Alternative Delivery Options: Convenience and a Cost Savings Solution
With delivery companies facing rising e-commerce volumes, alternative delivery locations are increasing in popularity. Not only are these locations increasing in popularity by consumers, they are being encouraged by delivery companies as a less expensive way to pick-up and deliver packages.
In early 2017, FedEx announced an alliance with Walgreens in which it would provide access to FedEx drop-off and pickup services at Walgreens locations across the United States. In turn, Walgreen’s joined FedEx Onsite™ program which includes retailers Albertsons, Randalls, Safeway, Vons, Jewel-Ocsco and Shaw’s, and offers alternative choices for consumers.
FedEx’s Onsite program is similar to UPS’ Access Point Network which includes convenience stores and other neighborhood stores as pick-up and drop-off locations. By handling a single group of packages at once, the costs for FedEx and UPS are much lower versus door-to-door residential solutions.
Lockers continue to be a popular alternative delivery option. Amazon introduced its locker network almost seven years ago, and recently expanded its locker network into apartment lobbies. Known as Hub, the lockers will accept packages not just from Amazon but from any sender, shipped via any carrier. Amazon further extended its locker network upon the purchase of Whole Foods by placing lockers in various Whole Foods locations.
For retailers, buy online with the option to pick-up or return to the store is much more cost effective versus paying shipping charges or added fulfillment costs. An additional bonus is the high possibility for a consumer to make an additional purchase while in the store. More retailers are now marrying their online presence with their physical to encourage more footprints into stores and as a means of competing against what has become known as the elephant in the room – Amazon.
According to a JDA study, half of consumers indicated they have used the option of buying online and picking up in the store in the last year, 44 percent more than in 2015. JDA also noted that speed is the top reason consumers cite when choosing to use stores for online order pick up. To further incentivize shoppers, in 2017, Walmart began to offer a discount on eligible, online-only (non-store) items that customers buy online and ship to any Walmart store for pick up.
During the 2017 holiday season, consumers and retailers alike benefited from buy online, pickup in-store particularly with limited delivery on Christmas Eve and Christmas Day, which fell on a Sunday and Monday respectively. For example, consumers shopping with Target were able to place online orders for free same-day order pick-up until 6:00pm on Christmas Eve and pick them up by closing time. Other retailers offering similar services included Apple, Best Buy, Macy’s, and Walmart.
The variety of delivery options is a convenience factor for the customer and the retailer, it enhances customer satisfaction and potentially reduces shipping and fulfillment costs. Likewise, for delivery companies, alternative pickup and delivery points are cost savings opportunities as well.
-Paul Steiner, Vice President of Strategic Analysis, Spend Management Experts