Consumers, who were once wary of providing credit card information to online retailers, now freely share it to buy items such as cough drops, cameras, and, increasingly, big and bulky items like couches and appliances.
Purchases of large products, once limited to brick-and-mortar stores, can now be made on a smartphone while waiting in line at the coffee shop. The shopping experience, however, often falls apart when it comes to getting those big, heavy items delivered.
The last mile of the delivery process for bulky consumer goods — that final leg of the journey to the buyer’s kitchen or living room — remains frustrating for many consumers. They miss the speed, transparency and flexibility that they are used to with small packages delivery. And heavy goods delivery can be expensive.
Transportation and logistics experts are working aggressively to change that with new technology.
“It’s critical for the consumer to have total visibility and command of that last-mile delivery for heavy goods,” said Mario Harik, chief information officer of XPO Logistics Inc., a leading global logistics and transportation company with $15.3 billion in annual revenue.
Brand loyalty can hang on the delivery experience, Harik said.
XPO recently unveiled technology that lets consumers use smart speakers such as Amazon’s Alexa to check where their heavy goods purchases are in the delivery process. They can use voice commands to ask when the items will arrive or even to reschedule. The last option has been tough for carriers transporting heavy goods.
Later this year, XPO will add an augmented reality feature to its Ship XPO web-based toolset. The feature is designed to work with smartphone cameras. It superimposes a digital image of, say, a couch that has been bought from an XPO business customer on the smartphone camera’s view. A consumer can point the phone to a corner of a living room, for example, and see through the viewer how the couch will look and fit before it arrives.
Other major logistics companies also are moving quickly to make changes to serve their retail customers who want their heavy goods delivered in a consumer-friendly way.
Seko Logistics, a fast-growing company, with $598.5 million in annual revenue in 2017, recently expanded its white-glove business-to-consumer delivery service to include full assembly for heavy and bulky items nationwide.
The company, which said it did nearly 1 million white-glove deliveries last year, expects that number to double by 2020. The growth comes as consumers ramp up online ordering of oversized goods such as fitness equipment, home appliances and furniture. People increasingly want those big items assembled at delivery, Seko said.
“Supply-chain thinking is dying, and what it’s being disrupted with is demand-chain thinking,” said Brian Bourke, vice president of marketing for the Itasca, Ill.-based global transportation, logistics, forwarding and warehousing business. “You start with consumer demands and you build everything around that, all the way backward. That takes a revolution in thinking.”
That’s how Seko helped one of its retail customers cut delivery times and lower damage rates. Dazadi Inc., an online retailer of billiards tables, basketball hoops and other home recreation items, wanted to speed up deliveries to meet consumer expectations shaped by Amazon delivery time frames.
In a brainstorming session last year with Dazadi, Seko agreed to forgo requiring customers to sign for deliveries. After a successful test program, the new process is now in place. It applies to the free delivery option that Dazadi offers consumers. Items are left at the dry space nearest their doors, such as a front porch or driveway. Consumers no longer have to make arrangements to be home to sign for the goods.
“We found the way to speed up delivery to the door is not to wait for the customers to get back to us for an appointment — that’s kind of an old model,” said Jason Boyce, co-founder and chief executive of Dazadi, which has annual sales of about $20 million.
Boyce said that damage rates fell because the oversized gear wasn’t sitting in warehouses for days or weeks waiting for consumers to say when they would be home for deliveries.
The change required Seko to break traditional industry delivery procedures and juggle its technology to accommodate the move. That’s just the kind of challenge that logistics companies are moving fast to meet these days as shippers and consumers demand a better delivery experience, no matter how big or heavy the item.
“I’ve never seen this rate of innovation relative to being able to deliver on customer needs,” said Mary Long, managing director of the Supply Chain Institute at the University of San Diego.
It’s part of the push to capture the wallets of consumers in the fast-growing, multibillion-dollar retail e-commerce market, which increasingly includes heavy and bulky consumer items.
In the second quarter, U.S. retail e-commerce sales hit $127.3 billion, according to an August government report. That’s a 15.2 percent increase compared with the same period a year earlier. Online now accounts for almost 10 percent of all retail sales in the U.S. Global retail e-commerce sales are growing even faster and topped an estimated $2 trillion in 2017, according to eMarketer Inc.
Challenges remain for the tradition-bound third-party logistics business. Overall, it has been slow to make changes or invest in the technology needed to bring the speed, transparency and affordability that consumers and shippers want when it comes to heavy goods delivery, experts said.
“From the shipper perspective, where heavy goods delivery providers have lagged is, No. 1, in the cost and, No. 2, in the availability of capability as far as number of participants in the marketplace,” said Michael Nayden, leader of Deloitte Consulting’s supply chain and manufacturing operations practice.
From 30 percent to 50 percent of the total cost to deliver heavy goods to consumers is due to the last mile, or final leg, of the delivery journey, Nayden said, depending on the cost of the product. Too many logistics providers have been hesitant to make the investments needed to reduce those costs, he said.
Consumer expectation for tighter delivery windows and white-glove installation services are also hurdles for many traditional logistics companies, he said.
“What’s happening in the retail world and the e-commerce world is going to force people in this part of the industry to wake up and do some different things,” Nayden said.
Not every logistics company is waiting for the industry to catch up.
Consumer-friendly delivery of heavy goods is becoming a valuable differentiator for shippers. The companies that can make the changes and invest in the new technology to make that happen will have a big advantage in the marketplace, industry players said.
“The biggest department in our company is IT,” Seko’s Bourke said. “We move boxes, but at the end of the day the value-add comes in the technology.”