Jim Hamilton is the Chief Digital Product Officer at Transportation Insight (TI) and Nolan Transportation Group (NTG). Jim leads the launch of a new digital products platform, which brings data-driven technology and end-to-end services providing one-touch accessibility to any business, any size, with any need – solutioning the simplest to most complex need in the logistics industry.
E-commerce has accelerated digital supply chains and how consumers interact with retailers. Consumer expectations and experiences in how they shop have changed since the COVID-19 pandemic began in 2020.
The ability to buy online and pick up or return in a store, curbside pickups and the ability to check online for physical store locations for the availability of items such as apparel, electronics, and pet supplies have all become expectations by consumers. Today, consumers have fully embraced retailers’ investments in omnichannel strategies, which connect online stores with physical stores.
These trends were already emerging, but COVID-19 was the catalyst that served as the kick-starter to fast forward them. Almost overnight, consumers switched to purchasing goods online. The immediate shift resulted in e-commerce sales reaching a high of over 16 percent of total US retail sales for the second quarter in 2020. Since then, however, e-commerce, as a percentage of total US retail sales, has settled around 13 percent as more consumers become vaccinated and are more comfortable shopping in physical stores.
Technology investments are helping retailers improve supply chain efficiencies and delight their customers
But consumer experiences and expectations have been solidified. Consumers want items available at the time of purchase, whether online or in-store; they want the items delivered fast. Same day is now the norm, not a nice to have, and consumers want transparency in delivery tracking after they hit the online ‘buy button.’
Consumers want real-time tracking, and they want to know precisely when their items will be delivered - Not an ETA.
Target has emerged as a success story in handling shifts in consumer demand, curbside pickups, and fast deliveries, to name a few, delivered the retailer record profits and consumer loyalty. Target achieved this by investing in technology to link their middle mile with their last mile to speed up deliveries and pickups and ensuring they had the right inventory placed in the right locations to provide a positive consumer experience.
“2020 was a record-breaking year thanks to the work of our team and their commitment to serving our guests amidst unprecedented demand. As we head into 2021, we are building on the aspects of our differentiated model that make Target the preferred one-stop shop for millions of guests,” Target CFO Michael Fiddelke told investors in 2021.
The company plans to invest $4 billion annually to open more stores, enhance its fulfillment services and strengthen its supply chain.
In addition to implementing fulfillment in stores capabilities that fulfill 95 percent of Target’s online orders, Target is also expanding its sortation facilities. Target collects online orders from local stores and sorts them into efficient routes for carrier delivery. According to the retailer, the process increases store fulfillment capacity, reduces costs, and speeds up delivery times.
Lastly, to seamlessly connect the virtual and physical customer experiences, Target is remodeling existing stores and building new stores with additional contactless features to facilitate same-day fulfillment.
Another success story is Home Depot. Utilizing customer data, it has built a supply chain network that positions inventories close to stores. According to the company, 50 percent of online orders are picked up at a Home Depot store.
“We believe that the front door of our store is now in the customer’s pocket,” Home Depot CEO and president Craig Menear said in an earnings call in 2020, referring to mobile commerce. “It’s on the job site that most of our customers’ shopping experience actually starts in the digital world, even if it finishes in the physical world.”
Home Depot has also partnered with such last-mile carriers as Roadie, now owned by UPS, to add same-day delivery capabilities to its existing delivery services.
Furthermore, to better serve the business-to-business (B2B) customer, Home Depot introduced an online portal specifically designed for the purchasing needs of contractors and other B2B customers, which now has more than 1 million pro customers.
Technology investments are helping retailers improve supply chain efficiencies and delight their customers. The ability for the consumer to get what she wants when she wants on time is critical to the success of retailers in today’s environment. This also holds true for B2B customers whose expectations are similar to consumers.
Technology investments are being made within stores, supply chain network configurations, and faster last-mile capabilities. In fact, FedEx expects the US domestic parcel market will reach 100 million packages per day this year, with e-commerce contributing to 88 percent of the total market growth.
Technology investments are now requirements to meet customer expectations and continuously innovate to stand out and succeed in a crowded retail industry.
