A recent study by last-mile solutions provider OneRail found retailers consider diversifying their delivery networks crucial and revealed strategies they use to better understand those networks.
The study also highlighted what today’s end consumers expect from retailers.
The study found, first, that technology plays a pivotal role for 63% of retailers surveyed in strategically planning and forecasting their last-mile delivery needs.
In addition, customers prioritize faster shipping and better tracking, with 82% expecting proactive order updates and 80% desiring ultrafast same-day delivery. That underscores the need for enhanced tracking capabilities to meet evolving expectations.
FreightWaves interviewed OneRail CEO Bill Catania about retailers’ last-mile needs.
Questions and answers were edited for clarity and length.
FREIGHTWAVES: Can you elaborate on the significance of diversifying carrier networks in the context of retail shipping, as mentioned in your study?
CATANIA: The significance cannot be overstated. The sheer scale of last mile makes it no longer commercially responsible to put all your eggs in one basket, so to speak.
In the study, the top action that the 350 retailers surveyed said they are taking now to address their biggest last-mile challenges is diversifying their carrier networks.
That’s because in the last few years, we’ve seen COVID-19 shortages, looming labor strikes, extreme weather and huge spikes in demand. Challenge after challenge after challenge.
The best way to tackle today’s supply chain challenges is with connected capacity — carriers that are available in the markets needed when they’re needed so that any disruptions to the supply chain don’t affect retailers’ ability to meet their service-level agreements.
The study also found that 65% of retail fulfillment leaders are planning on offering same-day or next-day delivery service in the next one to two years. Why? Because they’re realizing they need that competitive edge to keep their customer. Retailers and wholesalers simply can’t offer same-day delivery without diversifying their carrier network.
FREIGHTWAVES: The study highlights various risks associated with limited-source shipping. Could you discuss some strategies that retailers are employing to mitigate these risks?
CATANIA: You hit the nail on the head by mentioning risk mitigation. Taking that a step further, it’s about keeping your delivery promise.
A whopping 69% of retail fulfillment leaders from the study say that using only one shipping partner represents an intolerable risk to their business. Intolerable.
Today’s retailers are overwhelmed by what a headache it is to manage multiple carriers, and so many of them do it using an Excel spreadsheet. They’re calling couriers in every market, negotiating prices and handling invoicing, not to mention managing any problems that arise along each package’s journey.
In addition, retailers were using only one or two shipping modes to handle their product portfolio, but that may not be the most efficient or cost-effective way to deliver the product. But by taking a platform approach, by automating their processes, retailers are gaining back all that time they could be spending on core business, with serious savings on all the costs along the way.
FREIGHTWAVES: How do technological advancements, such as AI and Internet of Things (IoT), aid in improving shipping strategies, according to the findings of your survey?
CATANIA: AI is a game-changer. For us, we wouldn’t be in business without AI.
When we launched our first customer, American Tire Distributors, our support team that handles exceptions managed about 80 deliveries per head per day. We were just starting out, and we didn’t have any AI built into the platform; it was purely just digital dispatch.
Today, we’re managing 2,300 deliveries per head per day with 42 full-time employees managing those deliveries. There is no possible way we could have scaled without AI.
It’s all about the data. We have three years of historical data on every delivery, and we’re leveraging net promoter scores so that when our platform smart matches a driver to a particular delivery, it knows which markets are ideal for that driver and which markets support delivery accessorials that driver can handle, like white glove, assembly, etc.
Our study showed that 63% of retail fulfillment leaders are implementing AI and machine learning technologies for improved demand forecasting and inventory management within the next three years.
They recognize how powerful it is to look at historical data and predict which stores will sell out of specific SKUs. Many retailers don’t have access to delivery data, at least not the type of clean, actionable data that allows them to make better supply chain decisions.
Sixty-four percent of those retail leaders from the study plan to use IoT and real-time tracking technologies to improve transparency in their shipping process within the next three years.
FREIGHTWAVES: The study mentions that 80% of respondents believe that multimodal fulfillment offers the best solutions for their business. Could you explain what multimodal fulfillment entails and its advantages?
CATANIA: Multimodal fulfillment is when last-mile delivery provider solutions tap into diverse modes of transportation that might not be readily available through other channels.
The big advantage here is flexibility, which is particularly useful for catering to specific delivery requirements like big and bulky or hazardous cargo.
Another advantage is being able to ensure the most efficient transportation solutions for every shipment.
The survey found that the types of retailers most likely to prefer multimodal fulfillment include luxury goods, jewelry, and home improvement and furniture — and these verticals are in OneRail’s sweet spot.
Being able to handle products of all sizes with complete automation, instantly matching the right-sized vehicle to the order, as well as batching order deliveries offer a sustainability advantage.
Imagine how powerful it would be to give customers the ability to see eco-friendly shipping options in the pre-order stage when they are simply browsing products online.
Being able to see and understand those shipping options from the beginning is very compelling, and it creates a competitive advantage.
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