3PL Growth Potential

Third party logistics providers have been on a growth path since the recession starting with growth in knowledge and capabilities through acquisition of talent during the downturn in the market.  This was a long journey for the leading providers and required a great deal of belt tightening in order for them to survive, however, I believe that it was worth the effort for both the survivors and the market as a whole.  It took some vision and patience to see the potential and the leaders in the third party logistics market are now reaping the benefits of their struggles. The market has changed dramatically through both the services offered by the providers and also the changes to the market that these providers have enabled, from dramatic consumer delivery changes to the tracking and traceability capabilities the market is a better place now as a result of the leaders in the third party logistics providers marketplace.

Now though the real change will be delivered to the market through these providers as they mature and the technology really takes off.  I expect there to be dramatic growth in capabilities and market share for these providers. The key to the growth and expansion really comes down to the demands of the consumer and changes in the consumer collaboration and interaction as consumers combine social technology along with new network and service capabilities to support their lifestyles.

Think about it, every advancement in technology and market capabilities has been driven by consumers over the last 15 years at a minimum.  The market is becoming more segmented at the same time as it is becoming more collaborative. This means that third party logistics providers will succeed or fail based on their abilities to shape the supply chain capabilities to meet the consumer demands.  There is no longer a basis for the large legacy retailers to support their supply chain needs, in fact, these needs would be best suited to be support by a network of collaborative partners, including third party logistics providers, to develop the tools and technologies that will bring the market forward.  There is no longer an opportunity for larger retailers, manufacturers or service providers to control the market outright and demand abeyance.

The future holds a continued growth of 3PL providers an a withering of supply chain capabilities by retailers and manufacturers because they will not be able to compete based services and cost.  The market will be taken over by third party logistics providers and probably Amazon, but I consider Amazon to be a type of third party logistics provider. The future market requires specialization and collaboration capabilities and also services to support the growth and velocity of change.  These are exciting times for third party logistics providers and they must take advantage of the opportunities and think big. There will be great opportunities in the market and these opportunities require a great deal of imagination and also collaboration to be in the position to leverage the change.   

3PL Services Impact

Third party logistics provides have really been driving much of the advancement in the supply chain and the market at large through consolidation of the market that allows the growth of services and especially end-to-end services that provide a one stop shop solution for their partners.  These are exciting times for third party logistics providers because of the growth of capabilities and services that provide the ability to directly and indirectly impact the market by providing an opportunity for many partners to support their supply chain requirements quickly and efficiently.  These are exciting times in the supply chain services and the larger third party logistics providers are pushing the limits on the current supply chain capabilities in ways that allow their partners to quickly and efficiently deliver new services to their customers, providing their partners the ability to build on these capabilities in a cost effective manner.

Third party logistics providers fill a void in the market for their partners and customers that allows them to implement services and capabilities cost effectively.  Third party logistics providers provide a critical aspect to many of their customers through their expertise and development of services as a value add to their partners.  This allows both small and large customer of these providers to take advantages of market developments more quickly and efficiently. What I mean by this is that small and large customers not only outsource the supply chain services but they can also outsource their network design and strategy development to the third party logistics providers.  This allows more efficient use of resources in the market and also allows the larger partners to replace their internal supply chain analysis and development with services from the third party logistics partner.

These are exciting time for third party logistics partners resulting from the market consolidation in supply chain services and also the opportunities provided by technologies and especially how the combination of technology and services come together to streamline and offer expanded capabilities to their customers.  Third party logistics providers are completely focused on supply chain services and the expansion of services and developing new services and capabilities for their customers. I believe that this ability to focus on the supply chain services and more importantly on the future of the market is coming together now to develop and implement new services and capabilities that I really do believe would not have been developed without the growth of the third party service providers.  

This is the immense benefit of this expansion of the third party logistics providers on the market and supply chain services for their customers.  This would not have come together in my opinion without the growth of the third party logistics market. There is simply no way that a large legacy retailers would have been able to react and support consumer demands so quickly without the support and developments achieved through third party logistics providers.  This is where the potential of the third party logistics providers will make the largest impact because of their ability and drive to enhance and improve supply chain services and marketplace.

