Retailers like Wal-Mart and Best Buy are coming up with new strategies to top two-day delivery
In the quest to deliver purchases more quickly, efficiently, and at a lower cost, Jim Prewitt, vice president of retail industry strategy at JDA Software, a retail and supply chain software company, sees more technology and fewer people in our future.
“Autonomous vehicles are where we think this is going to go,” he told MarketWatch.
For today’s retailers, one of the hardest parts of the transaction is getting items into the hands of the growing number of online shoppers. These companies are exploring all of the options — both high-tech and low-tech — to get the meet the demand.
Executives speaking on conference calls this earnings season from Wal-Mart Stores Inc. WMT, -0.60% to home décor retailer Kirkland’s Inc. KIRK, -0.52% have talked up buy-online-pick-up-in-store (BOPIS) as an option, with Wal-Mart even offering a discount on some items for using the option.
Customers have been spoiled by the guarantee of two-day delivery offered by virtually every retailer in the industry. Now, making deliveries in less than two days is a differentiating benefit.
For example, Deliv, a third-party service, announced that it has expanded its same-day delivery to 33 markets and more than 1,400 cities. Macy’s Inc. M, -0.29% , Bloomingdale’s, Best Buy Co. Inc. BBY, +0.13% , and Office Depot Inc. ODP, +2.88% are among Deliv’s clients.
Amazon.com Inc. AMZN, +1.34% is already looking into autonomous vehicles, according to The Wall Street Journal, and companies like Google parent Alphabet Inc. GOOG, +1.05% , Tesla Inc. TSLA, +0.77% and General Motors Co. GM, +2.01% are working on the technology that could provide third-party outsourcing to small- and midsize companies that would want to take advantage of the service as well.
Last year, TechCrunch reported on the coming of self-driving trucks that could make human truck drivers obsolete.
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“There will always be a mix, including truck drivers,” said Prewitt. “You can build a lot of algorithms, but there’s always a component of human understanding.”
Autonomous vehicles, Prewitt says, could get the job done and solve other problems, like the labor costs that come with having a fleet of workers to deliver packages. Autonomous vehicles can even serve as lockers to safeguard items for pickup.
Meanwhile, companies are coming up with all kinds of strategies to close that “last mile” gap between the retailer and the customer.
Zaycon Fresh, a company that sells farm-fresh meat direct to consumers buying in bulk, shows up in a truck, usually at a local church parking lot, to hand off product to client.
“We go to a spot and they’ll come to me,” said Mike Conrad, founder of Zaycon Fresh. “People don’t have to get out of their cars” at the pickup location.
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According to Conrad, Zaycon Fresh has no warehouses, and delivers across nationwide routes with 31 trucks that pick up and drop off meat along the way. The company started in December 2009, and has a logistics system that was built as the company grew. Zaycon Fresh depends on “personable” staffers to deal with customers at pickup spots.
Chicken deliveries start tomorrow in some areas! If it’s sold out & you want some, call CS to be put on a call list in case extra comes up! pic.twitter.com/q0uQo1jyZJ
— Zaycon Fresh (@ZayconFresh) June 11, 2017
Wal-Mart also depends on the human touch with a program it’s testing that sends sales associates to customers to drop off deliveries on their way home.
Wal-Mart Stores Inc. has also filed a patent for a blimp that will deliver packages from the air via drones. A Wal-Mart spokesperson said the company has no further details about this patent, though it’s always looking at new ways the serve customers.
“Enabling specific time slots is the most difficult piece for retailers to get a handle on,” said JDA’s Prewitt.
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Chris Jones, executive vice president of marketing and services at Descartes Systems Group, a company that specializes in delivery solutions, says a “time-definite window” requires real-time GPS and “sophisticated” integrated technologies to work seamlessly.
In his view, the future isn’t just getting things to people faster, but at the time that customers actually want to receive an item. Appliances that need to be installed might not need to be there fast, for example, but have to be there when workers are ready to put them in place.
In Jones’ view, delivery coupled with other services “are a huge opportunity” for retailers. Best Buy Co. Inc. BBY, +0.13% , in its most recent earnings call, talked up the “in-home advisers” who can make house calls to consult with shoppers who need help determining which electronics to purchase.
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“Understanding the products you have and the kinds of people you sell to” is critical, said Jones. “If you build so much hype around speed, is it adding measurable value to your customer? Different classes of customers need different services.”
Wal-Mart shares are up 13% for the year so far, Best Buy shares are up 27.2% for the period, and the S&P 500 index SPX, +0.57% is up 10.4%.