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Companies Prepare for the Changing Landscape of Retail Logistics

Perpectives — October 17, 2017

By TechNexus Team


Consumers’ expectations for shorter delivery times and increased schedule accuracy have shifted supply chain management companies’ priority toward optimizing speed and decision-making processes.

“One of the things needed for an agile supply chain is fast, electronic data, and the analytics to turn that data into decision-making information,” said Justin White, who manages the T.Rowe Price New America Growth Fund and assists in Amazon’s supply chain management. 

Leveraging data analytics, supply chain companies - and the retailers they serve - can meet consumer expectations and create an enjoyable customer experience.

New Delivery Expectations Will Shape the Future of Shipping Technology

Many consumers are no longer purchasing their items in-store, but are researching and buying them from the comfort of their home. With Amazon, Walmart (Jet.com) and other providers enabling consumers to purchase an item with a simple click, consumer expectations have reached an all-high. They expect their order information to be emailed as soon as an online purchase is made and their items to be delivered the next day. According to a survey of more than 1,000 U.S. consumers, supply chain consulting firm AlixPartners LLP found that consumers expect to wait an average of 4.8 days for delivery, down from 5.5 days in 2012.

These changing expectations are pushing retailers, both brick-and-mortar and online, to streamline their logistics in order to meet customers’ need for speed. 

Drone Delivery: Direct To Consumer

The industry leader in many minds is Amazon. The online retailer is on the forefront of changing the way they deliver products to customers in the most efficient way possible. To do this, they have adopted emerging technology, most notably drones and autonomous vehicles. To support their online-ordering service, in 2016 Amazon successfully piloted a drone delivery in England, delivering a package in only 13 minutes. For areas that are less sparse, such as urban cities, they’ve even submitted patents for beehive-esque, multi-level fulfillment centers powered by delivery drones.

Google’s parent company Alphabet has is also joined the race towards logistic innovation. Their drone delivery project called “Wing Marketplace,” is an online retail center where orders will be delivered by drones on demand for a $6 delivery fee, according to a report from Wall Street Journal. While similar to Amazon’s model, Wing Marketplace connects other retailers - such as Domino’s and Chipotle - directly with consumers.

Amazon and Google have innovated the way customers engage with their orders. Particularly with Amazon’s latest acquisition of Whole Foods, it might not be long before organic vegetables are air-transported to customers for lunch.  

Drone Delivery: In-Store Product Shuttles

Walmart is another leader in drone technology in retail. Rather than using the tech to deliver products directly to customers, the giant plans to use drones to move products from department to department within the physical store. Their March 2017 patent showcases a drone delivery system that uses the stores’ shelving as route guidelines and an automated air traffic control process for each store. 

Ultimately, Walmart believes that drones “can greatly improve the customer experience without overburdening the human associates of the facility.” Waiting, the filing said, “can contribute to reduced customer satisfaction.”

Retail logistics is being transformed by emerging technology like drones, data and analytics and artificial intelligence. Next, it could be long-haul trucks platooning or fully autonomous vehicles. Much of this is caused by increased consumer expectations and enterprise logistics companies innovating to exceed them. We’ll continue to see speed and agility playing a key role in the technology that is adopted. As we’ve seen in our work with enterprises, this need can be met through collaboration with earlier stage companies eager to make their mark in retail logistics. 

TechNexus would love to assist your company in creating a logistics strategy that leverages venture enabled innovation. At TechNexus, we have start-up partners who are delivering the change necessary for companies to meet consumer demands.

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