Impact Of 3PL In Market

The market and third party logistics providers have come to a place and a time where the demands and the capabilities have reached a point and convergence that compliments each other and enables a robust suite of capabilities to the smaller participants in the market that would not have been available the smaller retailers.  These changes have been developing for a long time and we are now reaching a point of maturity in the third party logistics providers That allows these providers to offer a cafeteria style service offering that will not only support the current needs of the market but also lay the groundwork to not only support the future demands, it also provides the framework required to shape the market.  This is a truly disruptive force on the market that must be take seriously in order for retailers to maintain a place in the market.

These are exciting and scary times at once, exciting because of the potential of the market and the providers, scary because of the impact to the retailers that choose to ignore the disruptive potential of these converging practices and capabilities.  These are especially scary, or more accurately, these should be especially scary times for the legacy retailers that have developed a supply chain to support their demands themselves because this strategy really makes no sense from a capability and a cost perspective.  At this point it really doesn’t make a lot of sense for most retailers to attempt to maintain the level of changing demands in the supply chain themselves and this means that the future of the market will be determined by a combination of service providers and functionality along with extreme flexibility.

These large legacy retailers must now evaluate their capabilities against the demands for services on the supply chain to determine how to meet the demands.  As with any other type of outsourcing, the retailer must evaluate their needs and requirements with the third party logistics providers’ services and capabilities that can meet their current demands.  This, however, is only one part of the equation that must be taken into account during the evaluation and selection process. Another very significant piece of the selection process is the vision and capabilities of the service provider and I would say this is the most important piece of the selection process - how can the service provider help the retailer to meet the velocity and volume of change in the supply chain?  Is the provider driving change in the market or chasing change in the market.

One additional point to be taken into account when selection a service provider is that there is no requirement to completely outsource the supply chain.  The large legacy retailer first starting down the journey of selection must take a page from others than have already gone down the path and identify their own strengths and the activities and functions that make the retailer special.  These activities and functions that make the retailer special can and should be retained by the retailer and then outsource the activities and functions that can be viewed as commodities for instance. This is a good starting point the builds the capabilities and the relationship and then as capabilities change they can be transition to the service provider rather than developing internally.  Remember the market requirement is speed to market and in this matter the visionary service provider can provide the means to meet these demands.

Supply Chain As A Service

The supply chain now is coming to the place in both the marketplace and capabilities where it makes sense to view as a service. A very significant piece of these capabilities is related the omni retail marketplace and the growth in the market of third party logistics providers.  This is a turn of the market that makes sense when looking back on how we arrived in this time and place. I believe the realization of the supply chain as a service is the natural progression of market pressures to reduce costs and also an increase in niche and eCommerce retailers that have exploded in the market and all of these influences and demands bring us to this place where the third party logistics providers along with supply chain services and the Internet of Things driving connectivity and flexibility capabilities are converging to drive the supply chain as a service opportunities.

These factors and capabilities have come together at a time that allows the three party logistics providers to seize the moment and step into the market to provide supply chain functionality as a service and provide focused services that support all of the market’s demands.  The third party logistics providers themselves have been going through a transformation that is both driven and supported by a consolidation in the marketplace that allows the visionary and bold providers to provide a one stop shop for services that can grow and support the changes in the market.  Third party logistics providers have been focused on services over the recent years that is truly helping many of the players to participate in the market in a manner that would not have been possible even 10 years ago.

Just like other services, supply chain as a service as it has come together allows the participants in the market to focus on the activities that make them special and contract for services that are necessary for their success but they cannot provide the same level and types of services in the same time frame that a third party logistics provides can deliver the services.  These practices and relationships have truly driven the market and shaped the services demanded of the participants in a way that allows the smaller participants to enter the market with a much higher probability of success and these smaller niche players have taken these opportunities to change and topple the bigger players in the market. This is essentially a key factor in the disruptions currently experienced in the retail omni marketplace.

