We use cookies to provide you with a better experience. By continuing to browse the site you are agreeing to our use of cookies in accordance with our Cookie Policy.
  • INDUSTRY PRESS ROOM
  • ABOUT
  • CONTACT
  • MEDIA FILE
  • Create Account
  • Sign In
  • Sign Out
  • My Account
Free Newsletters
  • MAGAZINE
    • Current Issue
    • Archives
    • Digital Edition
    • Subscribe
    • Newsletters
    • Mobile Apps
  • TRANSPORTATION
  • MATERIAL HANDLING
  • TECHNOLOGY
  • LIFT TRUCKS
  • PODCAST ETC
    • Podcast
    • Webcasts
    • Blogs
      • One-Off Sound Off
      • Global Logistics and Risk
      • Empowering Your Performance Edge
      • Analytics & Big Data
      • Submit your blog post
    • Events
    • White Papers
    • Industry Press Room
      • Upload Your News
    • New Products
      • Upload Your Product News
    • Conference Guides
    • Conference Reports
    • Newsletters
    • Mobile Apps
  • DCV-TV
    • DCV-TV 1: News
    • DCV-TV 2: Case Studies
    • DCV-TV 3: Webcasts
    • DCV-TV 4: Viewer Contributed
    • DCV-TV 5: Solution Profiles
    • Parcel Forum 2022
    • MODEX 2022
    • Upload Your Video
  • MAGAZINE
    • Current Issue
    • Archives
    • Digital Edition
    • Subscribe
    • Newsletters
    • Mobile Apps
  • TRANSPORTATION
  • MATERIAL HANDLING
  • TECHNOLOGY
  • LIFT TRUCKS
  • PODCAST ETC
    • Podcast
    • Webcasts
    • Blogs
      • One-Off Sound Off
      • Global Logistics and Risk
      • Empowering Your Performance Edge
      • Analytics & Big Data
      • Submit your blog post
    • Events
    • White Papers
    • Industry Press Room
      • Upload Your News
    • New Products
      • Upload Your Product News
    • Conference Guides
    • Conference Reports
    • Newsletters
    • Mobile Apps
  • DCV-TV
    • DCV-TV 1: News
    • DCV-TV 2: Case Studies
    • DCV-TV 3: Webcasts
    • DCV-TV 4: Viewer Contributed
    • DCV-TV 5: Solution Profiles
    • Parcel Forum 2022
    • MODEX 2022
    • Upload Your Video
Home » Retailers turn to 3PLs for help in home delivery
newsworthy

Retailers turn to 3PLs for help in home delivery

January 5, 2016
Ben Ames
No Comments

Under pressure to keep up with Amazon.com Inc. on free overnight shipping, retailers are increasingly turning to third-party logistics providers (3PLs) in an effort to compete through flexible pricing and creative marketing, according to a survey by consultancy Retail Systems Research (RSR) and Canadian IT giant Descartes Systems Group Inc.

In an effort to measure retailers' home-delivery processes and concerns, the survey polled 83 retailers and then compared their responses with those of 1,015 consumers that measured buyers' expectations for shopping and delivery. The survey found that an "Amazon Effect" now in place for about 15 years has conditioned shoppers to expect speedy home delivery without paying a premium—or, in fact, anything—for the expedited shipping.

Until the 1990s, swift home delivery was generally offered only to buyers of big-ticket items like furniture and large appliances. Everyone else paid a hefty shipping and handling fee, then waited four to six weeks for the package to arrive in the mail. But since 2000, Amazon and other large e-commerce companies have expanded their market share by offering home delivery, next-day service, and easy returns, even when the high cost of those services means they often run their retail operations at a net loss, according to RSR.

Most small and midsize retailers don't have the resources to play that game, but they still have to satisfy customers who now expect free overnight service, RSR managing partners Nikki Baird and Paula Rosenblum write in the report, "Home Delivery: Retailers' Brave New World." As a result, many retailers now find themselves in an unfamiliar place—the home delivery business—and are desperate to identify the best processes to manage e-commerce and omnichannel fulfillment demands. Turning to logistics service providers (LSPs) and 3PLs is a smart way to outsource this task to experts, Baird and Rosenblum say.

Asked about their preferred methods of delivering products to consumers, 54 percent said they shipped from DC directly to consumers using an LSP; 38 percent said that consumers picked up items at the store; 30 percent shipped from stores using parcel carriers; and 26 percent used their own or dedicated truck fleets, according to the survey.

