If you are an e-commerce merchant, your supply chain might stretch thousands of miles. But these days, all eyes seem to be trained on the final stretch of that journey from the point of manufacture to the customer’s hands. Retailers and their service providers are applying a range of strategies to deploy the last mile of e-commerce fulfillment to win consumers’ hearts and minds.
The theory is that if you make the experience pleasant, provide lots of information, offer special services, and maybe turn the product’s arrival into a mini-celebration, customers will keep coming back for more.
“The last mile is about the customer experience,” says Melissa Runge, vice president of analytical solutions at logistics consultancy Spend Management Experts, Atlanta. “The logistics of e-commerce, including fulfillment and delivery, has become a competitive advantage.”
In the battle for e-commerce customers, the weapons that merchants keep stocked for use across the last mile include: services that tailor the speed and cost of delivery to customers’ desires; flexible delivery options, such as alternative drop-off points; abundant, well-presented updates about orders in progress; special services for delivering oversized items; and packaging strategies that reinforce the brand and let consumers know how much you care.
Fast, Free, Flexible
Since Amazon and other retail giants introduced one-day and same-day shipping, fulfillment speed has become a hot topic in e-commerce. “Customers are more likely to make a purchase if the delivery date is soon,” says Nick Hobbs, executive vice president, and president of dedicated contract services at J.B. Hunt in Lowell, Arkansas. “And the definition of ‘soon’ keeps getting shorter.”
But not every customer expects instant gratification. Take one of Runge’s clients, a collectibles vendor. “Their target market is not necessarily a young person who might expect the goods the next day,” she says. Certain customer categories are willing to wait. But, like many others, they want free shipping in exchange for their patience.
“One size does not fit all,” Runge says. “Retailers must tailor the logistics to fit the needs of existing and future customers, based on what they expect.”
Similarly, doorstep delivery is not the best choice for every shipment. Customers don’t change their activities just because they have deliveries coming. “But they still want their packages delivered during the day, when they may not be home,” Runge says.
To address that need, Amazon recently introduced “Amazon Key,” which lets a delivery driver with an access code enter a consumer’s home to drop off packages. UPS also offers a network of Access Point locations across the United States ranging from “The UPS Stores to local convenience stores,” says Louis DeJianne, director of retail marketing at UPS in Atlanta. A consumer who won’t be home, and doesn’t want a package to wait unattended, can choose one of those delivery sites and then retrieve the package when it’s convenient.
In some major cities, UPS has also started rolling out unattended UPS lockers, which a consumer unlocks with an access code.
The UPS My Choice service, which sends package tracking notifications, offers further flexibility. Customers can reroute deliveries in progress—say, if they expected to be home but then need to work late.
Retailers are also exploring new solutions for delivering perishables, such as produce and pharmaceuticals. “Some are testing delivery to a refrigerated facility,” Runge says.
Officials at Thrive Market, a Los Angeles-based e-commerce retailer that sells healthful groceries and other items, have lobbied UPS and FedEx for additional delivery options, such as “Saturday delivery, which they’re both rolling out,” says John Winkles, Thrive’s senior vice president, supply chain. “We’re also pushing them to do Sunday delivery so we can get product to people seven days a week.”
Besides refining their physical delivery methods, e-commerce merchants also focus on delivering information. Good communication stokes the excitement that starts to grow the moment a consumer clicks the “buy” button. “By proactively engaging with customers during that time, retailers build anticipation and create lifelong relationships,” says Amit Sharma, founder and CEO of San Francisco-based software firm Narvar.
Narvar develops custom-branded, post-purchase information platforms, each designed to look and feel like the retailer’s website. Buyers use these platforms to track incoming orders and manage returns. The platform can also push messages to consumers—for example, to tell them that an order has just shipped.
“According to our recent survey, 73 percent of shoppers believe messages containing order tracking are ‘very important,’” says Sharma. “Proactive updates when things go wrong are just as important: 98 percent of shoppers feel better about a company if they’re notified immediately about an issue.”
