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Competition for the Last Mile

last mileWhether you consider the ‘last mile’ challenge a customer service, supply chain, or logistics issue, it’s a topic that could be the next frontier for competitive advantage in the retail space. But what exactly are we talking about? Is it same day delivery, the use of ‘valets’ to provide immediate delivery at a premium, or the attempt to get a product in the customer’s hands when he wants it at the least cost? When I read through recent articles on the topic, it seems like they’re all considered ‘last mile’ issues. Heck, delivery-to-store and to storage lockers can even be thought of in the same vein.

This isn’t a new challenge. When I was part of the startup for a new division for our company back in the late 90s, one of our goals was to ship product exactly on the day that would put it into the customer’s facility when they wanted to receive it. We couldn’t pull it off, as we were plagued by an immature distribution network, dependency on drop shipments from 3rd parties, a lack of visibility into exactly what was where in the process, and myriad other problems. Times have changed, though, and a lot of good work is being done on the last mile challenge. Much of it is being led by ecommerce stalwarts such as Amazon, eBay, and Google. Other major retailers, sensing the competitive advantage whoever can figure it out first will have, are also playing catch-up.

So, the question is: who can crack the code on the last mile, and who can do it cost-effectively enough to provide competitive advantage? Amazon has (or will have) their drones (supposedly) and is currently offering ‘conventional’ same-day delivery in selected areas, Google with their driverless vehicles (some day) is also testing same-day deliveries both for their own sites and for other retailers, and eBay is taking it one step farther by offering ‘valet’ services to put items into customer hands within an hour. This effort was described in a recent New York Times article (read it HERE) and seems to be at the extreme end of the service/cost continuum.

Surprisingly, the US Postal Service (USPS) is getting involved, providing Sunday delivery for some vendors and getting into same day service for some ecommerce suppliers (see recent Forbes article HERE). When you look at the infrastructure the USPS has available, as well as their obvious need for revenue streams, they can logically be a player in the process. Recently, I ordered a sweatshirt from a company on-line. I wasn’t in a hurry for it, so I chose the cheapest shipping option. A few days later, I tracked the shipment using the number I received via email and discovered it left their DC via UPS, was delivered to a USPS facility in Chapel Hill, and was later delivered, along with our usual collection of bills and magazines, by our friendly mailman. With the proliferation of scanning steps throughout the customer service, DC, and transportation processes, visibility into where my shipment was in the process wasn’t an issue. I was very impressed with the tracking capability from order management all the way to my mailbox.

So, who’s the winner going to be? I’d normally bet on Amazon for same day delivery, since they have incredible resources and have been willing in the past to make investments and lose money while gaining market share and expertise. However, big omnichannel retailers will have to keep up and will likely match whatever Amazon is able to offer. Since additional options will be available to us, in reality consumers will be the real winners.
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