The proverbial last mile in supply chains—which refers to the point that the product transfers from the retailer’s possession to the customer’s ownership—has always been a challenge. Modern advances and trends seek to improve and enhance this step, but the solutions, as well as reactions to them, vary widely, making it difficult to derive consistent recommendations. Rather, it is up to each retailer to consider its needs and abilities, as well as its customers’ preferences, to design its systems most effectively.
Consider some of the novel approaches that have arisen, especially in the COVID-19 era, when retailers got creative in figuring out how to hand over purchased products without making physical contact. Albertsons introduced refrigerated kiosks at some of its stores, installing them in the stores’ parking lots. Shoppers place their order in advance and select a pickup time. The kiosk gets stocked with the items they have purchased. When they arrive, during their chosen two-hour pickup window, they scan a code received on their phones, which brings their order to the front of the kiosk.
Albertsons has indicated success with the experiment and is adding similar lockers and kiosks to more stores, yet at the same time, other retailers are halting and rejecting their own curbside pickup options. According to one analysis, consumers simply find the process too complicated. The challenges of coordinating staffing to pick and bring purchases to the curb or locker, as well as stockkeeping and inventory tracking, prompt these retailers to give up on the effort. Especially as COVID-19 restrictions eased, both the retailers and their customers returned to embracing more traditional methods, whether people came into the store to gather what they wanted or placed an order for delivery to their homes.
But delivery options might be undergoing an upgrade too. Various retailers have expanded their partnerships to include more delivery services, including not just national logistics providers but also smaller, local carriers that promise to get a product from the local store to a local customer. Albertsons, in addition to experimenting with kiosks, decided to outsource all deliveries of online orders, rather than relying on in-house operations as it has in the past.
But for Zumiez, relying on outside vendors to deliver packages seemed inconsistent with its focus on building connections between its tween customers and its exceedingly cool sales associates. Therefore, it is expanding the sales associates’ job roles to include delivery, similar to a pizza delivery model. Thus, a staff member might pull up into a customer’s driveway, in her or his own car, toting the skateboard the customer ordered. The retailer also encourages that associate to build connections, perhaps by showing the new owner some new tricks with the board. In addition to building the brand’s image and facilitating last-mile delivery, the expanded service helps sales associates who want to pick up extra hours, to the extent that they even might qualify for full-time employment benefits from the retail employer.
Delivery thus offers great appeal for this retailer and its customers, but it remains expensive, prompting some retailers to avoid it or else charge customers for the service. According to research by a logistics firm, only 8 percent of the top ecommerce retailers in the United States offer completely free shipping, with no minimum purchase. On the other side, 30 percent of them never provide free shipping. The rest use delivery prices as a promotional tool: As long as customers buy more, above some price point (usually around $35), they can get the delivery for free.
Although the rationale for charging for delivery is clear, especially for smaller retailers that simply cannot afford to pay these costs, the downsides are evident too. In a market in which most consumers have come to expect even same-day shipping from major retailers such as Amazon and Walmart at no cost to them, making them pay for potentially slower delivery is a difficult proposition to make.
The variety of last-mile options thus highlights the challenges for today’s retailers and the considerations they must make before committing to curbside, in-store, and delivery strategies. There is no one-size-fits-all solution though, and that makes the decision even more difficult.
Discussion Questions:
- Why are retailers seeking new options for getting products into customers’ hands, beyond traditional channels?
- What are some of the benefits and challenges of curbside pickup options, for retailers and consumers?
- Should retailers set minimums for free delivery? Or should they offer free shipping across the board?
- Do you use curbside pickup for your purchases? If so, for what kinds of purchases do you use it?
- Do you use delivery options for your purchases? If so, for what kinds of purchases do you get deliveries?
Source: Tom Ryan, “Should Store Associates Deliver Online Orders?” Retail Wire, January 19, 2021; George Anderson, “Albertsons’ Pilot Is Latest Part of the Plan to Supercharge Omnichannel Ops,” Retail Wire, January 21, 2021; Tom Ryan, “Do Retailers Need to Further Commit to Free Delivery?” Retail Wire, February 1, 2021; Maisie Woolverton, “Not Every Retailer Is Sold on Curbside Pickup,” Retail Wire, January 29, 2021; http://www.allbirds.com