Fighting the last-mile battle

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Retailers have found it hard to compete with Amazon’s delivery promises. But there are plenty of reasons to try: A study by Zebra Technologies Corporation last year found that 78 percent of logistics companies expect same-day delivery by 2023 and 40 percent anticipate two-hour delivery by 2028.

The big players are trying — FedEx has launched a self-driving delivery robot. But newcomers are significant players in rapid delivery, and the grocery industry’s experience provides a bit of a roadmap.

“A lot of the exciting things happening with grocery will be relayed and transcend on ecommerce,” says Chelsie Lee, co-founder and CEO of last-mile delivery solutions provider Shipsi. “There have been some amazing studies in the grocery space, where 76 percent of consumers would rather have same day versus next day. Imagine a world where the future is everyone can get everything right now.”

Shipsi is doing its part to make that a reality now, especially for small- and medium-sized retailers that are struggling to compete with Amazon “and losing customers because of faster shipping,” Lee says. “There are a lot of different things out there. They’ve tried using outside apps that offer a single last-mile network. They find problems, like someone in their store is wasting too much time.”

Shipsi surveys showed that retailers felt they could not compete in this area. “They felt fast shipping equaled high cost and that was something they could not afford,” Lee says.

Not so, says Kolbie Richardson, senior marketing manager for No Rest for Bridget, a fast-fashion retailer with stores in Boston and southern California. The company saw a 5 percent savings on shipping and a 10 percent increase in month-over-month sales, and Shipsi was particularly useful during the 2018 holiday shipping season.

“In the past, we’ve always had to rely on USPS and/or UPS, with them dictating our holiday shipping times to our customers,” Richardson says. “Having Shipsi this past holiday season allowed us to really cater to the needs of our last-minute shoppers. We were receiving online orders up until Christmas Eve, and with the help of Shipsi, we were able to meet our local customers’ immediate needs, which was definitely a plus for the business.”

A COMPETITIVE ADVANTAGE

Before working with Shipsi, Romont Johnson, owner of Atlanta Vinyl, which sells adhesive vinyl and heat-transfer vinyl, thought “it would be a much more manual process. I imagined our company dispatching drivers and billing customers for courier services.”

Shipsi levels the playing field by offering seamless last-mile, same-day delivery, bidding out the delivery to providers like Postmates and Uber. All a retailer needs to do is offer the instant option on the website and determine what, if any, of the cost it will underwrite.

“We work with the retailer on the front end to set up the business rules, which can be changed at any time,” Lee says. “They may want to offer it only on specific items or within a geographic radius.”

Some retailers will “set it and forget it,” though Shipsi constantly evaluates parameters like radius, price and driver qualifications to find retailers the best shipping deal. “We’ve seen anything from a 5-20 percent savings on shipping cost,” Lee says. And instant gratification often has equaled an increase in orders by 50-150 percent: “The more customers see it, the more they pick it, which means, in turn, higher ecommerce.”

Johnson anticipated same-day delivery “would be a game-changer in the craft vinyl industry.” Rather than employing and dispatching couriers, “Shipsi handles the whole transaction from start to finish. Partnering with Shipsi has been the biggest differentiator between our company and all other vinyl stores. It has been an integral factor in our growth thus far and holds a key role in our plans to scale.”

Retailers determine under what parameters, if any, it will subsidize the delivery charge. There is no set fee for shipping as there would be for FedEx or UPS; consumers see how much that option is. But retailers can tell Shipsi if they will cover $5 off the delivery charge or offer free delivery within a certain radius. Those that do subsidize have seen “incremental growth,” Lee says.

RETAIL-CENTRIC

Lee comes to logistics via retail, with stints at places like Saks Fifth Avenue, UGG and Nike. She knew she was on to something when creating the platform. “I called every friend and colleague and mentor that I could think of and asked, ‘If you could deliver within a couple of hours and make no changes in the system, would you find value in that? Is it in alignment with what your customers are saying?’ It became increasingly difficult to find someone who said, ‘No.’”

She kept that perspective throughout every phase of development. “Every single time we thought about a feature or a product, if it was something that wasn’t easy for the retailer, I would push it back.”

Therefore, there is no outside app that consumers must access to get the faster delivery option; Shipsi occurs right from the ecommerce page alongside other delivery options. “I love the fact that we give our retailers credit, that they are the heroes,” Lee says. It also helps that the consumer has the option to continue working with a brand they trust — the retailer. “That was critical for us.”

It also was critical that Shipsi integrate with the retailer’s ecommerce provider. “We wanted to avoid having to take resources away from a retailer’s technical team,” she says. “It looks like another shipping update.”

The retailer has full access to the data that the purchase generates. Largely nothing is required in the store, either, outside of normal buy online, pick up in store or shipping procedures.

“It was important that we not change the retailers’ current process,” Lee says. “We have found it really useful and even seamless, if the retailer treats a Shipsi order the same way as buy online, pick up in store, except that we’re facilitating the last mile. In a lot of cases, it’s really just changing the words on a button and putting up a sign.”

In just a few short years, Shipsi has spread throughout the United States, with coverage in metropolitan areas of practically every state. Lee says Shipsi is an option in more than 600 cities, and the company anticipates 1 million drivers and to be in every state by 2020.

Lee says a “significant partnership” within the last-mile space will be announced that will expand outreach to rural areas. “As you can imagine, most warehouses are not in New York or Los Angeles,” she says. “We have found quite a bit of success in some more rural areas by having the warehouse and driver network there.”

And while Amazon continues to make noise about expanding its own driver network, Lee isn’t worried. “Amazon has worked in our benefit to set this bar of consumer expectation,” she says. “Two-day shipping is now the norm. We wouldn’t have the pipeline forecast and customers if this wasn’t the norm.”

She expects companies like DoorDash, Uber and Lyft to continue as viable solutions for Shipsi’s last-mile network. “I don’t see those companies going anywhere. I know that they’re pretty scrappy because they still have that start-up energy and gumption internally.”

As for Shipsi, a cowbell is rung at its Venice, Calif., offices when a sales record is broken. “I can’t think of a week that we haven’t rung the bell,” she says. 

Sandy Smith grew up working in her family’s grocery store, where the only handheld was a pricemarker with labels.

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