Retail has faced its fair share of challenges this year. From supply-chain disruptions to pivots away from product that no longer serves shoppers, retailers have had to adjust to a new reality on the fly.
The holiday season has proved no less bumpy. While consumer spending has been high, brands have had to engage in promotions early—and often—throughout the fall in order to maintain their interest and engagement.
The cycle of sales and discounts—which are happening mostly online, due to continued retail shutdowns across the country—have overwhelmed the nation’s logistics providers. Following the Thanksgiving weekend and Cyber Week shopping holidays, an overburdened UPS halted pickups from major retailers including Gap, Nike, L.L. Bean, Hot Topic and Macy’s. FedEx added more than 70,000 positions to account for a projected 22 percent increase in peak shipping volumes since last holiday season.
These conditions haven’t stopped consumers from procrastinating on their shopping, either. More than three-fifths of would-be gift-givers plan to make their purchases in the final days leading up to the Christmas holiday, according to Klarna, and over half plan to do so online.
With consumers more dependent on e-commerce than any time in recent history—and parcel delivery services overburdened by the influx of orders—new solutions to the logistics logjam are emerging.
Roadie
Six-year-old Atlanta-based same-day delivery service Roadie relies on crowdsourced labor from regular folks—making it easy for the company to respond to changing market conditions. According to founding CEO Marc Gorlin, Roadie views potential delivery drivers—who could really be just about anyone—“almost like a public utility to plug into.”
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“We have over 200,000 active drivers who deliver to over 23,000 zip codes, and our footprint covers nearly 90 percent of the U.S.,” he said.
To use the service, shoppers need only download the app and make a profile. They can buy products through participating retailers—like Walmart, Macy’s and Chico’s, to name a few—by choosing the delivery option at checkout and specifying Roadie as their preferred service. Or, they can order goods to be delivered from any local boutique or store simply by completing their purchase with the retailer and scheduling a Roadie pickup and drop-off through the app.
The pandemic has quickly changed same-day delivery services like UPS-backed Roadie from convenient time-savers to essential services, Gorlin said. “It only gets messier with all of the retailers gearing up for the holidays,” he added. “A lot of the traditional package carriers are done—they’re at capacity, they have nothing left.” UPS’s funding of the startup illustrates the century-old institution’s understanding that the logistics space is shifting.
According to Gorlin, 2020 presented the “perfect storm” of unfavorable retail conditions. Fewer people have been shopping brick-and-mortar, both due to fear of Covid-19 infection and mandatory shutdowns, so the majority of shoppers have turned to the web. “That puts a strain on the shippers, so you start to see the surcharges, backlogs, delays, capacity caps,” he said. “And then you have retailers in a bind—they have lots of goods to sell, and no way to get them to their customers.”
But Roadie was “built for moments like this,” Gorlin said. “While you can’t always forecast demand, crowdsourcing models succeed because you don’t need to.”
Unlike FedEx, USPS or UPS, Roadie doesn’t have shipping deadlines or cut-off dates for holiday delivery, because everything is delivered same-day. “All of the delivery resources we have scale up in real time, which is different than if you have a fixed number of trucks,” he said.
Retailers must cease to depend entirely on “fixed assets,” like trucks, delivery services and even drones and robots, according to Gorlin, because a moment will eventually come when they’re caught flat-footed and their existing resources aren’t enough. “With a crowd-sourced model you have an unlimited number of assets, and the ability to handle the peaks, whether they’re pandemic peaks or otherwise,” he said. “That’s the only key that opens that lock.”
The Roadie roadmap appears to be paying off. About 5,000 retailers have signed on as partners since last year, pushing the service’s network of stores to 15,000, Gorlin said. And while the company delivered about 155,000 packages throughout November and December of last year, Roadie is on track to do “well over a million” deliveries this holiday season.
While Gorlin believes in Roadie’s business model, he also feels that the future of logistics depends on “optionality.” Brands and retailers must offer consumers a multitude of ways to shop in order to be successful, from same-day delivery to next-day shipping, buy online, pick up in store (BOPIS) and more.
“Consumers have been telling us they wanted this for ages,” he said. “This forces retailers’ hands, and you’re not going to get the genie back in the bottle.”
Untuckit
New York-based men’s shirting brand Untuckit—famous for its retrofitted button downs made to be worn casually untucked—may seem like an unlikely leader when it comes to logistics. But the company has made advancements to its business model in recent months, prioritizing customer service and convenience in the wake of unprecedented demand for both.
Prior to the pandemic, Untuckit’s business was almost evenly split between its digital presence and the more than 80 retail stores it operates across the U.S. and Canada, said Julie Mares, head of e-commerce for the shirt-first brand. But as the coronavirus took hold across the globe, that split shifted, with more than 80 percent of Untuckit’s clientele now patronizing its online channel.
Augmenting fulfillment options has been an area of focus since before the 2020 maelstrom began, in an “effort to optimize inventory turn,” Mares said. And as a brick-and-mortar-heavy business, the brand has now been pushed to accelerate those advancements to accommodate the influx of online orders and adjust to the dearth of foot traffic.
Untuckit wanted to promote the highest possible level of sell-through by making all of its inventory—even the products on store shelves—available to shoppers. Throughout the pandemic, the brand has turned its retail locations into mini fulfillment centers, Mares said, allowing it to “fill orders for customers seeking a color or size only available in other brick-and-mortar stores.”
The move, which theoretically gives Untuckit’s local stores access to homebound consumers across the country, has also spurred a push to expand the range of available shipping options, Mares said, from same-day delivery through logistics partner Ohi to next-day shipping and BOPIS.
“By enabling store fulfillment, we can manage our inventory more efficiently,” she said, and this has “helped extend the e-commerce offering.”
Untuckit is also building out online tools to emulate the in-store experience to further customers’ comfort with using its e-ecommerce channel, like styling services that allow shoppers to engage with in-store associates via the web. “The 360-degree omnichannel engagement has been very positive for us to allow shoppers to interact with us anytime, anywhere they want,” she said.
Once they’ve done their shopping online, Untuckit shoppers can now choose to have their orders delivered the same day. Benjamin Jones, founder of localized delivery provider Ohi, said that most Untuckit shoppers receive their orders through the platform in less than two hours—with 58 minutes being the average delivery time—in what he characterizes as an “instant commerce” experience.
“A huge group of consumers who previously only shopped in-store are now online and will stay there,” he said. “Same-day delivery was a minor part of e-commerce pre-pandemic, but it will be the norm within two years.”
The pandemic has undoubtedly accelerated this adoption, he added, but “omnichannel strategies have been important for brands for a while.”
“It’s about meeting the consumer where they want to be, as well as maximizing available inventory,” Jones said. This year’s e-commerce explosion has also presented an unforeseen opportunity for companies like his to step in, as traditional logistics networks flounder under the weight of increased orders. “We’ve seen many brands using our software to get product to their customers from stores,” he said, avoiding the delays inherent to using standard delivery services.
“As long as physical retail exists, brands will increasingly use those spaces to fulfill digital orders,” Jones added. “Bringing together the physical and digital should be an essential part of any retailer’s strategy over the coming years.”