Fulfilling orders continues to grow more complex as demand for e-commerce swells, creating renewed stress and calls for more brick-and-mortar last mile fulfillment. According to TechCrunch, “U.S. e-commerce sales will jump 18% this year due to the impact of the coronavirus pandemic that forced more shoppers online, according to a new forecast released today by eMarketer. However, the surge in new online orders won’t make up for the overall hit that the U.S. retail sector will take this year, the firm noted. The analysts estimate that total U.S. retail sales, which also includes auto and fuel, will drop by 10.5% in 2020 to $4.894 trillion — a level not seen since 2016.”
As consumers look to conserve resources and reduce outings, that demand will reach a thinking point in 2020, And the informed shipper must know how the changing face of logistics, particularly fulfillment in brick-and-mortar last mile logistics, will define both successes and failures in the consumer experience.
The Supply Chain Trends to Know in 2020
The Challenges in Managing the Expansion of Last Mile
Increased demand on e-commerce leads to multiple problems with managing logistics. Key challenges include limited available capacity, inability to track shipments within the last mile, i.e., poor supply chain visibility, a smaller pool of delivery drivers, and technology costs in the warehouse and while in transit.
Obviously, shippers need more technology to meet these demands, but where? One option might include the use of delivery lockers and brick-and-mortar last mile pickup. Also known as buy online pickup in store (BOPIS) fulfillment. Yet, that capability requires integration with the transportation management system (TMS, warehouse management system, the placement of delivery lockers, easy to use systems for customers to collect shipments, and more. Even if a company has some use of lockers in place, the footprint may be too small to remain effective. Furthermore, fulfillment at the brick-and-mortar store may not necessarily be the best option for all customers.
For example, customers may want curbside services, and in some places, those services may be the only way a business can remain open. The best example of a rushed curbside fulfillment strategy is Lowe’s Home Improvement, which implemented curbside at the start of the recent pandemic, and demand remains at strong levels despite states reopening and the lessening of restrictions. Clearly, customers wanted more curbside fulfillment all along, and now, it is up to the companies to create efficiency within those options.
Brick-and-Mortar Fulfillment Centers Offer Much More Than a BOPIS Strategy
Brick-and-mortar last mile fulfillment might seem like a simple, profitable way to get customers their products. It’s a BOPIS fulfillment strategy that creates distribution center automation within existing facilities. But companies may fail to realize what else offering BOPIS can do for the profitability of a business.
As another example, businesses could use data collected from BOPIS brick-and-mortar last mile fulfillment to better manage freight moving through local facilities. It may not necessarily align with lean inventory practices, but if a company can move freight between stores to fulfill more orders, it’s a win-win. Additionally, retailers have always had a problem with the high carrying costs of inventory, and since e-commerce orders are generally routed through a distribution center, finding ways to move brick-and-mortar store products can be challenging.
As reported by Forbes:
“We’ll see more retailers leverage distribution centers to provide efficient services for customers and turn unused back-of-store space into automated, hyperlocal mini-fulfillment centers, following Target’s lead. Store-to-store shipping and ship-from-store home delivery will help stores maximize their potential.
As they offer experiences for shoppers, stores will also hone their buy online, pickup in-store (BOPIS) strategies for customers who want hassle-free order pickup. Look for more self-service lockers or towers and curbside delivery services to add another dimension to store fulfillment.”
Now, organizations can leverage in-store inventory to fill orders and reduce the costs of shipping in one instance. Thus, customers enjoy the benefits of “free” fulfillment options, and over time, those savings can add up to bonus-like discounts for customers that use curbside or brick-and-mortar last mile order fulfillment options.
Additional Benefits of Using Brick-and-Mortar Last Mile Options
The benefits of brick-and-mortar last mile fulfillment extend to all supply chain partners as well. Carriers can better manage fleets by reducing strains. Less capacity moving within the industry during a time of increased demand can help protect against rising rates. In fact, rates have recovered in the past month, but those recoveries are nothing compared to the year-over-year gains between 2016 and 2019. Moving to use brick-and-mortar fulfillment is the solution for companies with limited resources.
Additionally, brick-and-mortar fulfillment includes the option to let others pickup orders, reducing the number of people physically in the store. When people do opt to visit stores to collect purchases, stores have the option to increase profitability by encouraging customers to “keep shopping.” It’s like the whole store becomes an impulse shelf when a customer arrives. I personally have been to Walmart or other retailers to pick up one item. It never ends that way. I leave with a basket of purchases that I did not plan, and the retailer enjoys the benefit of more sales.
Unlock Greater Brick-and-Mortar Last Mile Value With a TMS
Brick-and-mortar last mile fulfillment is the new way to access customers and reduce the number of miles driven in the final mile. Moreover, taking advantage of brick-and-mortar stores is essential as e-commerce grows. It also serves the benefit of reaching your customers through digital capabilities, increasing the level of engagement, and reducing risk. Of course, these options are best served when using a TMS that can adapt to omnichannel fulfillment for the last mile.