Demand for logistics fulfilment has risen in the times of the Corona Virus Pandemic across the world more than it could have in the last 5 years. In the last 10 years, the migration of retailers to ‘fulfilment models’ was not so inspired by the impending technological push as it has been in the last few weeks by the global health crisis. A McKinsey survey points out that an average of 58.20% of customers surveyed would continue to adopt ‘Safe Delivery Modes’ for a long time after the elimination of COVID 19 as a global threat. Their emphasis lies on the delivery and storage methods of the product more than the product itself. Disruption in the end-point fulfilment of delivery and storage needs, inspired by COVID-19; has been listed as “potentially here to stay” technologies as compared to “works for now” and “lower adoption” models in which online gaming, telemedicine, and even video conferencing lie. Thus, it is the right time for etailers and supply chain facilitators to explore solutions for mitigating these changes which might affect their business in the post COVID world.
Critical changes in ‘Business to Consumer’ Fulfillment
The change in consumer behaviour observed today is most similar to the change in cautionary buying observed post the Global Banking Crisis 2007-08. Cautious customers are what changed the way monthly purses were maintained across the world back then. And now the world is looking at more health-inspired buying (product and process) after the CoronaVirus Crisis is done and dusted with.
It’s not just the volumetric shift of buying; other aspects like loyalty, rebuying, responsiveness of customers is also changing. Shifting focus of customers to stores that are in their vicinity and the ones with more freshly available stock, has impacted the loyalty paradigm of store sales. Stockpiling of supplies by customers has resulted in pressurized inventories. Such inventories with their conventional fulfilment models are incapable of meeting same-day delivery or even next-day delivery demands. Still, it’s not just consumer behaviour which has resulted in the ultimate logistical and storage case study of the decade.
The self-sufficiency of stores to maintain regular and frequent temperature-controlled logistics is also being questioned. Stores dependent on weekly or on-demand availability of 3rd Party Temperature controlled vehicles are hit by demand competition with other similar stores. Even residential blocks with no credible contactless package management system are unable to draw a balance between depleting household supplies and the risk of manual deliveries. While stores and end-users have themselves devised hacks for managing these bottlenecks; their solutions are far from being scalable to permanent models in the post COVID world.
Also read [blog]: What are the changes introduced by automated parcel delivery lockers to the last-mile delivery services?
State of Storage and Delivery Fulfillment during COVID 19 Crisis
Here are some more observations made by Smartbox about the factors that highlight the critical outcomes of the CoronaVirus Crisis on parcel-courier management and last-mile fulfilment for e-commerce and roadside stores.
- 1: Given the current consumer sentiment, footfalls at shopping malls and retail stores are not going to recover anytime soon. 1/5th Australian consumers and half of the frequent retail consumers in Thailand have declared that they wouldn’t be shopping for groceries outside. (McKinsey, May 2020)
- 2: 62% of the customers expect an increase in the usage of touchless technologies from the companies after the crisis subsides. That includes production, warehousing, movement, and last-mile delivery. (Capgemini, 2020)
- 3: Euromonitor International Survey has identified that more than 25% of global customers now view ‘Click-and-Collect’ as an important delivery feature for making their purchase decisions. This shift in consumer behaviour is notwithstanding the essentiality of the products at all. (Forbes, 19 May 2020)
- 4: Retailers (especially in low middle-income countries like India and Georgia) are looking at options to rationalize their store space by 20-30% for mid to long term (6 months to 3 years) owing to thinning order books. (CNBC TV18, April 2020)
- 5: 75% of retail companies in the USA have accepted that their supply chains have been directly hit as an outcome of the COVID-19 pandemic. (Fortune, April 2020).
Fulfilment Solutions for Post COVID 19 World
WhatsApp groups for residential societies that have surfaced for consolidated purchasing in these times are not going to be permanent solutions for either consumers or stores. After finding the COVID 19 vaccine, the current crisis might be rendered a short-term historical event, but consumer behaviour has changed for good now. And if there’s anything that the history of ‘historical crisis events’ has taught us, it is that Customer Experience leaders always surface from such depressions, in better positions than slow learners or laggards.
Thus, considering the demands of customer experience in fulfilment needs of today and tomorrow, companies might have to formulate solutions that replicate the behaviour shifts in the exact format as they have been raised. Some of these solutions have been catching pace recently across the globe.
Last Mile Fulfillment Trends (2020) for Post COVID World Scenario
PUDO (Pickup-Dropoff) Model
A Network Model Solution for all kinds of retailers, distributors, retailers, and stores. PUDOs (Pickup and Dropoffs) are remote locations shared under a 3rd party logistics network to provide for convenient last-mile delivery without having to cover each nook and corner of your area of operation. Each PUDO point is a midway spot where customers can self pick-up deliveries or drop-off returns based on their availability. If powered by an Automatic Parcel Management Solution, the PUDO points can act as small Warehouse-as-a-Service points for contactless fulfilment.