This is an exciting time in the market and especially in the retail marketplace in a manner that allows the participants to collaborate directly to shape services and capabilities to meet the shifting demands of the consumer.  As I have said before consumers have used technology and network services to take control of their shopping and purchasing practices. The smaller retailers, in partnership with third party logistics providers, are using these capabilities disrupt the market and the participants in this market must maintain an open and collaborative practice to understand and react to the consumer demands and supply chain as a service will support these demands effectively and efficiently

Retail Virtual Relationships

The retail omni market and the omni supply chains supporting this marketplace now require the development and extension of virtual relationships across all partners and participants within the extended marketplace.  These virtual relationships are required now as an extension to the relationships across the marketplace and as a result, these virtual relationships are required, especially, to extend the consumer relationships. The retail omni market itself provides a means and the capabilities for consumers to shop when it makes sense for them and this leaves a hole in the consumer relationship with the retailer.  This is where the retailer must focus the virtual relationship to engage the consumer in their shopping and purchasing practices. This virtual relationship will augment the consumer relationship in some cases but there are many cases and situation where the virtual relationship will replace the personal relationships from the brick and mortar channel.

Consumer relationships should be extremely high on the retailer list of priorities because of the potential impact on their success.  Without the personal relationship and a reason to encourage consumers to return the retailer must focus on the price aspect of the shopping equation.  There is no room for differentiation in the order delivery since Amazon introduced the Prime service in addition to standard free delivery from so many other Internet retailers it's now common practice for free deliveries so there are basically two areas of differentiation; product price and consumer relationship. For the large legacy retailers the strategy to compete on price alone is a losing proposition because there is always someone that will offer a lower price and the Internet makes it so easy to search for the lower price, including apps that search in the background, that make it so difficult to compete on price alone.

This leaves the consumer relationship and collaboration as a key factor to differentiate the legacy retailers.  The large retailers must leave the low price war to others and stay out of that fray, it doesn’t mean that these retailers should not compete on price but it does mean that the low price or more appropriately - fair price - strategy combined with a strong collaborative relationship with consumers will allow the retailer to stand out in the market.  I suggest that the new feature for focus by retailers should be the virtual and collaborative relationship with consumers as a differentiating factor. Any other retailer can copy an operational process but it is much more difficult, really impossible, to duplicate a relationship and this is why the large legacy retailers should focus on this aspect.  

This will require two types of work to implement; capital investment for hardware and software to support the integration and abilities to connect and collaborate with consumers (this is the eay part of the equation), personal commitment and even culture change to support relationship development and maintenance (which is much more difficult because it involves personal involvement).  This can be done and the good news is that the capital investment is relatively easy and quick to complete, leaving the more difficult effort to develop the relationship. The relationship development requires overcoming a couple of hurdles that are easy to call out and very difficult to overcome. This effort requires both a long term commitment from the retailer leadership which is very difficult in itself and then the actual investment of time and effort to develop and maintain the relationship.  This is not a zero sum option, it requires a long term commitment and investment in time and people, however the payback can be phenomenal.

Collaboration Culture

A little collaboration can go a long way and for most retailers this has really been the extent of their collaborative efforts over the years.  Their efforts have really been focused on internal collaborative practices and with key supply partners in an effort to streamline their supply flow.  Their focus now must shift to an external one that includes not just their key supply partners but also their customers as well in an effort to expand their reach and interactions to include the end-to-end relationships to support their abilities to support the market and consumer demands.  Retailers must reevaluate their relationships and methods of interaction and most importantly their cultural focus in order to then meet the market demands in the retail omni market. This requires a change in focus from what I would call an internal focus on the interactions that will support the the retailer to an external focus to develop a relationship with consumers.

Most retailers over the recent past have been highly focused on the operational side of retail, in other words, the support fo consumer purchasing and delivery coordination and improvements.  These are requirements to support the retail omni market however on the other side of the coin the consumer relationship also demands a higher level of focus because of the recent retailer changes focusing on cost reductions and operational improvements.  This is especially true of the large legacy retailers playing catch up with online retailers like Amazon to meet the purchasing and delivery demands. I see the demands of consumers to develop an interactive type of relationship as a relative blind spot to many of the large legacy retailers simply because these retailers have always utilized sales associates to support the consumer relationship.  

This is the challenge of the retail omni market for these large legacy retailers. They must now develop methods to develop virtual relationships and these virtual relationships will require a change in the retailer culture to a more open and collaborative culture that shares information and works openly with partners to deliver solutions that are beneficial to all partners, rather than a command and control culture that focuses on their internal needs.  This is perhaps the one weakness in the Amazon methods where Amazon likes to control and drive the direction based on what Amazon believes to be the demand or more importantly the need of the consumer. This has worked very well in the past for Amazon because of the focus on the consumer and has allowed Amazon to lead the marketplace in many offerings in both services and products.

