Shipping Shift: Why Not Use Every Store As Its Own DC?

Every time we hear one of these shipping company nightmare stories—with packages lost or recklessly damaged—it's a painful reminder of how much retailers are at the mercy of these shipping partners. When a consumer makes an E-Commerce purchase and something happens to the product en route, who does the consumer blame? (Yeah, life's not fair. Get used to it.)

As a practical matter, there's little IT can do to take control of these third-party shippers. Nor can the department get better visibility into its package-tracking operations, because they are limited to how sophisticated that shipper's internal tracking systems are. But there may be a way to flip this problem into an advantage. What if chains viewed every store as a local distribution center? And used local talent to deliver not only to customers but on the same day? This approach enables the merged-channel retailer to extend that experience right back into the customer’s front yard and maybe through the front door.

The original business argument for outsourcing product distribution to the third-party likes of FedEx, Airborne/DHL, UPS, USPS and others was supposed to be lower costs, courtesy of economies of scale, along with advanced tracking services. But along with those benefits, retailers had to turn over a super-crucial part of their business to people who had little reason to care.

FedEx, usually seen as the shipper with the best tracking system, loved to play games with those systems. Several years ago, when we used to receive many daily FedEx deliveries, we noticed that 10:30 AM often came and went with no delivery. Then, maybe at 11:20 AM, the packages would arrive. Calling to get the shipper the credit for failure to meet the 10:30 AM delivery deadline, we discovered that the packages had been time-stamped 10:28 AM.

You guessed it. When we ran into the delivery guy a few days later, he revealed the least well kept secret in FedEx's operation, which is that delivery folk would pull over at about 10:25 AM and scan all of their undelivered packages while in the back of the truck. So much for the fool-proof proof-of-delivery systems.

And FedEx had little reason to look into such issues, because it would accomplish nothing but hurt its on-time delivery record. These are your distribution partners, and FedEx is one of the better ones.And FedEx had little reason to look into such issues, because it would accomplish nothing but hurt its on-time delivery record. These are your distribution partners, and FedEx is one of the better ones. Taking the deliveries back—at least within XX miles of your stores—provides quite a few benefits. First, there is the delivery from a smiling person with your store's logo on his/her uniform. Second, there is the ability to offer same-day delivery, which can be the beginning of an advantage over pure-play E-tailers. (Why buy from Macys.com instead of Amazon? Now you have an answer.)

There's also complete visibility into tracking. With a local delivery, tracking is somewhat easier; you can track the trucks, the packages and the drivers. And unlike the FedEx example, no one at Target.com will have a reason to look the other way if Target packages are not arriving when and how they should.

If you're going to be blamed for how your packages are delivered, shouldn't you at least own the process? This is all about extending the brand. For some, this approach could go beyond delivery, with the package person asking if the customer needs help setting up the product or maybe carrying the box into the house. Or maybe it's someone who asks if the customer needs any assistance with the product and, if so, can immediately call someone on his or her mobile to immediately talk with that customer.

The traditional argument has been that a brick-and-mortar only fights against an E-tailer by pushing the in-store experience. This approach enables the merged-channel retailer to extend that experience right back into the customer's front yard and maybe through the front door.

How far you want to push this service is a very legitimate question. Back in 2007, the Tweeter electronics chain—OK, so the company went bankrupt the next year. Does that mean it didn't have some good ideas?—started exploring using virtual reality to test surround-sound home entertainment systems. The idea was to do things that no E-tailer could match, by leveraging its ability to get personal with customers.

It's not a bad idea to think about, especially the next time you hear about a flat-screen television thrown over some customer's fence.

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