Several indicators and trends are opening the door for revolutionary opportunities on both the transportation side and the retail side of business. More than ever, we are in a transformational time where either brands will innovate and win big or slowly fade into the background. So exactly what is happening in the retail and transportation spaces? We break it down for you here.
Shift to D2C
It is no news that consumer habits have quickly changed since the spring of 2020, with now over 75% of people shopping online at least once per month. This has created a unique scenario where having a physical storefront is no longer the ultimate goal for growing businesses and where mega retail chains like Walmart have become more tuned into what consumers expect in the delivery process.
The shift to D2C opens the door to opportunity in several ways:
-Small and growing businesses can focus on building a strong online presence and grow their customer base with little upfront investment as an online and social media presence is now more important and impactful than a physical footprint.
-Large retailers can build out pickup and delivery options to keep customers who once shopped in person loyal to their brand. This is already in progress for many large retailers.
Visibility & Control
With over three quarters of people frequently making online purchases, the direct interaction that they would have with a physical storefront, or an in-store employee is eliminated. Therefore, retailers are pivoting to focus on every aspect of the direct-to-consumer experience that they can control. This experience is largely virtual and the few human interactions that customers might have with brands are limited to customer service representatives and carrier delivery personnel.
Control opens the door to opportunity in several ways:
-Retailers eager for control, and those that have the finances to do it, are building out their own last-mile transportation capabilities. This is the result of a focus on control and a need for flexibility as capacity from carriers is often not a guarantee as the carriers work to serve a massive portfolio of customers.
-Companies are eager to compete with Amazon and other large retailers that offer 2-day shipping. This has opened the door for partnerships and acquisitions that are mutually beneficial. These partnerships and acquisitions create a better environment to cut costs, offer better shipping service to customers, and bring essential shipping operations and data closer to in-house.
-Small and medium businesses that do not have the financial capability to acquire a shipping partner are taking advantage of large and ever-growing 3PL networks to have more visibility.
As previously mentioned, retailers are acquiring transportation partners to beef up their D2C capabilities, and a parallel trend is happening in the carrier space. Smaller, regional carriers are on the lookout for strategic partners that could take them from a regional carrier to a larger that player that can offer deliver coast to coast. One of the most prominent small carrier acquisitions we have seen recently is that between Lone Star Overnight and LaserShip.
Acquisitions open the door to opportunity in several ways:
-Acquisitions that give regional carriers are larger footprint give shippers another transportation option. Although regional carriers usually have more limitations than major carriers on the type of packages they can accommodate and the nationwide coverage they offer, they can still be an impactful addition for retailers.
-Acquisitions can also open the door for cost-effective solutions in the expedited delivery space, particularly for companies that have a customer base that is concentrated to a regional geographical location that is already covered by the regional carriers.
-On the carrier side, there is the opportunity for regional carriers to become larger players in the delivery space that will allow them to have a more competitive rate structure and onboard larger and larger customers.
As retail and transportation continue to evolve, SMBs may feel like they are unable to keep up with the huge moves that large retailers are making, but thankfully partnerships and acquisitions are a bright spot on the horizon, and smaller players have the advantage of having a more intimate connection with their customer base.
Over the coming months we will see bold moves from both small and large players who are able to recognize these opportunities—make sure your business is in that mix!
- Supply chain