Need for speed critical to Internet-trained consumers
June 24, 2016,
HIGH POINT — Increasing consumer expectations created by Internet retailers’ ability to get goods into consumer homes within a day or two of order will continue to challenge furniture stores and the companies that service their deliveries to match that pace — despite the need to handle larger goods that often require deluxing and set up.
Supply chain panelists Ray Kuntz, Watkins Shepard, left; Mark Fierek, Orion Air Ride; and Ron Borgman, Lodeso, discuss key issues challenging furniture deliverers.
That was the near unanimous assessment of panelists on the Logistics Symposium’s supply chain panel. “We have to do a better job as an industry,” said Freddie Davis, Global Shippers Assn. “We have to have the ability to move in a safe, timely manner and get the furniture there in once piece. It means we have to roll up our sleeves and work hard.”
“We need to get this down to seven days,” said Lodeso’s Ron Borgman. “That’s what consumers are demanding; that’s what our customers are demanding.”
Just one week prior to the symposium Lodeso and another panelist, Watkins Shepard Trucking, were simultaneously acquired by Schneider, a provider of transportation and logistics services, bringing together a technology platform and final-mile delivery specialist and highlighting the trend toward consolidation currently spreading across the logistics space.
“We answer to two gods now, the box store and the Internet,” said Watkins Shepard’s Ray Kuntz, describing the environment fueling the current wave of consolidation. “We all have to get better in the IT world because there’s so much IT involved. That’s one of the big advantages of our new owner. They have world class IT systems.”
Kuntz added that increasingly brick-and-mortar stores will need to offer delivery speeds comparable to Internet retailers, which — even on furniture — are reducing time frames substantially.
“Two years ago we were probably in the 14-15 day transit level to market,” said Mark Fierek, of Orion Air Ride, which does 80-85% of its business servicing Internet retail accounts. “Currently we’re running at about eight and a half days from origin to destination market.” And even that number, he noted, needs to come down.
Freddie Davis, Global Shippers Association, left, and Jason Bohannon, J.B. Hunt Transport Services, joined other panelists stressing the importance of time and transparency in satisfying today’s furniture consumers.
Jason Bohannon, from J.B. Hunt Transport Services, noted that this has become a critical determinant of consumer satisfaction. “It’s one thing to take an extra day, but it’s a different thing for them not to know where it is,” he explained. “Having visibility from the manufacturer to the end customer is extremely important.”
In fact, it’s important to communicate any change in expected to delivery to the consumer. The panelists agreed that for today’s consumer, who can often track every step of an Internet purchase, knowing where their furniture is and when they can expect delivery is absolutely critical, particularly when something occurs to alter an originally communicated delivery.
“The worst thing that can happen for a consumer is to not know what’s going on,” said Lodeso’s Borgman. “They’re better off knowing it’s going to take a month than not knowing where it is. We need to pour resources into that process so we can bring big box furniture delivery to the same level consumers have come to expect with Fed Ex or UPS.”
Another part of the equation, and one where traditional specialty truckers have a significant advantage over the commodity carriers like Fed Ex and UPS, which currently underpin the Internet model, is the ability to reduce damage and return rates, an area that has challenged pure-play Internet specialists as they’ve moved more deeply into the full-line furniture business.
Orion’s Fierek noted that damage rates on goods moving through common carriers can run as high as 10%-14%, compared to a rate near 1% when moving through specialty carriers. The key, he and other panelists noted, is to appropriately set expectations with the consumer.
“When you handle everything by hand, there’s a significant cost to that,” said Watkins Shepard’s Kuntz. “If you use a specialized furniture carrier and you want a quality product, there’s a cost involved.”
Balancing cost, speed and expectations will determine the winners and losers in tomorrow’s logistics arena.
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