Amazon now has the power to create markets for products and services where there are really no other retailers with the ambition or drive to do this. Other retailers can compete though in the marketplace through a collaborative relationship with all partners in their marketplace.  This will allow them to develop the virtual personal relationship with the consumer that is lacking with so many retailers and this relationship will ensure that consumers return and participate in the retailer marketplace and this increased participation will also drive increased sales.

Collaboration in Omni Supply Chain

The retail omni market demands enhanced and robust collaboration between all participants across the entire supply chain from the producer to the consumer.  This is becoming a cost of doing business now in not only the omni supply chain but also throughout the retail marketplace. There are many pockets of collaboration throughout the extended supply chain and between the retailer and the supply chain and the challenge of collaboration in the omni supply chain now is the additional connectivity between the consumer and the omni supply chain along with retailer of course.  Consumers are really in the lead now for these collaborative efforts and open to the omni market opportunity to connect. It is really now a matter of the retailer recognizing the importance and then taking the steps necessary to extend their collaborative efforts to the consumer.

This is at the same time the most challenging and the most valuable opportunity that retailers must recognize and also requires another level of change in the culture of these retailers.  The extended supply chain partners within this framework have already opened their collaborative networks to consumers to support direct interaction with the consumer through either direct sales and marketing or the extended product delivery through carrier services.  There are many islands of consumer collaboration and these islands must be connected through a robust collaborative framework that allows and encourages connections and collaboration across channels, partners and activities to support the consumer shopping experience.

The tools have been available for a while now and are being used by consumers through social networks and the omni market and supply chain to connect to each other.  These tools are in use by the disparate groups and can easily be connected through social networking technology already in use by these groups to connect for other reasons; the retailers already connecting to consumers through Facebook and their eCommerce sites and manufacturers and carriers are also connecting through the same technology.  The omni supply chain demands these tools be connected now in order to enhance and strengthen the relationships with all partners in the supply chain, this is actually the tools and the capabilities that will build out the omni supply chain. The piece necessary to connect and make this happen is the control tower functionality that allows the data and communications to piece together the pieces and parts of data and communications into a cohesive channel for distribution and communication throughout the omni supply chain.

The supply chain and their connected partners have been connected through this type of collaboration network for a while now and so have the tools and practices in place to make these connections.  These supply chain partners have been using these same techniques in their collaboration communications with retailers for quite some time now, the challenge now is the retailers ability to connect with the consumers to create this end-to-end chain of collaboration.  The challenge now for the retailers is the shared collaboration between all partners from the suppliers and carriers to the consumers to bring this omni supply chain together. There are many new capabilities and demands along the lines of this collaborative network and this is the next frontier of the omni marketplace.  

Retailers have been focused for some time now on the operational aspect of the omni market and now must focus on the connectivity of the supply chain partners and the consumer to create a framework to help to clarify and understand the demands of the market.  This is not simply the connection, it is much more focused on the collaboration required to develop and understanding of a very complicated network of partners and participants.

Omni Supply Chain

The retail omni market requires an omni supply chain in order to support the demands and the velocity of change that is being driven by the omni market and the collaborative partners across the market.  I think one of the most challenging aspects of the omni supply chain is the interaction required between the retail omni market participants. This means that the omni supply chain must also develop and continue to enhance a social collaborative aspect and integration into the omni supply chain in order to ensure they fully participate in the omni market and also in the collaborative aspect of the omni market.  The omni supply chain must be robust and yet flexible in order to continue to meet the demands and actually help to drive the demands across the retail omni market and this requires an open and collaborative viewpoint in order to both support the demands and even provide guidance to the retail omni marketplace.

Let’s face it, over the last few years there has really been a renaissance of features and function in the supply chain along the path to developing the omni supply chain.  In fact I think that he omni supply chain has developed a set of capabilities that allows and supports the efficient integration of the Internet of Things technology to support the end to end transparency that is necessary to support the changing demands for the omni marketplace.  These capabilities combine and compliment the retail omni channel capabilities to provide and opportunity for end to end transparency and interaction with participants to deliver on the demands. The supply chain has continuously focused on transparency, connectivity and collaboration across the entire supply chain and these capabilities complement and enhance the capabilities of the retail omni channel.

