Why Brilliant Retailers are Recognizing Freight as the New Competitive Frontier

I love thinking about the omni-channel shopping journey, the future of in-store technology, predictive analytics, personalization and all the other compelling new areas of technology that make this an era where we will see retail radically transformed. My latest love in the technology world is freight, especially as it relates to retail. The opportunity for retailers and direct-to-consumer brands to leap into dynamic, machine to machine, API based fulfillment will help leverage supply chain as the powerful competitive weapon. The type of cloud-based, predictive and intelligent machine technology that has invaded other industries will also radically and rapidly change freight. Those that adopt early and fast will be the winners. Early adopters in the space have already started to dive in, with the extreme example being Amazon’s Anticipatory Shipping!

Logistics Freight Visibility

Fulfillment has been “all the rage” lately. Wal-Mart is duking it out with Amazon with a discounted version of the Amazon Prime program. Last mile delivery is one of the hottest trends in eCommerce. Macy’s and other top tier retailers are launching same day delivery programs to compete with Google’s free same day delivery. We all know that free shipping continues to be a focus for driving shopper conversion to fulfill customer’s expectations for low cost delivery and collapsing delivery windows. Further, the desire for more choice and fulfilling every long tail customer product need is causing massive SKU proliferation; as an example, Walmart is moving quickly to offering over 10 million SKUs on line. Smart use of drop shipping programs is powering the race to maximize consumer choice but what retailers are gaining in product offering they are risking in loss of control and visibility, especially with fulfillment. The stakes couldn’t be higher as retailers and direct to consumer brands fight to differentiate through customer experience and maximize customer lifetime value (LTV) through loyalty. The impact of one bad fulfillment experience can be devastating. A recent Voxware study found that 17% of respondents will abandon shopping with a retailer altogether after receiving just 1 late delivery. This increases to 55% for the second delivery delay.

Meanwhile, the freight world is undergoing massive change and venture capital dollars are starting to pour in to fund this freight revolution. Carriers, especially in the less than truckload (LTL) space, are actively embracing web services. They are evolving from the old EDI-based connectivity model to a new world where real-time rating, scheduling and exception alerting are possible. The high cost of building, maintaining and supporting direct connections is becoming a thing of the past. At a macro level, the timing for this couldn’t be better. While the LTL space is booming the “Mother of all truckload capacity shortages” is coming with electronic logging devices and speed limiters being mandated. When you combine that with LTL driver shortages and other constraints the future has to point to a more dynamic model where spot rates become the norm rather than the exception. Why does a model of pre-negotiated carrier rates that are fixed for a year still make sense in a world where other industries are moving fast and furiously to true dynamic pricing?

We are excited about a enabling a world where static routing guides become obsolete, retailers and brands truly have the ability to leverage all the benefits of spot pricing, and carrier selection doesn’t just mean the low cost provider, but is based on many factors that are informed by a big data analysis of all activity across a network. A world where exception reporting is instant and standardized and maybe most importantly, a drop ship eCommerce program with a massive supplier network is able to fulfill in a way that is economically viable. A time where there is complete control, no surprises and supplier shipping is fully automated and optimized at the shipment level. Supplier chargebacks due to non-compliance simply become a thing of the past.

We are a passionate group of eCommerce pioneers, technologists and freight junkies that can’t wait to be a part of this wave of change. We will also strive to be the voice of record for documenting and contributing to this change, for all of the innovative thinkers in supply chain. We can’t wait to get to know you all better and share our vision!