The last mile has become a hotly contested race between carriers to shorten delivery times as well as offering delivery at no cost to customers. This “free shipping” is detrimental to retailers’ balance sheets particularly as so many are teetering on towards bankruptcy.
Free shipping is not free for retailers but so many believe that in order to compete they must offer this service. Sadly, for many, they neglect to analyze their shipping costs and ignore the possibility of cost savings if contracts with delivery providers are renegotiated.
Besides “free shipping,” customers expect to receive their orders quickly, usually two days or less. However, for many carriers, the ability just to deliver during the pandemic has been deemed a success. FedEx and UPS temporarily suspended their service guarantees for air and ground services.
Amazon has struggled, as have other providers including Instacart. All have announced hiring sprees to address the increased demand from consumers who are abiding by stay-at-home mandates.
What happens when you can’t hire enough delivery people? One gets creative. FedEx has been experimenting with its last-mile delivery robots while UPS has been working with medical facilities. CVS has been exploring last-mile drone delivery services.
Alternative delivery points such as lockers will likely increase in usage after the pandemic subsides. Retailers should consider including lockers to their physical locations for after-hour pickups and drop-offs.
In order to survive this time of crisis, retailers will need to be creative in how they emerge from COVID-19. Now more than ever, they will need to balance their revenue among all sales channels and provide excellent customer service and experience all the way to the customer’s front door.
John Haber is founder and CEO of Spend Management Experts.