The Recycler Issue 301

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Retail Column Building a Last Mile Strategy In retail today, every conversation includes e-commerce. Whether retailers integrate their brick and mortar stores with their website and use their stores as a delivery option, or if their web store is a stand-alone business unit, every retailer has to consider the impact of e-commerce and how they will address it to meet customer expectations. For pure e-commerce companies, the most expensive component is getting customer orders to each customer’s doorstep. They call it “the last mile” and in terms of logistics, delivery security and damage, home delivery is the riskiest and most expensive part of the sales cycle. There are many systems to efficiently move products from manufacturers in Asia or elsewhere to a retail warehouse. Retailers and their vendors have been working on their supply chains and logistics to such a degree that they have wrung nearly all the costs out of that portion of the supply line. But getting products into customer’s homes is a new capability that has relied heavily on delivery models that were intended for postal delivery. Pure e-commerce retailers have used ideas that range from annual membership service fees to underwrite delivery throughout the year (Amazon Prime, for example) to testing drones and driverless cars. But retail stores have what pure-e-commerce retailers covet: street addresses in the same neighbourhood as their customers, which allows them to build a true face-to-face relationship. Retail stores offer a unique opportunity to close the last mile gap in a few ways: 1. The mini-warehouse model – For low cost, bulky items a delivery fee can erase all profit. Similarly, small high-value items are easy targets for thieves. Retailers can offer their store as a mini-warehouse where customer orders can be efficiently delivered and wait for pick up. In effect, the consumer handles “the last mile.” Amazon has been testing its lockers at retail locations across the US, especially in low income areas where multi-unit housing makes delivery problematic. Other retailers like Target and Best Buy offer a discount to customers who are willing to pick up Flora Delaney products at their nearest store instead of home delivery. 2. The hub and spoke model – Stores can act as local fulfillment warehouses and the final delivery service by sending customer orders with route drivers. The inventory impact and need for system integration is significant. A variation on this model is when the store serves as a drop ship location from vendors to get products to customers. That method is more common with pre-planned purchases like building materials and furniture. In our industry, there is the opportunity to create varying levels of service that customers choose to receive as the last mile preference. Customers can use the store as a secure location to aggregate their order and have it ready to go when they arrive. Usually that can be accomplished on the same day, as long as store personnel have access to orders on the web. Or they can have their ink and toner delivered on a regular schedule that can be adjusted up or down with enough notice through a web interface. Finally, they can opt to have a white glove service treatment which borders on managed print services: a delivery route person monitors supply levels and may even install and maintain printers at the customer’s location. For store managers and small business owners, it is important to look at your customer base and make decisions now about how you will play in the “last mile” game to 42 THE RECYCLER • ISSUE 301 • DECEMBER 2017
Tel: 01993 899800 • info@therecycler.com • therecycler.com build sustained relevancy for your target market. If your customers are primarily consumers who use private cars while shopping, the mini-warehouse model may be the most valuable option. Create an order pick-up station where customers can park in dedicated convenient stalls, find their order quickly at the store front and show ID or other steps to secure their order. If demand is high enough, offer curb side delivery service by one of your staff members. The key to succeeding with this model is speed and convenience. Make the stop as simple as possible to prevent customers from moving to a home delivery model. To make this mini-warehouse model work economically, the key is to entice customers to use this convenient service to gain a greater share of their wallet. If a customer is only picking up ink and toner, provide them with a bounce-back offer that gives them a discount the next time when they include reams of paper as well. Or consider offering your customers connections to neighbouring (noncompeting) businesses by including their coupons or advertisements in the packed orders for a small charge. Finally, work to delight and surprise these customers with unexpected addon and thank-you items that will build loyalty. For example, if you are closing out a range of goods (pens or folders, for example) at a discount, consider giving away a free sample to your pick-up customers as a way of saying thank you and to remind them that you carry other goods they can purchase. Always include a strong marketing message with any giveaway. Consider looking for products from your vendors that can specifically work as giveaway items such as notepads that will act as ongoing reminders. If your customers are primarily business customers who expect delivery to their premises, the hub and spoke model is likely the most appropriate option. Lease or purchase a delivery vehicle and hire a route driver who understands that their job isn’t just safe driving and reliable deliveries but building relationships and sales. To achieve that, make sure they are given the incentive to be cordial and friendly above achieving an hourly delivery rate. Consider expanding your offerings to bring new business supplies to your customers like cleaning supplies, tissues, envelopes and other business consumable items to gain a greater share of their wallet. If your delivery service is friendly and reliable and your prices are similar, why wouldn’t a business customer start to shift their perception of what you offer and give you a try? And finally, in an effort to delight and surprise your business customers, consider how you can leverage the delivery capability you have built into new ways to meet their needs. Could you offer to deliver other items during peak times to help business customers? Consider shredding services, a special service to shuttle dry cleaning for business executives, deliver flowers for special occasions or add legal/secure courier services to meet your customers needs. To truly succeed with delivery there is a simple way to satisfy your customers: communicate. Set up an automated process so that customers know when their order has left your building. A simple text or email that says “your order left our store and it will arrive today” could be enough. Finally, if your customer base is a blend of end consumers who use public transportation and businesses, consider a hybrid model where customers can opt in and out of delivery. These are the exact customers who often find home delivery to be problematic, so creating a locked location like a secure bin that they can access can be ideal. Provide a subscription service for accepting deliveries on their behalf and depositing it into their bin as a service that could become a new revenue stream with an investment in space and lockers. You will want to consult a legal advisor on how to structure such a contract, but it is a service that is in demand amongst a portion of most urban residents. As you look at your operation, consider how taking proactive steps to close The Last Mile with your customers could help you build your business. R Flora Delaney is a retail consultant and advisor to the remanufactured cartridge industry in the US. A seasoned retail executive, Flora’s clients benefit from her holistic approach and pragmatic solutions. Email flora@floradelaney.com to reach her. THE RECYCLER • ISSUE 301 • DECEMBER 2017 43
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