Our Thoughts on the Future of Last-Mile Delivery
Cura Resource Group is in the business of helping companies distribute their goods in complex, hard-to-navigate, urban markets, so we’re well aware that last-mile logistics have never been more important than they are right now. With social distancing in full force due to COVID-19, people are depending on home deliveries for everything from food to pet supplies to paper goods (yes, even toilet paper.) We have never lived through such a significant disruption of “normal” shopping routines — even in years when our country was at war and supplies were scarce, people could still leave their homes to buy what they needed from local stores.
I typically use this blog to talk about retailing, e-commerce, and logistics trends that we hope are relevant to many of you, but in our current circumstances, it’s abundantly clear that every business needs to reconsider whether their last-mile logistics plan is flexible enough to withstand market pressures we could never have imagined.
We Still Don’t Know What We Don’t Know
It’s too soon to say what lasting impact the global coronavirus pandemic will have on retail and the logistics industry. Just last month, I was writing about sustainability and the effect excessive last-mile delivery traffic is having on the environment in our largest cities. Now, we’re wondering whether commerce as we know it will ever be the same again.
When humans de-mobilize on a massive scale, as we’re doing now, supply chains are inevitably affected. Labor shortages are creating materials and component shortages that are slowing production lines, so everything takes longer to get from factories to inventory to end customers, not to mention that no one is buying anything non-essential. Some trucking companies report their business is down by 60% to 70% since the end of February 2020.
There may also be a long-term psychological shift in the way people spend (or don’t spend) money when this is all over. After weeks of staying away from their favorite stores, consumers may realize they don’t really miss them that much after all, and we may not know the real economic costs for a long while.
Adapt or die: Lessons from Charles Darwin
We do know that flexibility and the ability to adapt to radically different circumstances will be the key to rebuilding a new and better global supply chain. Darwin’s theory of evolution says it’s the most adaptable species, not the biggest or the strongest, that survive a massive disruption — just ask the dinosaurs.
From our vantage point as suppliers of custom last-mile distribution services, the firms that will have a significant head-start are the ones already experimenting with cost-effective, creative, and environmentally sustainable last-mile logistics. Here's what they're doing right:1. Deploy technology in creative ways - Dolly, a delivery service for retailers such as The Container Store, is enabling a messaging feature in its app to let customers communicate with drivers before they arrive to make a drop-off. The ability to provide specific instructions in advance decreases the time drivers and shoppers spend together. Customers can also choose to pay an upcharge for “No Contact Service” where parcels are delivered in a pre-arranged location outside the home, which is safer for customers and drivers alike.
Cura Resource Group is offering our clients an online tool that allows customers to submit requests up to a day in advance of picking up product orders at the curbside outside our local sales centers. The Sales Center Advance Will Call app is a safe, easy, and secure way for product distributors to sustain their business while practicing social distancing.
2. Rethink the role of physical stores - The 2019 holiday season put the last doubts about the viability of “buy online, pick up in-store” (BOPIS) to rest, in the sense that BOPIS is no longer an experiment, it’s a proven omnichannel retail sales strategy. Sixty-eight percent of U.S. shoppers reported making multiple click-and-collect purchases last year. And 90% of brick-and-mortar brands say they expect to offer the service by 2021 because BOPIS cuts shipping costs, increases the chances of in-store impulse buys, and improves overall customer satisfaction.
3. Focus on hyper-local distribution - According to another recent survey, 67% of physical retailers now make their stores the final location to hold inventory prior to delivering to customers, with a goal of “getting product as close to the shopper as possible.” In fact, 51% include local distribution centers in their logistics model.Companies like Target are turning unprofitable, dormant square footage into “dark stores,” or hyper-local mini-fulfillment centers, where they can consolidate loads and run local store-to-store and store-to-home shipping operations.
4. Embrace data-driven decision making - Data and operational transparency are critical when survival depends on agile decision making. Companies that invest in scenario planning models and analytics to accurately forecast changes in demand and production cycles can anticipate supply chain obstacles and game plan solutions before the next crisis hits. At the same time, high volumes of customer data can support personalized user experiences that help retain customers in even the darkest economic times.
We’re Only Human
At the end of the day, the global supply chain is still manned by human beings doing human tasks. When a pandemic takes the people out of the last-mile logistics equation, the true impact is all but unknowable. At Cura Resource Group, we’re doing our best to help our clients stay focused and start planning for whatever comes next.
If you’re already thinking about how to change your last-mile delivery model to be ready for the “new normal” in the wake of COVID-19, we can help. You can contact me directly or visit www.curagroup.com.