In 2005, A.G. Lafley Chairman, President & CEO of Procter & Gamble coined two "Moments of Truth". First moment of truth: When a customer is first confronted with the product. It occurs within the first 3-7 seconds of a consumer encountering the product and it is during this time that marketers have the capability of turning a browser into a buyer. Second moment of truth: When a customer purchases a product and experiences its quality as per the promise of the brand. With the growth of ecommerce and home delivery, there is a new moment of truth: Delivery: How the customer experience around shipping and delivery shapes the consumer’s view of the brand. In this post we will cover how consumer expectations are ever increasing, what retailers are doing to address evolving expectations and how this impacts your transportation strategy.

Heightened Consumer Expectations & the Amazon Effect

Everyone knows that Amazon is driving heightened consumer expectations and completely transforming retail. The pace of innovation, however, is accelerating. When Amazon introduces a new concept, everyone else starts chasing it. Before they can catch their breath, a new unexpected innovation is introduced. Two “prime” examples are shipping and delivery options. Many years ago, Amazon aggressively promoted free shipping, leveraging it across products and its marketplace of suppliers and putting tremendous pressure on other retailers and their ecommerce logistics operations. Then Amazon Prime was introduced: 2-day free shipping with an annual subscription. In 2014, Amazon then introduced Amazon Prime Now—promising one- or two-hour deliveries for a small variety of consumer staples. Today, Prime Now operates in more than 30 U.S. cities. The bar continues to get higher. Additionally, Amazon has introduced a multitude of delivery options in the last few years. Who would have predicted its Whole Foods acquisition, which now supports a growing network of 3,000 delivery lockers. For delivery of large items, Amazon also now offers special options including Porch Delivery, Room of Choice, and Inside Entry Way. The question for other retailers is not simply how to compete today, but what is coming next?

Impact on Transportation Strategy and Networks

To stay competitive and leverage new markets, retailers are expanding their delivery choices. This still needs to be done, however, in a cost-effective way, which is driving more convergence in the transportation network. In order to address this, retailers need: (1) global end-to-end visibility (2) flexibility to leverage expanding and more dynamic modes and partners (3) a digitally connected network of partners and (4) the ability to adapt to quickly service new market opportunities.

How One Retailer is Transforming to Address “The New Moment of Truth”

With such a focus on meeting rising consumers expectations, leading retailers are transforming their transportation strategy from cost-centric to consumer-concentric—and creating a competitive advantage.

As an example, consider a large national retailer that provides a wide variety of products from clothing to furniture. For its “big and bulky items,” the transportation strategy was traditionally a mix of local warehouses and supplier direct based on item and inventory. For the supplier direct shipments, the company provided a routing guide to the supplier based on consumer address, and managed the transportation through a number of 3PLs who were responsible for the door-to-door delivery, plus any white glove services. With this model, however, the retailer ran into customer service issues that negatively impacted the customer experience. The 3PL had a network of last mile carriers that were specific to each region. What the local last mile carrier lacked was product expertise. It was the same carrier whether the delivery was a firesafe or it was a crib that needed to be assembled for anxious and expecting parents. Furthermore, with the 3PL managing the first mile, line haul and last mile, the retailer was missing the opportunity to save costs by converging these moves with its larger transportation network, costing more in freight spend.

To address consumer expectations and reduce complaints and returns, the retailer took on the transportation management for the first mile and line haul, and expanded its 3PL relationships to increase the options for the last mile to match specific product delivery needs.

Learn More and Hear Other Examples

Join Descartes and Adrian Gonzalez on September 27, 2018 at 2PM ET and learn how retailers are transforming their fulfillment and transportation networks to meet these new expectations. In this webinar we will cover:

  • Examples of retailers who are transforming their networks
  • How transportation has changed from a cost center to a competitive advantage
  • The impact on traditional transportation organizations and stove pipes
  • How technology can be applied to accelerate this change
  • Insights on delivering a big vision with minimal risk

Register here now!

Written by Brian Hodgson

Senior Vice President, Industry Strategy Product Management