When Amazon (and a few others) started a logistics revolution, countless supply chains were caught off guard. The vast majority tried to put a very expensive band aid on a giant wound by relying on third parties to give customers the shopping experience they had come to expect. Then, COVID-19 came along and put the logistics revolution into hyper speed. This has made one thing very clear: It’s time for businesses to rip off those delivery band aids and consider going in-house.
In 2019, only 16% of total retail spending came from online sales. In today’s post-pandemic market, things are amazingly different. Furthermore, the businesses that chose to invest in tech-driven, in-house fulfillment have reaped the benefits: Target saw 195% growth in digital sales in the second quarter of 2020, along with an 80% earnings increase. Likewise, Walmart enjoyed 97% growth, and Amazon’s profits surged by billions.
Customer expectations are unlike anything we’ve seen before — and people aren’t wrong to want what they want, when they want it. After all, Amazon, Instacart, DoorDash and many others have trained us well.
Companies can provide this great delivery experience with third parties, but it comes at a high price. Additionally, it’s the third parties that often end up owning that customer relationship, turning the client into a warehouse. Even when that’s not the case, the client almost always lacks full visibility into the delivery process.
How to begin
One delivery optimization necessity is real-time dashboards that monitor performance and provide visibility into problems as they occur. Another is proximity to the customer. Delivering from down the street is far faster (and more environmentally friendly) than dispatching a package via a big truck from a far-flung warehouse.
This past year has created a monumental shift in delivery practices, and it’s here to stay. So far, the rising tide has not lifted all boats — but it could. By bypassing quick-fix solutions in favor of in-house strategies that provide visibility and a direct relationship with the customer, the logistics revolution could turn out to be an unprecedented opportunity.