The retail omni market will need to focus on the integration to these supply chain capabilities in order to build out the omni market capabilities and meet future demands.  These demands include fluid and transparent product visibility and delivery across all channels and will also require visibility and even the ability to take action to direct an redirect future deliveries across channels to efficiently meet consumer demands.  As the market becomes more fluid the supply chain must also become more fluid and flexible to meet the demands.

A critical factor to the future success of both the omni supply chain and the omni retail market is the support and embrace of collaborative practices across and between all participating partners.  This collaboration and interaction will allow the participants to react to any change in the environment and also support fluid reactions across all channels and participants to changes in demands and abilities along the way.  The fluid interaction and collaboration will allow the participants to quickly react to changes in circumstances and then utilize network capabilities to react and adjust to quickly meet the demands.

The great benefit to this collaboration and extension of networks is the increased flexibility to reach to changes in shopping and purchasing requirements.  What we are seeing in the market is an increase in imaginative reactions to consumer demands along with new shopping and purchasing capabilities to meet the demands as they materialize.  The goal of the omni market along with the omni supply chain must be to increase transparency and collaboration to reduce reaction times and also increase the choices for reactions.

Expansion of Omni Market

I have been saying for a while now that the omni market practices and capabilities have been expanding and increased in acceptance as the consumer base has changed and especially as millennials have grown in their participation in the marketplace.  In addition to this change in the consumer make-up and comfort in technology the improvements in technology including wireless technology and mobile technology has continued to increase the usage and the acceptance of the omni marketplace. These changes have resulted in the growth and expansion of both the capacity of the omni channel shopping and purchasing along with a growth in the types of shopping and purchasing capabilities that are available through the omni marketplace.  The quickening of the expansion in capabilities along with the expansion of the types of product and materials available through the omni market shows a growing maturity of the marketplace along with a maturity of the acceptance by the consumer in the omni market.

Looking back you can see the early beginnings of these changes and the growth in the capabilities have been driven just as much, if not more, by the acceptance of a greater number of consumers for these capabilities and they have been driven by the technology developments.  This two pronged impact and development of the marketplace has allowed and encouraged the development and expansion of the marketplace. The change this time is that both technology capabilities and consumer interest and acceptance have come together at the right time and the right place to really allow and encourage the expansion of the marketplace.  In the past there these two areas were not aligned, either the technology was not available to truly support the demands of the marketplace or the capabilities were really not interesting to the consumer. This change in consumer interest now, I believe, is driven by the growth of millennials in the market and their comfort in technology.

There are many new shopping verticals added or expanded in the marketplace now that were either somewhat of a niche offering or just not viable in the past.  These are starting to be driven by both the technology capabilities along with the comfort in virtual shopping. Amazon is driving an expansion in the fresh and grocery market with the acquisition of their Whole Foods and their experiments in convenience shopping to combine the the Prime membership is many ways that is changing the fresh grocery market.  Then the most interesting new shopping opportunity is in the auto shopping and purchasing area where the consumer can shop and purchase a car and then have the car delivered to their home. This shows the types of expansion and capabilities that can be expected in the near future

I also see an opportunity for dramatic changes in the marketplace continuing and growing into areas that people would have never expected even a year ago.  Quite frankly, the ability to purchase a car online and have it delivered to your home is a little surprising, however I can see the niche and the opportunity for this niche to grow.  The opportunities will only be limited by the imagination and demands of the consumer.

Consumer Collaboration Benefits

Consumer collaboration is an interesting opportunity because it can start slow and provide baseline minimal benefits with low capital investment or it can provide significant benefits with the same low capital investment, the difference in benefits lies in the investment of personal interaction with the consumers produced from the collaborative efforts.  There is a significant difference in the benefit that is controlled or delivered based on the acceptance and embrace of the organization and the support of leadership. The support requirement though is a significant investment in commitment from retailer leadership and requires a long term commitment. The return on this investment that is completely dependent on leadership support though is significant and should encourage retailer leadership to invest the time and support that will allow the benefits to be realized.

