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Retailers Seek to Tweak the Last Mile

The growth of e-commerce is forcing bricks-and-mortar retailers to become more creative about last-mile delivery.

E-commerce has complicated the last mile of delivery at the consumer’s home or business, making it much more challenging for retailers. Besides traditional home package last-mile delivery by companies like USPS, FedEx and UPS, e-commerce businesses like Amazon have been exploring air and land drone delivery and lockers in pre-designated, mostly urban locations available for customer pickup. Earlier this year, The Washington Post reported how Walmart is adding FedEx Office locations, where customers can ship packages, drop off returns and pick up deliveries, to 500 of its U.S. stores.

Traditional last-mile delivery involves many challenges, including cost minimization, transparency and efficiency. That along with Retailers Seek to Tweak the Last Mile

There is now an ongoing trend where large retailers such as Walmart and Best Buy use their bricks-and-mortar stores as distribution centers. Basically, store employees pick items from the store shelves and backrooms to fulfill online orders and either drop them into waiting FedEx or UPS trucks or in some cases—currently being tested in a few Walmart stores in New Jersey and Arkansas, according to The Los Angeles Times—deliver packages themselves on their way home.

In the case of the Walmart employee delivery, they will use an app to specify how many packages they are willing to deliver and the maximum weight and sizes of the packages and will be paid for their efforts.

In any case, stores can stand to cut a significant amount of costs by having employees deliver from stores, as the “last-mile” costs for delivery are a significant part of fulfillment costs. Employee delivery is potentially even better than having a third-party such as UPS or even Uber drivers do it (also being tested) as they would have to drive to the store, whereas the employee is already there. Furthermore, in the case of Walmart, two-thirds of the U.S. population live within five miles of a Walmart.

Some other benefits of retailers enabling last-mile delivery include switching online orders to locations with the most inventory of a selected item, thereby reducing the need for discounts, and fulfilling orders for items that are out of stock at e-commerce fulfillment centers (happens 2%-4% of the time at Best Buy ,for example).

This concept is even more important as Amazon continues to expand its network fulfillment centers closer to customers. By enabling store delivery, traditional retailers feel they can better compete with Amazon’s fulfillment network of 100+ distribution centers by utilizing their hundreds or even thousands of bricks-and-mortar locations as DCs.

If you are going to go down the road of ship-from-store fulfillment, a recent article in Parcel magazine offers some tips on picking and packing within the store, which in addition to delivery has a significant impact on costs and service:

Simplify the Process—establish standard operating procedures for picking and packing.

Maximize Space—determine what non-revenue generating space is available and package to minimize space.

Deliver Trust and Excitement—put some time and thought into packaging as it will impact customer satisfaction.

Save Some Dough—choose the right packaging as physical characteristics impact shipping costs.

Free Up the Phone Lines—as you don’t want damages and returns, select the right packaging (i.e. cushioning, wrapping, etc) to protect the products.

Total Cost over Price—when deciding on packaging, consider the lowest cost to adequately protect your products during transit.

These are exciting but rapidly changing times for retail. Those who want to survive and thrive need to do their best to stay ahead of the curve, and one way that many are trying to do it is by focusing on the last mile of delivery.

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