As customers in some countries (especially Asian, including India) have shown a 30-50% shift in their primary choice of stores based on the distance and peak-crowd, we need a solution that enables ‘Social Distancing’. This model offers a convenient way for customers to avoid the in-store crowds and maintain a safe self-service experience. Stores and suppliers can benefit from the reduced last-mile logistics costs while providing the services of same-day contactless delivery to its customers.
Although ‘Click and Collect’ is a quasi-fulfilment model which can be assigned to self-service deliveries of any format provided for orders purchased online, but for ‘Post COVID World’; it’ll have to strictly adhere to contactless principles. Recently a myriad of residential units and commercial units have partnered with Click and Collect fulfilment providers to have in-house contactless delivery spaces. E-Lockers at these spaces offer popular e-commerce platforms and stores to conduct hygienic low contact at-home delivery to lobbies, receptions, front desks, security stations of residential societies, or commercial units. What’s even better is, e-commerce platforms are still able to service the same number of pin-codes (locations) as they were and the customer need not travel the distance for a home-delivery experience.
Others are reading [blog]: How to fix the challenges of last-mile delivery for grocery market with temperature-controlled Smartbox E-Lockers.
This is popularly used as a rationalizing technique by brick and mortar stores to expand their reach. Dark stores are – setting up just a fulfilment store at epicentre locations for connecting with customers at different locations. Given the rise of curbside delivery (kerbside) by 18% for groceries and other essential supplies in some countries during the COVID 19 crisis, dark stores are becoming a common solution for most of them.
Dark stores are an extension of the PUDO model with proprietary PUDO points. They are appropriate for a larger volume of deliveries and fast-moving inventories. Equipped with an advanced parcel management software suite dark stores can also be integrated with IoT modules to monitor real-time store data and conduct post-analysis of the inventories. For customers Dark Stores mean, maintaining their loyalty benefits, constant availability, and better security assurance.
BOPIS (Buy Online Pick Up in Store)
This is the only modern last-mile delivery technology that even customers are well acquainted with. During the COVID-19 crisis, this model has seen an exponential rise in adoption across high-income countries like the USA, Australia, United Kingdom.
This self-checkout model works on full-scale IT digitalization of store sales via a web-based or mobile-based platform. The customers buy or book online their supplies and inform the store about their preferred pick-up timeline to finally visit the store in-person and receive their order. Customers and retailers both prefer this model to avoid any kind of contact by supply-chain personnel and to ensure maximum convenience in personalized pick-up/returns. As much as half of the online buyers worldwide are already aware of the contactless checkout.
To further optimize this model of endpoint logistics, stores employ industry-grade smart lockers to organize the store visits of customers and to add the cashier-less transaction experience for them. Powered by Smart Locker Technology, BOPIS is slated to lead the Post COVID World last-mile fulfilment business as 56% of global customers have promised to permanently adopt it after the crisis is safely managed.
Smartbox and fulfilment challenges of Post COVID World
It’s curious to notice that E Lockers and Smart Customer Drop Boxes are the common denominators in all the logistics equations formulated during the Novel Coronavirus Crisis. McKinsey’s report on automation in logistics puts customer lockers or drop boxes as the only endpoint solution for all supply chain order fulfilment models; namely Hub and Spoke, Cluster Logistics, Retail infrastructure, and Omni Channel Infrastructure.
That’s because, in the series of contact driven logistics and storage business, smart lockers are the only last-mile element that offers a break of contact between the carrier and customer. That’s tapping into the major disruption trend in the coming times – ‘Proactive and Preventive Wellness based Buying’. It’s not only the customers that benefit though; the companies and stores are also at a greater advantage.
The vendors get to keep many elements of their existing process while adding value to their customer experience. As much as half of the customers would want the companies or stores that deliver products to change their technological engagement, most of them are willing to pay better for AI-based experiences as well. Stores get to keep their customers, irrespective of the footfalls by adhering to such trends.
Self-service checkout with multiple biometric/non-biometric modules and PCS protected payment add-ons have become quite the feature of these Smart Lockers. With countries like Indonesia showing an inclination towards the self-checkout mode of payments (60%, McKinsey), it is evident that even the low-middle income and moderately digitally aware communities are also ready for delivery kiosks powered by Smart Lockers. All aspects – whether it’s the social distancing, cashless transaction, contactless processes, scheduling lags, inventory management, temperature-controlled delivery, returns management, automatic inventory control, IoT integration; every challenge that the Post COVID World has to offer; Secure E-Lockers are equipped to accommodate them.
Find out [blog]: What are the sensitive touchpoints of Last Mile Logistics that your business needs to consider?
Post-COVID World of Supply Chain – an Opportunity in Disguise
As much as 44% of supply chain stakeholders across the globe have shown their dismay for not having an organized post COVID strategy for resuming their operations. Many of them are still waiting for things to get back to normal, while that’s never going to be the case now. The new normal of delivery fulfilment requires a digital and low touch approach. The expected change in consumer behaviour directly points to a change in the in-person interaction with products and services. Smart Lockers and automated parcel management services can help businesses position between those gaps of contact which this global pandemic has created. Behavioural changes through crisis have been the beacon of transformation in history and the same is going to happen this time.