for any eventuality—whether it’s a natural disaster, pandemic, or even a good problem like unexpected sales growth—requires carefully retooling your supply chain strategy, information technology integrations, and carrier relationships.