For last-mile delivery, ‘one option is not going to cut it anymore’

Consumers look to retailers to help them save time and effort in their busy lifestyles

The NRF Supply Chain 360 conference and expo was held in Cleveland, June 20-21, 2022. It explored the modes and methods needed to build a stronger, more sustainable supply chain and ensure resiliency in challenging times. Learn more about the conference here.

Factory shutdowns in Asia, congestion at U.S. ports, and shortages of cargo containers and truck drivers have dominated the news about the many supply chain challenges that have occurred since the beginning of the pandemic.

But there’s another supply chain challenge that hasn’t grabbed as many headlines: the need to transport merchandise the “last mile” from retailers’ shelves — be they in stores or warehouses — and into the hands of consumers.

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According to Statista, the number of consumers opting for same-day delivery when ordering from a pureplay online retailer jumped from 24 percent in 2020 to 36 percent in 2021. For those ordering online from a store-based retailer, the number increased from 14 percent to 26 percent.

The demand for same-day service can often be met with curbside pickup or buy online, pick up in store, at least for omnichannel retailers. But many consumers still want products delivered. That’s where companies like Shipt come in.

Founded in 2014 but growing rapidly in the past two years, Shipt is one of many companies like Instacart, Bringg and DoorDash that have sprung up to satisfy the demand for same-day delivery. Half of retailers offer same-day delivery today and two-thirds expect to do so within two years, according to the consulting firm Invesp. Allied Market Research expects the same-day delivery industry to grow from $5.8 billion globally in 2019 to $20.4 billion in 2027.

“There is tremendous opportunity for our industry,” said Shipt CEO Kamau Witherspoon, who it was my pleasure to host during a session on same-day delivery at NRF’s Supply Chain 360 conference in Cleveland in June.

Witherspoon said today’s consumers are driven by speed, convenience and price. Only a few are in such a rush that they want 15- or 30-minute delivery — the latest standard in the race for ever-faster delivery. But most do want same-day delivery, often expecting products on their doorstep within a specified one-hour timeframe. The key is to “meet customers where they are.”

“We see a lot of our retail partners investing in a very diversified ecommerce experience, but you’ve got to have something for everyone,” Witherspoon said. “You have to have a phenomenal store experience. You also have to have phenomenal options for the customer for all things curbside and drive-up and various pick-up options. But the customer also wants the option for same-day delivery when that’s a need.”

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“One option is not going to cut it anymore,” he said. “The customer has spoken very loudly as relates to that.”

To help retailers meet that range of consumer preferences, Shipt offers two primary services. Under its original model, consumers place orders on Shipt’s smartphone app or website, choosing from products available at participating retailers in their area, and Shipt sends shoppers to the stores to pick up the products and deliver them in as little as an hour.

In addition, Shipt was purchased by Target in 2017 and provides same-day delivery services for products consumers order directly from Target. The same Shipt Driven service, which Witherspoon says is more efficient than a retail company building its own delivery infrastructure, is now available to other retailers and is a part of the business he hopes to grow significantly in the next few years.

“A Shipt driver can go pick up a brown box or group of brown boxes that’s already sorted down to a route,” he said. “They load them in the trunk of their SUV and the Shipt drivers are actually making the deliveries.”

Unlike delivery services that specialize in groceries, for example, Shipt works with more than 120 retailers at locations in over 5,000 U.S. cities, delivering clothing, pet food, electronics, home goods, toys, outdoor items and baby needs, among a wide range of other products.

What does the future hold for same-day, last-mile delivery?

“Disruption is going to be the new normal,” Witherspoon said. “Things like fulfillment and same-day delivery are going to have to get even more personal to make sure you’re bringing something distinctive and relevant to your customers.” Increasingly, consumers want “the product that they want the way that they want it.”

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