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First and Last Mile Logistics – The Most Critical Aspects of The Supply Chain
The past year brought massive disruptions in logistics - especially for last mile and parcel delivery-driven by the pandemic and the consequent historic e-commerce growth. Through this, retailers became acutely aware of the importance of contingency planning and diversification of carriers, especially for the all-important first and last mile. Shippers - even major shippers - were subjected to numerous surcharges, capacity limits, and even contract terminations due to carriers’ inability to provide last mile services. This trend will continue. If shippers are expecting any quick relief or rapid return to normality in 2021, they will be disappointed. Parcel carriers implemented their annual General Rate Increase (GRI), which extended COVID/peak surcharges and added or increased other accessorial fees, leaving shippers scrambling to find affordable alternative last mile carrier solutions. Additionally, while shippers are not prepared to absorb these increases, they have found that engaging the parcel carriers in contract re-negotiations is futile.
Few in the industry could have foretold the level of upheaval witnessed in 2020 in the movement of goods from a transportation hub, distribution center, or retail location to the final delivery destination. But retailers quickly learned that although a specific product might be available from many places-sometimes even at lower prices - a same-day or next-day, customized delivery experience for that product would set a retailer apart in the minds of their customers and win sales. Forced to adapt quickly, retailers embraced last mile logistics as a key differentiator.
Abandoned shopping carts due to high shipping costs and poor customer delivery experience have always been bad for brands, but in the current environment, they are disastrous. In fact, Accenture’s 2020 Holiday Shopping Survey found that 56% of customers would stop shopping with a retailer after a bad delivery experience. Looking ahead, the ability to survive and thrive in today’s “new normal” shipping environment means re-engineering the supply chain to offer critical last mile services such as same day or next day delivery. Unparalleled demand for last mile delivery and “the Amazon effect” (customers expectation of 2-day delivery) makes speed an assumption, so merchandise must be in stock and near the consumer. Otherwise brands risk losing customers to competitors.
Source: Automotive World, June 9, 2020
By providing reliable and cost-effective last mile delivery, successful retailers understand that they not only secure valuable sales, but also building loyalty that results in repeat customers. Even if a shopper selects Buy Online Pickup In Store (BOPIS), the knowledge that a retailer also offers ship from store can be valuable in safeguarding shopper loyalty. After all, customers appreciate direct delivery to their home, with 30% of US consumers reporting that home delivery is a very important option when deciding which brand they will buy from.
Another critical aspect of the supply chain is the ability for retailers to manage merchandise returns efficiently. In 2021, shoppers are expected to return twice as many items as they did during last year's holiday period, costing companies roughly $1.1 billion, according to Narvar Inc., a software and technology company that manages online returns for hundreds of brands. On average, people return 25% of items they buy online, compared with only 8% of what they buy in stores, according to Forrester Research’s online analyst Sucharita Mulpuru. For clothing it's even higher: about 30% of all clothing items purchased online are returned to the retailer. Because the value of fashion apparel depreciates by 20% to 50% over an 8-to-16-week period, it's critical to get returned items back in inventory quickly.
GEODIS City Delivery provides customers a convenient return solution providing in-store sweeps of returns that have been inspected and routed back to store stock or redirected to channels and stores to resale and ship same day or next day. By avoiding shipping returns to a distribution center (DC) or processing center, GEODIS City Delivery saves retailers time and a lot of money. What’s more, using GEODIS Zipline, an easy-to-use and easy-to-integrate real-time parcel monitoring/delivery application, GEODIS provides complete visibility into last mile delivery. And to streamline and accelerate the returns process further, GEODIS can work with retailers who are already using self-serve kiosks or lockers for easy return drop-off.
Supply Chain Success – Looking Ahead to 2021 and Beyond
The challenges of the past year offer lessons that can help retailers grow and become more efficient in 2021. A few tips:
- Consult with subject matter experts who can help you navigate the ever-changing logistics landscape.
- Seek out specialists in parcel contract negotiations who will provide a package-level detailed assessment that shows the true impact of surcharges and rate increases as well as help you negotiate with your carriers.
- Diversify your last mile by working with providers like GEODIS to customize the best solution at the right price.
- Enhance the customer delivery experience-including offering value and convenience- for maximum growth.
- Update inventory management systems to enable in-store fulfillment and better management of stock allocations.
- Get your packages closer to the consumer through micro-fulfillment, forward stocking locations, ship from store and other last mile solutions.
- Offer better returns management and convenience by implementing a system that uses lockers, kiosks and other first and last mile solutions to avoid unnecessary mark downs and/or freight costs incurred in shipping returned merchandise back to a distribution or processing center.