Race to the Bottom
Race to the Bottom
Last mile delivery, the movement of consumer goods from a transportation hub to a final destination is a race to the bottom. Consumers have come to expect that when they click the “purchase†button, deliveries will be made when, where, and how they want. No longer is the five to seven day delivery window acceptable; two days or less is the new norm, with many consumers demanding their product to be delivered the same day. Moreover, delivery must be free; otherwise the consumer will make their purchase elsewhere.
The fact of the matter is that the distribution of packaged goods carries both a cost and a value. At the moment, retailers are shouldering the costs, but this route for delivery is unsustainable and unprofitable. Continuously, consumers will look for faster delivery on their terms. As a result, businesses must find an answer in order to be successful in a future where rapid delivery is less of a request and more of a demand. The answer, however, may not be “one size fits all†and the question of delivery will call for multiple, innovative responses.
The industry is experimenting with everything from Walmart’s Shipping Pass, a Prime-like home delivery service to Instacart, to curbside pickup. Target has partnered with Curbside, a mobile app, to allow consumers to purchase items on their mobile device and have the order subsequently loaded into their car at the retailer’s curb. In the UK and Europe, car companies such as Volvo are partnering with retailers to provide trunk delivery to parked cars. Volvo is currently testing this service in Scandinavia, and delivers packages to consumers’ cars while they are parked at work. Webvan’s founder is even getting back in the game, launching Home Delivery Service, a same-day delivery service.
The Delivery Decision
So, what does this all mean? With the future of shopping increasingly headed online, delivery, especially last mile, will take center stage as vendors find themselves packing, sealing, and shipping more products than ever before straight to consumers. Online sales reached $297 billion in 2014, and it’s estimated that roughly 10% of total sales ($334 billion) in the US will have taken place at online retail stores in 2015. Persistent growth is expected to have ecommerce reaching $480 billion in online sales by 2019.
Retailers must find the delivery solution that fits their needs or risk losing relevance in the marketplace. Manufacturers must ensure they are making their product available to consumers, in whichever delivery format they desire. It is crucial that they adhere to consumers’ desires for faster, more convenient last-mile delivery. It is important to remember that the answer is not one size fits all. The solution that fits best for each store relies predominantly upon their market, consumer expectations, location, and resources. The future of last mile delivery could include any combination of the discussed solutions, or something completely new. ES3 can help you maximize your network to make sure your products are available to customers whenever and however they choose to purchase it. Contact us to learn how we can help you position your inventory for rapid response, whatever the delivery method may be.