Retailers must identify a means to encourage the personal relationship with their customers, the the past this relationship was developed and maintained by salespeople in the brick and mortar store.  Recently though the personal relationship with consumers was replaced, for many retailers, with a focus on low cost pricing to encourage consumer sales. While the lowest price practice continues it is becoming apparent that for many retailers they should redirect their focus from a low price strategy to building consumer relationships to re-engage and develop the personal relationship with consumers again.  The challenge for these retailers then is the initial investment in hardware and technology while developing the relationships with consumers.

This investment increases the cost of the operations and it also will provide a return on investment through re-engaging the personal consumer relationship.  The collaborative practices can and should be layered on top of big data strategy to track and consumer practices and provide suggestions to encourage collaborative opportunities.  This start-up phase of extended consumer collaboration will require significant investment in time from internal resources and will require significant support from leadership to ensure success.  

These activities are the next logical phase of the retail omni market in order to support the consumer relationships that have basically been eliminated through a combination of  focus on cost reductions and introduction of technology to reduce human interaction. This focus on cost reductions has been driven by the market focus on low price. This is a pervasive practice and I do not think that retailers will generally jump at the opportunity to increase operational expense to support a consumer collaborative strategy.

I see this as another opportunity for imaginative and bold retailers such as Amazon to disrupt the marketplace through the expansion of the consumer interaction and collaboration activities.  I see the future opportunities through current interactions and functionality deployed by Google in their apps, including Maps and additional apps such as surveys and especially the location based suggestions and feedback requests.  These types of activities are building the big data structures that will allow these retailers to bury their competition as a result of consumer acceptance and participation. Retailers must break with their traditional practices to wait for the industry and marketplace to develop a solution because the nature of the market no longer allows the retailer time to catch up.

Big Data And Collaboration

Retailer collaboration practices with consumers has usually been focused at the personal, and in person, level through the employee interaction with their customers.  This must change with the changes introduced by the omni market and the explosion of the social network aspect and capabilities and especially the embrace of this technology from by consumers.  These demands can be especially difficult if the retailer attempts these efforts without a means to analyze the reactions and the interactions with the consumer. This is where the big data practices and capabilities come into play and these capabilities can be utilized to provide the consumer reactions that were captured in the past from the personal and direct one on one interactions with consumers.  Big data can be utilized to produce the analytics and provide the means to explore consumer reactions through their direct reaction and interactions with the omni market technologies.

This is a coming together of technologies and interactions between consumers and the retail marketplace.   These technologies have exploded in the marketplace with new capabilities and interactions on a daily basis, it seems, and the retail marketplace has been incorporating much of these technologies as a result of consumer direction and demands.  The difficulty for retailers lies in their abilities to incorporate these capabilities into their procedures and practices which requires a robust and flexible framework to support the required integrations and interactions. However the benefits can be priceless for these consumers because of the data these technologies and consumer interactions can produce.

Technology improvements has produced the tools and the foundational hardware to support the collection of huge amounts of data to quickly and efficiently analyze the data to answer the questions that will support direct consumer collaboration.  As a result of the advances hardware technologies the big data capabilities can now support the amounts of data collection required to analyze consumer shopping and purchasing practices in the retail omni marketplace. The challenge now for retailers is to understand and embrace the capabilities, while at the same time incorporating new technologies and capabilities to support consumer shopping demands in the retail omni market.  

This is the single greatest challenge for retailers now and probably the single greatest opportunity to support their collaboration efforts with consumers.  The retail omni market produces huge amounts of data based on the consumer direct interaction with the technology and the omni market practices and capabilities of wireless technologies provide the means to support seamless interaction across all channels, also producing huge amounts of data.  All of this data availability will do no good for the retailer without big data technologies and this technology requires expertise and imagination to analyze the data.

These are challenging times for many of the large legacy retailers because of the velocity of change demanded by consumers and the retail omni market.  Layer on top of this the requirement to understand and then plan for changes and the challenge can become almost overwhelming. Big data technologies and analytics will add to this complexity and challenge on the one hand and then on the other hand these technologies will provide the knowledge based on factual data collections to help the retailer succeed and navigate the demands from the market.

