The shipping delays that pervaded the holiday season were the latest example of how e-commerce fulfillment is still very much a work in progress. But as more retailers and shopping centers get a grasp on how to better use their physical space, the last mile may be a bit more manageable as the year gets underway.
Bill Thayer, co-founder and co-CEO of Fillogic, a logistics-as-a-service platform that converts underutilized space at retail centers into tech-enabled, micro distribution hubs, believes retail faces two main pain points as it tries to figure out the last mile. The first is integrating technologies such as warehouse management, transportation management and order management into the retailer’s overall infrastructure to understand inventory visibility, while the second involves leveraging the tech to execute these strategies out of brick-and-mortar locations and scale bandwidth.
“One of the great things with physical retail is there’s lots of good, solid space close to good transportation locations,” Thayer said at the NRF virtual Big Show earlier this month. “It’s just taking existing infrastructure technologically that was built for something different and making it happen with something else. It’s basically providing additional logistics aggregation services.”
While the demand for same-day delivery is sky high, traditional companies are lagging behind in their ability to offer these capabilities, especially when it comes to down to spending. Many of these carriers have fixed assets and fixed employee bases, which can be hard to scale when demand spikes, according to Erik Logerquist, who leads Uber Direct, the company’s new on-demand delivery service.
And although at this stage, there shouldn’t be any denying the importance of same-day delivery, Tanger Outlet Centers president and chief operating officer Stephen Yalof believes most retailers haven’t been able to “capture the value” of last-mile distribution from the brick-and-mortar store.
Despite being behind in implementation and execution, retailers have plenty of resources that they can leverage even if their carriers aren’t up to speed. Thayer highlighted that retailers’ physical locations, whether in malls or in open air centers, are simply in a much more convenient area than most fulfillment centers their third-party logistics providers use.
These malls would serve as the aggregation points for the logistic providers and retailers to expand the local delivery networks, Thayer said. He highlighted that these shopping centers could handle fulfillment from both physical players and even digital natives that don’t have a reach into brick-and-mortar in the area yet but are considering the option.
These aggregators could theoretically serve as homes to logistics services such as cross-docking, cooling and even added freight that a retailer typically wouldn’t have immediate access to.
Tanger and Fillogic will be partnering on fulfillment initiatives in “a couple short weeks,” Yalof revealed in the session, noting that it will give the shopping center operator the chance to prop up the e-commerce businesses of its retailers to facilitate more sales in a way it couldn’t before.
“We’re in the outlet space, so typically a customer who is shopping in an outlet store gets greater the value, the bigger the basket they build,” Yalof said. “When a customer…is coming to one of our shopping centers that are mostly based in American tourist-drive cities, they don’t have the space to bring their haul home with them. A concept like Fillogic can provide for us the shipping for customers who want to take advantage of spend-to-gets and other promotions that you’ll often see in an outlet center.”
The touristy destinations will also be an advantage for Tanger’s budding partnership with Uber, said Yalof, particularly since many of these locations are near hotels.
Uber Direct’s Logerquist believes his company’s network of drivers fits in the last mile equation by fulfilling the element of transparency, both in delivery and returns. He noted that retailers, convenience stores and restaurants partnering with Uber can offer courier-tracking in real time on their own websites.
“Not only do consumers want things on demand. They want to be informed every step of that journey,” Logerquist said. “Traditional carriers have made some improvements in real-time tracking. But, consumers nowadays are used to seeing their french fries delivered in real-time on their smartphone. And I think they’re really starting to want that same experience with all the merchandise that they purchase.”
He noted that while end consumers want this transparency baked into their delivery process, B2B customers are asking for this as well, which would further incentivize all parties of the logistics side to improve transparency.
While “last mile” dominated the discussion, Logerquist noted that the most important innovations within delivery are occurring beyond this level. He highlighted the Uber Freight long-haul trucking venture that connects truck drivers with shippers, much in the same way the company’s ride-hailing app pairs drivers with those looking for a ride.
What excites Logerquist most are the innovations that afford more control over the customer shopping experience.
“Imagine a consumer who’s in your checkout and they see different shipping options such as two-day, ground, same-day delivery, but then they also see an option in the checkout for an Uber to take them to the store,” Logerquist said. “That gives the consumers more agency and more control over their shopper experience. We found that brands are very excited about this. They want to drive the incremental foot traffic, and they want to drive the basket size, and we’ve seen really positive results when retailers provide more choice.”