In many ways, the Covid-19 pandemic of recent months has acted as a time machine, propelling demand for e-commerce to levels predicted for four years’ time. European e-commerce providers experienced a 71% increase in online orders during May 2020 and this figure was even higher in the USA at 93%.
Today’s challenge for post and parcel organizations is how to respond to this surge in e-commence driven by new consumer behaviors (many of which will become permanent) and subsequently the pressures these new behaviors and trends have placed on the business and delivery infrastructures.
In-store shopping experiences have also been profoundly changed by the pandemic. Shoppers are only slowly going back to brick-and-mortar stores as they reopen. When consumers do visit, they often have negative experiences including wait times to enter stores, capacity constraints within and sometimes even limited inventory.
These challenges have advanced retailers’ omnichannel strategies at pace – and by years. While shopping in-store remains a challenge, retailers have found stores are a remarkable asset for enabling e-commerce fulfillment. Our analysis shows a step change in investments to enable click-and-collect and ship-from-store capabilities necessary for growth and likely survival in the pandemic-transformed market.
Catching up to the future
The pandemic has heralded a new era, one that is ‘never normal’. If post and parcel companies want to stay relevant and viable in this new era, they should focus on four key things:
1. Repurpose the delivery depot. To take advantage of the changes in the market, local delivery depots should be set up to accept local parcels that can be merged into existing delivery operations at the depot. These new capabilities would allow for efficient integration, making for simple induction, as well as systems and processes to efficiently include these local parcels on the right routes.
2. Achieve continuous delivery. Delivery organizations should move to a system of continuous delivery to take advantage of local fulfillment and make same-day delivery cost effective. Undertaking collections from retailers and deliveries to customers while in transit, and then re-optimizing routes accordingly (using insights gained from data on previous journeys) will help to increase route density, improve fleet utilization and reduce the overall cost of delivery.
3. Drive down cost with analytics and automation. New tech can significantly improve the ability to lower sortation costs with limited investment. Small scale, flexible automation solutions enable automation in places previously not cost-effective.
There is also significant efficiency to be gained by using the data generated by operations to drive greater efficiency. The costs to capture, store and analyze that data have all fallen while sophisticated machine learning techniques have enabled new insights. Our analysis suggests an increase of more than 20% cost efficiency is readily achievable with analytics-driven management.
4. Create revenue opportunities. Covid-19 has driven a new level of ecosystem evolution. Postal operators should explore how they might support these new models with local warehousing and fulfillment capabilities. Support for small to medium-size business e-commerce or direct-to-consumer models requires new capabilities but also opens new revenue. Delivery providers are well positioned to leverage existing assets with minimal new investment to offer these solutions.
A mandate for success
The good news is that post and parcel organizations are best positioned to offer the solutions that retailers are seeking, and to take advantage of the incredible growth opportunity offered by e-commerce. Their unique local footprint is the complementary infrastructure to these Covid-transformed supply chains. By focusing on making their last-mile offering more frictionless and dynamic – and on playing a redefined role in the ecosystem – post and parcel organizations have an opportunity to win the last-mile race.
This article was originally published in the September 2020 issue of Parcel and Postal Technology International