DeJianne agrees that status notifications are crucial. He points to an optional feature in UPS My Choice that emails when packages have shipped, are scheduled to arrive, and have been delivered.
When Size Matters
Not every product sold online comes in a package that can slide into a locker or be left on a porch. Amazon sold $2.3 billion worth of furniture in the United States in 2016, according to research firm One Click Retail. Consumers also turn to e-commerce merchants such as Overstock and Wayfair, plus a host of omnichannel retailers, for bedroom suites, dishwashers, workout equipment, and other products that require special handling. Some items are simply big; others need setup services.
Responding to this wave of oversized items, some carriers from beyond the package shipping market have started to focus on the e-commerce last mile. One example is Schneider, which in 2017 bought two last-mile transportation companies—Watkins & Shepard of Missoula, Montana and Lodeso of Zeeland, Michigan. Schneider is using their capabilities to further enhance its own Final Mile+ service.
Providing excellent final-mile service for large items demands careful attention to the whole supply chain. For instance, how does the product get from the original manufacturer into the distribution network? “Using traditional channels, it could be on a less-than-truckload shipment, using material handling equipment that is really designed for pallets,” says Bill Matheson, senior vice president and chief commercial officer at Schneider.
That equipment doesn’t work well for, say, a sofa. “Carriers need to engineer the first mile to make sure it will not result in damage or a claim, and then reduce touchpoints all the way through the network,” Matheson says.
For the actual hand-off to customers, Schneider is moving away from delivery agents, in favor of employees driving Schneider-owned trucks. “With agents, carriers don’t have as much control over the equipment and the standard operating procedures for assuring that the customer gets a great experience,” Matheson says.
In many cases, the final mile for large items includes special “white glove” services. That could mean moving a bed upstairs, attaching legs to a table, or providing complicated installation services.
“A mattress delivery is simple, the drop and hook of a final-mile delivery,” says Hobbs at J.B. Hunt. “But installing a refrigerator or dishwasher takes a skilled delivery team.”
The quality of final-mile delivery for large items can impact how consumers feel about a brand or a retailer. J.B. Hunt’s Final Mile services starts with the distribution space the company provides to make products available quickly when consumers want them.
“We are also responsible for meeting consumer delivery expectations, including timing and communication, as well as the in-home experience,” Hobbs says. “If one delivery hits a snag, it can impact a consumer’s shopping pattern and create the potential for negative feedback online.”
Thinking Inside the Box
While standard-sized packages don’t need white-glove treatment, many e-commerce merchants put careful thought into providing a great experience when smaller products reach the delivery address.
Thrive Market uses “unboxing”—the experience of opening a package and taking out the product—to reinforce the value of its brand in the customer’s mind (see sidebar).
To keep full control over the unboxing experience, officials at Thrive Market decided early on to run their own fulfillment operation, rather than outsource to a third party. “We wanted everyone who packed our boxes to be a Thriver—someone who was committed to the company,” Winkles says.
Thrivers receive training on packaging aesthetics. “We specifically train on the ‘fragile wrap’ so the package looks like a Christmas present when customers unwrap it,” Winkles says. Packers also learn how to use dividers to separate heavier and lighter items. “We don’t want chips or crackers to show up crushed,” he says.
Some consumers want their unboxing experience to come without too much cost to the environment. E-commerce merchants who seek their business take pains to oblige, sometimes with help from service providers. “We partnered with organizations that create customized packaging to minimize the amount of filler within a box, as well as the size of the box,” says DeJianne.
At Thrive Market, it has become clear that customers want just enough packaging to keep products undamaged, but no more. They also want packing materials to be recyclable and made from recycled content. Complying with that mandate costs money. “But it helps to create our brand experience,” Winkles says.
The days when retailers wooed shoppers to brick-and-mortar stores with lavish décor, charming tearooms, and personalized service are mostly gone. In the e-commerce age, fewer consumers get to enjoy the little thrill of a smiling sales clerk placing a new purchase into their hands.
Smart e-commerce merchants are working to replace that point-of-purchase encounter with an equally satisfying experience, based on outstanding service across the final mile.
Find the original article on Inbound Logistics here.