Many retailers plan to hand off responsibility for consumer home deliveries to their vendor partners, despite being competitors with those firms in an age where vendors increasingly sell direct to consumers. About 72 percent said they expect during the next three years to increase their use of "drop-shipping," a practice where a retailer does not hold inventory but instead transfers orders and shipment details to a manufacturer, another retailer, or a wholesaler, who then ships the goods to the customer. About one-quarter said their drop-shipping activity would remain the same, while 4 percent said it would decline.

Many retailers also offer shoppers such services as product assembly, in-home installation, and removal of packaging and old products. However, the survey showed that these initiatives miss the mark of what consumers really want: low prices and convenient delivery.

That sounds simple, but the survey results also exposed a gap between customer desires for fast home delivery and willingness to pay for it. Many retailers are fearful of losing customers by boosting shipping fees, but RSR suggested a different approach. Through clever marketing, companies could offer discounts for consumers who choose slower shipping or wider delivery windows, and charge the full rate for "standard" overnight fulfillment.

The survey found that that both retailers and shoppers see room for improvement in 3PL performance. Technology investments by retailers could address those issues, allowing companies to improve profitability through route optimization, dynamic appointment scheduling, and real-time rerouting. Other technologies could help please customers by enabling predelivery customer notification, track and trace, and electronic proof of delivery, the survey found.

RSR conducted the survey last September and October, reaching companies ranging from revenues below $50 million to those generating more than $5 billion. Respondents' areas of responsibility ranged from executive management to supply chain and logistics/transportation. Respondents to the consumer survey also covered the full range of age, gender, and income.

To read the full report, see www.rsrresearch.com/2015/11/10/home-delivery-retailers-brave-new-world/. To see a webcast on the report, "State of Home Delivery Report 2016: Retailers' Brave New World," sponsored by Descartes Systems Group, register here. The webcast will take place at Tues., Jan. 26 at 2 p.m. EST, as RSR's Rosenblum discusses and explains the survey results with moderator Ben Ames, senior editor at DC Velocity.

Business Management & Finance
KEYWORDS Amazon.com Descartes Systems Group Inc. Retail Systems Research (RSR)
  • Related Articles

    More women turn to delivery driving in 2020

Benames
Ben Ames has spent 20 years as a journalist since starting out as a daily newspaper reporter in Pennsylvania in 1995. From 1999 forward, he has focused on business and technology reporting for a number of trade journals, beginning when he joined Design News and Modern Materials Handling magazines. Ames is author of the trail guide "Hiking Massachusetts" and is a graduate of the Columbia School of Journalism.

Recent Articles by Ben Ames

Jungheinrich buys Indiana warehouse automation vendor for $375 million

Shipping groups back bipartisan trucking overhaul bill

Walmart boosts investment in GoLocal delivery-as-a-service platform

You must login or register in order to post a comment.

Report Abusive Comment

Most Popular Articles

  • Survey: top supply chain risk of 2023 is semiconductor shortage

  • Big and bulky last-mile delivery segment set for hot growth

  • Outlook 2023: What’s in store for logistics/supply chain?

  • Ports, maritime operators see tide turning as ocean freight tsunami subsides

  • In Person: Steve Beverly of Penske

Now Playing on DCV-TV

89cfed30 8aac 4284 960d c8c8c1886e16

Have you checked your read rate lately?

DCV-TV 4: Viewer Contributed
No reads. Unaccounted for boxes. Boxes sent to the wrong place. A logistics nightmare! But this nightmare doesn’t have to come true. SICK’s linear line scan camera is what dreams are made of for your logistics operations. And if you’re worried about motion and vibration from conveyor belts...well, there’s no reason...

FEATURED WHITE PAPERS

  • The five best applications for robotic lift trucks in warehouse environments

  • Fulfillment Facility Improved Efficiencies by 4x

  • 3PLs: Complete Orders Faster with Flexible Automation

  • Reusable Packaging for the New Wave of Supply Chain Automation

View More

Subscribe to DC Velocity Magazine

GET YOUR FREE SUBSCRIPTION
  • SUBSCRIBE
  • NEWSLETTERS
  • ADVERTISING
  • CUSTOMER CARE
  • CONTACT
  • ABOUT
  • STAFF
  • PRIVACY POLICY

Copyright ©2023. All Rights ReservedDesign, CMS, Hosting & Web Development :: ePublishing