Retail Supply Chain Analytics

The retail omni market provides a basis and opportunity to collect vast amounts of data from a range of data points to support the types of analytics required to understand and adapt to the changing marketplace.  The omni market really provides methods to collect data points from all aspects of the customer experience that can then be used to develop customer relationship and also programs, product and services to meet the consumer demands in the marketplace. The omni market really provides a remarkable opportunity for the retailer and all of their partners in the market, including the end customer to increase collaboration opportunities and most importantly build the relationships that will help the retailer and their partners to succeed.

All of the pieces and parts have been coming together over the years now to provide the framework and infrastructure to collect and store along with the horsepower to process the vast amounts of data required to perform the analytics to understand and make decisions to drive the business.  The technology is really coming into a maturity that can provide tremendous value, if the retailer in this case is imaginative and also skilled in analytics. As the technology advances there is more and more opportunity to grow and expand expertise based on your desire and imagination.

The challenge in the retail omni market now is not the technology, it is what should be collected and how should it be analyzed.  There is now more than ever before a level of data available to the retailer that can support analytics of the shopping and purchasing process that could never have been achieved in the past.  The omni market provides the opportunity and the collection points that would allow the retailer, and their partners, to achieve a level of understanding of the consumer habits that would allow the retailer to develop the methods to truly customize the shopping and purchasing experience based on the demands of the consumer.

Retailers have focused on the operational processes and capabilities to support consumer purchasing demands based on the marketplace, in other words the offerings to consumers have been based on the offerings of competitors and focused on sales and operational efficiencies.  The analytics now available to the retailer will allow them to develop relationships with consumers and extend the relationships of their partners into the customer experience area to focus on the reasons why consumers shop and purchase from the retailer. Retailers cannot afford to follow the leaders the market because the market is changing to quickly and the analytics allows the retailers to identify trends and demands earlier than in the past.

The challenge now for retailers is to embrace the tools and capabilities that will allow them to detect the trends and direction early.  This means a framework that collects the data for analysis and even more importantly provides a feedback framework to support the change implementation.  This is another tool or practice in the continuous change framework that can easily be utilized to support and deliver the success of the consumer. Now is the time though to start because this framework requires investment in both technology and skills to support the retail market demands.

Direct To Consumer Delivery Challenge

Consumer delivery, or last mile delivery, is a challenge from two directions; the initial delivery to the consumer and then the reverse logistics for returns from the consumer, to provide cost effective and delivery options to meet the consumers needs at the time of purchase.  These are both logistical and service related and there is simply no easy ‘one size fits all’ solution. The solution depends on the product and consumer, or market, expectations and in addition to the variances the expectations and demands are continuously changing from both expectations and capabilities.  The challenge for both retailer and carrier is keeping up with the velocity of demands from all players in the market and maintaining a rate of change that keeps up with the rate of the demands.

The demands and capabilities have changed dramatically over the last few years and the last mile carriers, especially such as FedEx and UPS, have been really brought their best offerings and ideas to play in order to maintain both market share and also service demands of the consumers.  These carriers have really felt the brunt of the consumer demands, really they are second only to the retailers, and these carriers have been creative and invested in technology and operations to improve service and increase transparency in the last mile services. I see a strength in these offerings because of the potential flexibility of the tools to easily shift to multi function capabilities through new technology offerings.  This is an area where truly only the imagination of the service provider and the consumer of the services limits the types of offerings.

The last mile delivery and then the reverse logistics services really require a type of  hand in glove relationship with both retailers and the consumer to coordinate both the start and the finish of the service.  You can see the example of the social network at work in these relationships and connections when you diagram the connection from the retailer to the consumer and they the retailer to the carrier and then the carrier to the consumer.  Each of these relationships and connections are first level connection and requires a means of two way communications to support the relationship and collaborate between the connections. In this model consumers have the opportunity to connect directly to each of the participants in the retail market and the transaction at hand.  

This transactional connection must be leveraged to create a relationship in order to encourage the partner to return.  In this model every participant is a consumer with the other participant and this requires and increased level of participation from all parties involved.  Like so many other retail activities the market is driven in a large extent by the imagination, consumer collaboration and size of Amazon. You see this in almost every interaction in the retail marketplace, from the first contact of the consumer to the last contact by the delivery and then the potential return or reverse logistics.  Retailers must encourage the relationship with all partners in order to ensure their success and this requires a commitment to the consumer relationship and meeting and exceeding consumer demands.