Thoughts On The Delivery Landscape

By Raghu Ramachandran on Dec 9, 2015

“A long time ago, in a galaxy far, far away…”.

Alright not that long ago, it was 2012 when most, in the US, received gifts we ordered on time and, as both a retailer or consumer, accepting our delivery providers quaint time in transit which varied between two and seven days for most items. The landscape is very different now.
 
In 2013, the retailers were overwhelmed with shoppers who went online to avoid the winter storms and this cascaded to delivery providers – UPS, FDX, USPS – who could not process all the volume in time for Xmas. Learning from their missteps, the providers worked, with retailers in 2014, to obtain better forecasts but overcompensated and incurred significant additional costs to process additional volume after thanksgiving and before Xmas with uneven volume between the two holidays.
 
As I write this brief, there is a buzz about Amazon’s drone prototype for 30 min delivery! There is no gainsaying the fact that in three short years, online shopping and the demand for fast, free delivery with easy returns primarily created by Amazon and followed by other retailers has changed consumer expectations.
 
While UPS and FDX offer a suite of services with time and day definite guarantees, their same day services are expensive and limited. To enhance the consumer experience and mitigate costs, they created services such as UPS My Choice and UPS Access Point or FDX Delivery Manager, providing consumers greater control over their delivery time window or make changes to their delivery address including picking up packages at local stores.

Meanwhile, Amazon, ignoring the current capabilities of the entrenched providers, expanded demand for same day, generated a need for two-hour service creating a market for new providers to fulfill. There are a number of firms including Deliv, Postmates, Instacart, Uber Rush, Shutl, Roadie and others to meet this “local” same-day market need.

Just like FDX, “absolutely, positively” claimed that you needed your documents the next day – a few generations ago – Amazon is training us to demand our products be delivered not long after ordering them! If the trends in next day delivery are any indicator of what the future holds for same-day, I see them being limited to grocery, consumables and high value orders all for a fee.

Looking ahead, I see the delivery landscape changing to accommodate several “hyper local” providers. This would be an extension of the UPS Access Point, FDX Store models – local businesses near high density neighborhoods or a representative of the new gig economy. These providers, for a fee per package, will expand their intermediary role for the package delivery companies to store and deliver all the volume brought to their door.

We will know, if this happens by the next holiday season or sooner, within the next few weeks depending on how the providers fared this year.

Happy Holidays and may you receive your gifts on time!

Raghu Ramachandran

About Raghu Ramachandran

On May 31st, 2015 Raghu retired early from UPS after 28+ amazing years. Over the past two years, besides launching an e-commerce solution, he led a team of UPS Managers to assess, evaluate and recommend efficiencies in the Supply Chain of large and medium sized US retailers.

The company gave him the latitude to get engaged in numerous interesting projects worldwide and he has since founded 13 Colony Global LLC to enable other organizations become more efficient and grow.

Raghu can be reached at raghu@13colonyglobal.com

 

 
 
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