Going Local: Shifting Logistics Networks

We’ve talked before about the pressing fact that even as rates with the major parcel carriers continue to rise, so too do customer expectations. Online shoppers are more demanding than ever, and retailers are struggling to keep up. In today’s e-commerce supply chain, a week has become an eternity. Customers expect their purchases to arrive fast, or even overnight. “Regular delivery” has become the irregular: a recent study by Accenture showed that the majority of shoppers in the US expect their orders to have free shipping and to arrive within three days!

Shipping Matters

In 2019, HOW you’re delivering is sometimes more important than WHAT you’re delivering. Desirable shipping options are now a must-have that will determine whether you make an online sale or not. We know that ease of checkout as well as the favorability of shipping and returns are some of the biggest factors in shopping cart abandonment overall (and, remember, almost 70% of online shoppers abandon their carts).

If you can differentiate yourself by getting goods to your customers FAST, it will be one of the biggest competitive advantages available to you right now.

Decentralization

Ok, you know you need to be thinking about how to ship faster. But how? In this climate, it’s time to employ some systems thinking. It may be time to make changes in your network. Consider inventory placement. The paradigm of the massive, fragile supply chain depending on a few huge centralized distribution centers is on its way out in certain markets. The networks of tomorrow will need to be much more sophisticated. We’re seeing a shift to multiple smaller, more distributed centers, closer to customers.

Ok, you know that your resources need to be reallocated. Sounds good, but unless you’re Amazon, you probably can’t get ALL your inventory close to every customer. The companies that succeed in this new paradigm will be the ones that can take a strategic approach to inventory distribution, spreading out inventory based on factors like velocity.

Data, Data, Data

So how will tomorrow’s companies be making these strategic decisions? With margins tight and so much at stake, accurate projections have never been more important. Much of the strategic planning in the next generation of e-commerce will come from data analytics in combination with predictive technologies like AI and blockchain.

Sure, that sounds very high-tech and wonderful — but many shippers are already at capacity, running a mile a minute just to keep up with current demand. That means there’s already a gap in the market for new players to come on the scene with fresh solutions.

From Planes and Trains to Bikes, Robots and Drones

As this new delivery paradigm begins to emerge, shippers will need to forge relationships with the ever-expanding network of localized “microcarrier” services, especially to make residential deliveries. We’re already seeing brands experiment with programs that enlist every possible vehicle to get the job done, from typical freight vehicles to cars and bikes. Widespread use of drones, robots and even self-driving vehicles are just around the corner.